Smoke and mirrors on structural separation

Stuart Corner
Tuesday, 27 May 2008 11:18

Opinion and Analysis

Nothing new here. Anyone who has followed telecommunications debate with even a passing interest will know that these problems have been raised, debated, claimed and refuted ad nauseum in recent years.

So what fresh insights does CEG-AP offer that will help Optus' cause? The answer is very little. Of its 21 pages only the six of section four are devoted directly to addressing the question; "What is the case for Structural Separation?" Sections one, two and three are respectively: an introduction, an examination of the issues and consideration of operational separation.

Section four neatly sums up the case for, and against structural separation: "If competition is foreclosed due to anti-competitive behaviour [by a non structurally separated entity] then the benefits of competition will be lost. Structural separation will protect the benefits of competition. The benefits from structural separation therefore are essentially the benefits of competition that would otherwise be foreclosed. However, there are potential costs of structural separation and proposing structural separation requires a careful consideration of the costs and benefits."

At which point there is a reference to a 2001 OECD report " OECD, "Recommendation of the Council concerning structural separation in regulated industries," but little consideration of these costs and benefits. It should more correctly have been titled: "The case for structural separation: a summary of the arguments."