Government To Force Telstra To Structurally Separate Wholesale And Retail

Somebody get me some popcorn: This could get very messy. Today Senator Conroy announced that the Rudd government has made some pretty major changes to telecommunications laws that will require Telstra to structurally separate its wholesale and retail businesses. And if they don’t do it voluntarily, the government’s going to bring the pain…

Apparently the government and Telstra have been talking about this for awhile, so it shouldn’t have come as a big surprise to the company. Of course, that doesn’t mean they won’t fight it. Considering how much friction there has been between the company and the government over the past few years, you’d expect a confrontation.

Here are some of the restrictions Conroy announced this morning:

If Telstra don’t play along and do thins voluntarily, the Government will change the Telecommunications Act 1997 so that:

* Telstra conduct its network operations and wholesale functions at arm’s length from the rest of Telstra;
* Telstra provides equivalent price and non-price terms to its retail business and non-Telstra wholesale customers; and
* this equivalence of treatment is made transparent to the regulator and competitors via strong internal governance structures.

Furthermore, the Government will prohibit the company from gaining any additional spectrum for advanced wireless broadband while:

* remains vertically integrated; and
* owns a hybrid fibre coaxial cable network; and
* maintains its interest in Foxtel.

Discussions will need to be completed by December at the latest, with the Bill set to be voted on in October or November. Which gives us a couple of months of entertainment at least. Let’s just hope the consumer – who Conroy claims will benefit most from this – actually does see the benefit.