Turnbull endorses, then attacks, Labor's Telstra separation bill

Coalition was never opposed to structural separation, Opposition communications minister says

Opposition communications minister, Malcolm Turnbull, has confirmed the Opposition will not immediately seek to block the Telstra separation bill introduced into Parliament today.

Instead the Opposition would “carefully consider” the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill 2010.

It would also continue to support the bill’s changes — including a change from the current access regime to one which better balanced the interests of access seekers and carriers — as long as any additional regulatory powers granted to industry watchdog, the Australia Competition and Consumer Commission (ACCC) were subject to appropriate checks and balances, and procedural fairness was maintained.

Despite this, the Coalition would reserve the right to move amendments to this section of the bill in the Senate.

The Opposition also signalled that it would oppose parts of the legislation which imposed functional or structural separation upon Telstra’s fixed-line businesses by refusing the incumbent telco access to wireless spectrum.

In a doorstop interview following the bill's reintroduction into the House of Representatives, Turnbull said the Coalition believed there were strong arguments for the separation of Telstra, but that separation should not be achieved by holding “a gun to the head” of the company.

“Telstra is committed now to structural separation, and I think it would be in the interests of competition generally, and indeed in the interests of shareholders if there was an effective separation, but it would have to be on terms that gave security, in terms of pricing, to that separated network company," he said.

Despite the endorsement of Labor’s bill, Turnbull claimed the Coalition had not significantly changed its policy position on separating Telstra.

“If you are asking the question: Is it Coalition policy to be vehemently opposed to structural separation, that’s not our policy,” he said. “We have never been vehemently opposed to structural separation. We have been opposed to holding a gun to Telstra’s head and forcing them to do it against their will.”

Turnbull did not provide details on how the Coalition might put forward legislation which broke up Telstra, yet did it in a way which Telstra was happy with. The telco issued a press release prior to Turnbull's press conference voicing support for the bill's passage through Parliament quickly.

Having endorsed the separation legislation, Turnbull went on to attack it arguing the separation, in order to facilitate the National Broadband Network (NBN), was fundamentally uncompetitive.

“What we have here is legislation which is proposing… to create a government monopoly to contractually oblige Telstra to pull out its copper network, to contractually oblige Telstra not to use its HFC network to compete with the NBN, and which… prevents Telstra from saying to customers, ‘well you know you could get pretty good broadband on Telstra wireless’; they’re not even allowed to say that,” Turnbull said.

“This is so anti-competitive — it is obviously highly anti-competitive — that the government is proposing, as far as I am aware, for the first time, to actually exempt the creation of a government monopoly of this kind from the provisions of the Trade Practices Act.

“If vertical integration is the problem, then separation — structural or functional — is the answer. If monopoly is the problem, the competition is the answer and what we have is a great big new monopoly being created by the Government."

Despite the criticisms, the Coalition, according to Turnbull, had previously indicated support for key parts of this legislation, including a proposed shift from the current access regime to a more predictable and less contentious framework which balances the interests of access seekers and carriers.

The news follows comments from Prime Minister Julia Gillard this week that the government intended to introduce its Telstra separation bill.

“We will be pursuing it and it becomes a question, really, for Mr Abbott and for Mr Turnbull as to whether they will stand in the way of this key microeconomic reform, which of course will be better for businesses, better for customers and enable the further development of the National Broadband Network,” Gillard said on ABC's Lateline program.

“And of course, since the legislation was last in the Parliament, we have entered an agreement with Telstra - and that is very significant - an agreement with Telstra which is about the delivery of the National Broadband Network and Telstra's customer base using the National Broadband Network.”

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