-
Telstra mobile phone - Source: ONE News
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.
