Structural separation: on the cards or not?

Stuart Corner
Thursday, 04 June 2009 13:23

Opinion and Analysis

Then, crucially, only two options are listed: "Option 1—Strengthening the current operational separation regime that applies to Telstra," and "A further option open to Government would be to introduce a stronger form of separation, such as a functional separation regime similar to those introduced in the United Kingdom and New Zealand, and being considered as a regulatory remedy within the European Union," There is no mention of "legal" or "structural" separation.

However it is not true that structural separation is not canvassed: the question is listed as one to which responses are sought, but in a somewhat qualified manner. "What are the appropriate structural arrangements for Telstra during the transition to the National Broadband Network?" (my italics). What exactly do they mean by that? Structural changes are major and permanent, not something put in place for a transitional period.

There's no shortage of material in the discussion paper detailing the faults of the current system, and little to indicate how greater functional separation would solve these without adding even further weight to the heavy regulatory oversight that has so patently failed to achieve its goals to date. So it is not hard to interpret the paper as a sign that the government is heading at least towards legal separation.

Is the Government perhaps unwilling to spell out the 'S' word but hoping that the regulatory reform process will lead to at least legal separation as the inevitable and only solution to the problems so clearly spelt out in the discussion paper? Perhaps it is hoping that the mere threat of legal or structural separation and a Telstra free NBN will persuade Telstra to take the initiative and start down the road to greater separation.