We will not break up Telstra: Liberals

Shadow communications minister, Tony Smith, has delivered the strongest mandate yet that a Liberal Government will block legislation aimed at structurally separating Telstra.

Speaking at the Australian Computer Society’s (ACS) ICT Policy Forum between Smith, Labor Senator Stephen Conroy and Greens Senator Scott Ludlam this week, the Liberal MP said that regulatory reform was a key aspect of the broadband policy he announced earlier that day. However, those aspects pertaining to a Telstra breakup were counter-intuitive to the competitive landscape the Liberals hope to build.

“We have said all along with respect to that legislation that if the minister [Conroy] only split the bill and took away the Telstra forced breakup provisions, we would be very happy to deal with those competitive issues,” he said.

As part of the Liberal party’s $6.25 broadband alternative to the National Broadband Network (NBN), an Abbott Government will build an open access fibre backhaul network in order to provide a “second lane” of broadband access to communities and remove the competition bottlenecks on the telecommunications industry. The plan will also pit several competing broadband technologies against each other in the same areas, in hopes of lowering prices and raising technology standards.

The party will also commit to regulatory reform, but are yet to release details on when and how far that will go.

Smith lashed out at Conroy at the debate for not announcing his intentions to break up Telstra early on.

“Telstra was sold on a vertically integrated basis, it was sold to shareholders in good faith. The minister never disclosed before the last election he wanted to forcibly break up Telstra. Even after his first NBN plan turned to ashes in April last year and he announced this NBN plan he didn’t say he wanted to forcibly break up Telstra. That came some months later.”

The structural or functional separation of Telstra has become a key tenet of the Gillard Government’s telecommunications policy, forming the majority of its proposed Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2009 among other reforms aimed at giving more powers to telco watchdogs, the Australian Competition and Consumer Commission (ACCC) and the Australian Communications and Media Authority (ACMA), in order to tackle customer rights issues.

However, in any case the bill may become redundant if the Labor party wins the Federal election on 21 August.

The $11 billion Financial Heads of Agreement between Telstra and NBN wholesaler, NBN Co, if it is approved by Telstra shareholders early next year. Under the agreement, Telstra would voluntarily separate and progressively decommission its copper network.

The Liberal party's insistence of keeping Telstra together has been seen by some as swaying key voters. However, the Greens' Ludlam recently told Computerworld Australia that the heads of agreement deal could see many shareholders backing Labor instead.

"There was something of an organised campaign. We were getting correspondence from Telstra shareholders over the last eight months or so, very concerned that the government wanted to disaggregate Telstra and bring half of it back into the public domain," he said. "Those emails have stopped.

"I think those shareholders have realised that if those negotiations continue constructively, they're going to have a pre-eminent seat at the table as this industry expands quite rapidly."

Concerns about the planned privatisation of NBN Co should the Labor party win the election continued to swirl at the debate, with Ludlam continuing to affirm the importance of keeping the wholesaler in public hands.

“There’s natural monopoly assets there; you don’t necessarily want people duplicating the road system or electricity grid,” he said. “If the Commonwealth holds NBN Co and we make sure it stays in the wholesale space only, you won’t have the issues that you had with Telstra, which was vertically integrated.”

Though the Liberal party is keen to keep Telstra a whole company, the party’s leader, Tony Abbott, used it as an example of the importance of keeping such companies private in the first place.

"Telstra’s not perfect but it’s better in private hands than it ever was with the public servants running it and we don’t want a new Telecom in this country today,” he told 2GB Radio in May.

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