Turnbull replied: "A separation of assets and ownership'¦is frankly not necessary. As long as there is an access regime so that Telstra has to, as it does now, make its network available to third parties then you can achieve the objectives of competition without nationalising assets belonging to a private company."
The argument for the need to structural separate Telstra is independent of the case for an NBN and is based on over a decade of attempts by the ACCC to ensure that competitors can gain access to Telstra's network equivalent to that enjoyed by Telstra's own retail operations and access to monopoly services at prices that are fair and reasonable.
It does not necessarily mean that one part of a structurally separated Telstra be government owned. Ownership could, in fact, remain with the current shareholders of the integrated entity.
Turnbull's comments provoked a swift rebuke from the primary lobby group of Telstra's competitors, the Competitive Carriers' Coalition (CCC). The organisation issued a statement saying: "Mr Turnbull's declaration that the 1990s regulatory regime was working demonstrates that he urgently needs to spend time listening to the industry to be brought up to speed with the state of play from a competition and access perspective.
"Just this week we have witnessed the potential impact of anti-competitive behaviour by the monopoly network holder with the impending closure of one of Telstra's largest Brisbane city exchanges. This closure stands to leave thousands of customers in Australia's third largest city facing loss of their competitive services.
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According to the CCC: "Telco policy and regulation was under intense review throughout 2007-2009 and the result was universal agreement - the regulatory regime has failed. It has resulted in Australian consumers being stuck with some of the highest prices and poorest services in the developed world. The ACCC, competitors, consumers and even Telstra called for fundamental reform. Separation of retail and wholesale markets MUST be at the core of this reform."
Turnbull is likely well aware of the issues and arguments around structural separation and well aware that these are quite distinct from the NBN. Structural separation of Telstra is, however, another pillar of Government communications policy and his attack could simply be part of a Coalition plan to undermine the fragile government by any means possible.
That seems to be the view of Greens communications spokesman, Scott Ludlum, who issued a statement welcoming Turnbull's appointment but warning the Coalition against "playing political wrecking tactics with the crucial issue of building a National Broadband Network."
"Malcolm Turnbull obviously brings a wealth of knowledge to this field and I welcome the increased focus it will bring to the portfolio," Ludlum said: "But I am concerned that he has simply been placed there to 'demolish' the broadband rollout, which has widespread public and industry support...Coalition slogans of it being a 'giant white elephant' and a 'colossal destruction of taxpayers' money' are unhelpful and purely political."
Ludlum concluded: "Holding the government ferociously to account is one thing, using a crucial infrastructure project like this as a platform to bring down a minority government is another."