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Telstra mobile phone - Source: ONE News -
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Key Australian cabinet ministers appear divided on reform plans to break up Telstra.
Communications Minister Stephen Conroy says the telco giant may be spared having to sell its 50% stake in pay television company Foxtel if it agrees to divide its retail and wholesale wings.
Finance Minister Lindsay Tanner, however, says Telstra's involvement in subscription television is a major impediment to competition in Australia.
"(In) virtually every other developed country, the main competitor to the traditional phone network is the cable-TV network," Tanner told ABC Television on Sunday.
"Here, the phone company owns both. It's been dreadful for competition."
Tanner was a Labor backbencher in 1995 when the Keating government let Telstra, then a publicly-owned corporation, buy into Foxtel with media mogul Rupert Murdoch's News Corporation.
That was a "significant mistake", Tanner told ABC Television on Sunday.
Senator Conroy, however, says Telstra may be allowed to keep its Foxtel interest, and the cable that delivers the service.
"As is clear in the legislation, the minister has the discretion not to enforce that if an acceptable form of structural separation is put forward," Senator Conroy told ABC Television.
Telstra may be able to keep its stake in Foxtel if the Australian Competition and Consumer Commission and the minister agree with a Telstra proposal to split its retail and wholesale arms.
The minister said Telstra needed "flexibility" to determine its future.
A clash between Tanner and Senator Conroy would be the biggest Labor division in cabinet on telecommunications policy in almost two decades.
In 1990, then communications minister Kim Beazley persuaded his colleagues to reject treasurer Paul Keating's proposal to privatise Telecom, as Telstra was formerly known as, without exposing it to market competition.
Opposition communications spokesman Nick Minchin is lukewarm on the idea of splitting up Telstra.
Labor's plan to split Telstra would "re-nationalise" fixed-line broadband services in Australia with a state-sponsored monopoly, he said.
The government wants a $43 billion government-run national broadband network to compete with private-sector wireless spectrum.
Under the plan, Telstra would be broken up before it is allowed to expand its wireless broadband services.
"They (the government) want to stop Telstra being able to compete with this $43 billion monster they want to create," Senator Minchin told Sky News.
Labor has criticised the Howard government for privatising Telstra without breaking it up first, creating a private-sector giant with too much market concentration.
But Senator Minchin told Sky News Labor's plan for a government-run fixed broadband monopoly would create a conflict of interest with the regulator, which the previous government had tried to solve by selling Telstra.
The government wants the legislation breaking up Telstra debated in November.
Senator Minchin said a Senate vote should be delayed until February when a $AU50 million taxpayer-funded implementation study into broadband is released.
