Tuesday, September 15, 2009

Telstra will be forced to split by Government

Anything that cuts Telstra down to size sounds good to me -- JR

THE Rudd Government has introduced major changes to telecommunications laws, including the separation of Telstra. "Today we are delivering historic reforms in Australia's long term national interest," Communications Minister Stephen Conroy said this morning. "The Government will require the functional separation of Telstra, unless it decides to voluntarily structurally separate."

Telstra has been given the choice of voluntarily separating its infrastructure and retail arms in a manner approved by the competition watchdog.

If it chooses not to, the legislation will let the Government impose rules on the way it operates.

The rules include making sure Telstra charges other companies a fair price to access its network.

Telstra will also be prevented from moving into advanced wireless broadband unless it separates and divests its cable broadband and Foxtel assets. "These reforms will address Telstra's high level of integration to promote greater competition and consumer benefits," Senator Conroy said.

The changes, included in an update to the Telecommunications Act, will be tabled in Parliament today.

Senator Conroy said Telstra and the Government had already been in talks about the move. "Telstra are very constructively engaged in discussions with us already," Senator Conroy said. "They were very well prepared already when we had our first meeting."

The Government was flexible on how Telstra may choose to separate, he said. "The Government maintains an open mind on how structural separation may be achieved," he said. "It may include a new company Telstra that may transfer some of its fixed-line assets to."

Senator Conroy said previous governments of both persuasions had failed to address telecommunications reform. "The measures in this legislation will finally correct the mistakes of the past," he said.

Telstra has previously strongly resisted moves to separate its infrastructure and retail arms.

The new laws will also give more power to the competition watchdog and the communications minister to protect consumers and issue warnings to telcos. A new Universal Service Obligation will ensure "all people in Australia to have reasonable access on an equitable basis to standard telephone services".

It will also regulate the removal of payphones and include serious penalties – up to $10 million – for Telstra if it fails to comply.


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