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Telstra gets ready for the split

ACCC okays break-up plan; opposition finds shark and jumps

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In a landmark move, the Australian regulator has accepted Telstra’s structural separation undertaking (SSU) to be implemented via the migration to the National Broadband Network.

After many months of work, including revisions to Telstra's original proposals, the Australian Competition and Consumer Commission gave the SSU the green light and approved its draft migration plan.

“Together the SSU and the migration plan implement a form of structural reform of the telecommunications sector that responds to a set of long-standing concerns that have arisen from Telstra’s vertical integration,” the ACCC said.

Telstra has undertaken to deliver price equivalence to all its copper-based access services and exchanges through new wholesale contracts which specify that, as a fall back position, the charges set out in ACCC access determinations are to apply.

Communications Minister Stephen Conroy said that the telecommunications industry has been seeking this outcome for two decades.

ACCC approval of the SSU marks one of the final steps in completing the definitive agreement between Telstra and NBN Co.

Once completed, NBN Co will gain full access to detailed information about Telstra’s network of pits and ducts. This data is vital to NBN Co confirming its three-year rollout schedule, which will be released before the end of March.

NBN Co CEO Mike Quigley said “this removes the final major obstacle in the way of the large-scale rollout of the National Broadband Network. We will shortly announce plans to escalate the essential upgrade of the nation’s telecommunications infrastructure.”

Under the plan Telstra will also renegotiate existing wholesale ADSL contracts in light of the ACCC's recent access determination if requested by a wholesale customer.

Conroy made the point that Telstra did not voluntarily agree to this separation and made the undertaking in response to the policy and legislation of this government.

“We provided them with a clear choice. They could choose to remain a vertically integrated fixed line business, or they could choose to separate, and participate in offering a full range of services. They could choose to keep their vertically-integrated dominance of the fixed line market, and divest Foxtel. Or they could choose to separate, keep Foxtel, and be able to participate in the auction for spectrum for mobile broadband later this year,” Conroy said.

The new measures also include specific commitments to ensure the quality of Telstra's supply of regulated services, and the security of wholesale customer information. The undertaking also includes a raft of compliance measures and dispute resolution processes, including an independent telecommunications adjudicator scheme.

According to The Australian, the federal opposition has responded to the deal by saying that if elected it will require Telstra to hand over its copper to NBN Co.

In a media statement, opposition communications spokesperson Malcolm Turnbull said: "A FTTN redesign would see NBN Co acquire the copper loop on the customer premises’ side of the node." He did not, however, outline the funding arrangements or likely price for the transfer of the network. ®

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