Partial break-up of Telstra on the way 

Source: ONE NewsTelstra mobile phone

The Australian federal government has announced sweeping reforms to the telecommunications sector in a move that paves the way for at least a partial break-up of Telstra.
  
The government will introduce legislation paving the way for Australia's largest telco to voluntarily separate its retail and wholesale arms.
  
However, the legislation provides scope for the government to impose strong functional separation on Telstra if the company chooses not to voluntarily separate.
  
The legislation could also require Telstra to divest itself of its interests in pay television broadcaster Foxtel before it is able to expand its advanced wireless broadband services.
  
Telstra would be permitted to retain its interests in Foxtel if it submits to the Australian Competition and Consumer Competition an acceptable undertaking to structurally separate.
  
The telco said it was examining the detail of the proposed reforms.
  
But the move is unlikely to be welcomed by Telstra, which has resisted attempts to separate its retail and wholesale functions.
  
"Telstra is currently examining the detail of the reforms and will provide an update to the market as appropriate," the company said in a statement.
  
Telstra shares were down 13 cents, or four percent, at $US3.12 in early trading on the local stock exchange.
  
Communications Minister Stephen Conroy described the announcement as the most significant reform of the Australian telecommunications sector in more than a decade.
  
"These fundamental reforms address the long-standing inadequacies of the existing telecommunications regulatory regime," he said.
 
Senator Conroy said the government had already been in negotiations with Telstra in relation to the reforms.
  
But it's clear that breaking Telstra's dominance of the telecommunications sector is the government's ultimate goal.
  
"The government will require the functional separation of Telstra, unless it decides to voluntarily structurally separate," Senator Conroy said.
  
Maha Krishnapillai, director of government and corporate affairs at Optus, said the reforms were long overdue and would lead to far better competition outcomes.
  
"The sector has been dysfunctional and that has been largely driven by Telstra's behaviour," he said.
  
"This is a landmark change. It changes the entire landscape."
  
Senator Conroy said the reforms would also promote competition and strengthen consumer safeguards.
  
The legislation requires Telstra, as the universal service provider, to ensure all Australians have reasonable access on an equitable basis to standard telephone services, including payphones.
  
The communications minister would be able to specify the standards, terms and conditions of services, connection and repair periods, and reliability requirements of the standard telephone service.
  
Failure by Telstra to meet new minimum performance benchmarks would expose the company to a civil penalty of up to $US10 million.
  
The legislation also includes more stringent rules on the removal of payphones, including provisions to allow people to apply to the Australian Communications and Media Authority to direct Telstra not to remove a payphone.
  
Failure to comply with the new rules will expose Telstra to civil penalties or on-the-spot fines.
  
It is expected the legislation will be debated in parliament in November.