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Telstra offers separation proposal

Public prices, Chinese walls and ring fences

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Australia’s incumbent carrier, Telstra, has submitted its proposed structural separation and migration plans to competition regulator, the Australian Competition and Consumer Commission (ACCC), ahead of the rollout of the country’s National Broadband Network (NBN).

The ACCC will now have the job of fielding submissions from the rest of the industry, most of which are bound to call for either stronger protections for wholesale customers, or stricter regulation of the wholesale business. Already, Singtel Optus has told the Australian Financial Review that it believes greater wholesale customer protections are required.

Telstra’s plan includes publishing reference prices for wholesale fixed line services. The cost of regulated services – the unbundled local loop and line spectrum sharing (used by retail ISPs to connect customers to their DSLAMs), originating and terminating access and wholesale line rental (for fixed line telephony resale) – will be based on prices already regulated by the ACCC.

The carrier’s wholesale DSL service, which retail ISPs use to connect customers outside their own network footprint, will be priced according to Telstra’s retail prices “less retailing costs”. Telstra’s estimate of those retailing costs is likely to form the basis of industry criticism of the pricing model.

However, Telstra has also committed to provide reports on its economic modeling to the ACCC each six months, along with a table of retail and wholesale costs “and comparable wholesale yields”.

Non-price commitments included in the Telstra offer cover service activation and SLA commitments. For example, the carrier has offered to improve service activation and fault restoration times for ISPs using its network, either matching the performance it offers its own end users, or working to specific SLAs.

It also promises to offer a wholesale equivalent product for any new network-level service it develops.

The migration plan

The carrier says its NBN migration is designed to maintain “business as usual” up until the point where a region is connected to the NBN and the copper and/or HFC networks are decommissioned. A wholesale customer like an ISP will be able to migrate customers away from copper any time after the NBN becomes available in an area, but won’t be obliged to take customers off the copper until the region’s disconnection date.

However, Telstra has also acknowledged that its migration plan is incomplete. If the current plan gets the nod from the ACCC, the carrier says it will develop a further, more detailed set of migration processes within six months.

The pricing, separation and migration plan is available here.

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