Telstra separation bill delayed again

The government's bill to force separation upon Telstra will be delayed again, a spokesperson for Senator Stephen Conroy confirms.

The Federal Government's proposed legislation for the separation of Telstra (ASX:TLS) has been delayed again thanks to big ticket items to be discussed in the Senate hearings starting on February 2.

A spokesperson for Communications Minister Stephen Conroy said the senator plans to have the bill heard "this year" but could not make the next sitting in the first week of February because of "more pressing considerations".

The spokesperson would not provide any further details on the situation.

In November last year, the push to split Telstra's wholesale and retail arms was made to wait until a later Senate hearing after a lengthy debate over the emissions trading scheme (ETS) emerged.

Last year Conroy had said he wanted the legislation passed by the end of 2009 but with the ETS and Liberal party shake up overshadowing the rest of the agenda this is now a distant dream.

The latest news provides additional relief to Telstra CEO, David Thodey, who along with several key shareholders wanted to delay the bill and opposed the separation outright.

The Government's moves are seen as key to much of its National Broadband Network (NBN) plan, with NBN Co negotiating with Telstra over its network assets.

Despite the often vehement opposition of Telstra and its shareholders over the move, others, particularly rival telco players, have suggested the separation is a necessary evil to improve competition in the industry.

Some telco analysts have also said the future of a separated Telstra is rosy, one even suggesting it is the deal of the decade.

In December, Telstra and NBN Co announced they had failed to reach commercial terms before Christmas in their negations over the NBN but in statements said they had formalised "Terms of Engagement" to facilitate the telco's possible role in the network. The terms include a preferred model for a potential agreement between the parties "that would see a progressive transition from Telstra's copper access network to a fibre to the premises NBN".

Commercial wholesale arrangements for NBN Co's use of Telstra's extensive infrastructure including ducts and exchanges are also being discussed under the terms.

At the time Telstra said it will also upgrade its network to fibre in the Melbourne suburb of Point Cook immediately as a field trial to evaluate the "practical issues" associated with moving to a fibre network and provide NBN Co with the resulting information.

Around 1500 customers will have the option of migrating to the fibre network once the rollout is complete around May, 2010, or retain their copper connection.

The telco will also offer an interim wholesale offering on the fibre network and provide details of the retail and wholesale offerings when the construction is near completion.

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