Competition watchdog says Telstra shouldn't fear operational split

The Australian Competition and Consumer Commission (ACCC) chairman Graeme Samuel yesterday said Telstra's has nothing to fear from the introduction of new regulations to split the telco's wholesale and retail operations.

Samuel said Telstra's aggression over the new regulations wasn't helping its cause.

However, under the new rules Telstra will be forced to split its wholesale business from its retail arm subjecting the telco to an even tighter regulatory framework.

It is part of a $3 billion sweetener by the federal government, approved by the coalition last week, to help get its Telstra sale legislation through parliament. Speaking on the Nine Network's Business Sunday program Samuel gave Telstra a "15 out of 10 for aggression."

"My own assessment, for whatever it's worth, is probably about three out of 10 for effectiveness," he added.

Samuel said the new regulation model had been designed to balance the interests of Telstra with those of promoting competition in the sector. He said the new system would create greater certainty for Telstra which would benefit shareholders.

"All it is about is providing much greater transparency in the way that Telstra deals with its own retail business and its other wholesale customers," he said.

"If we accept the fundamental rule, which is that Telstra should not behave anti-competitively, then Telstra has nothing to fear from the regulations."

A working party made up of representatives of Telstra, the ACCC and the government will work through details of the rules in the coming months.

Meanwhile, the government is struggling to get full coalition support for the Telstra sale with Queensland Senator Barnaby Joyce still not willing to back privatisation even in the wake of the $3 billion sweetener.

At the same time Liberal back bencher Alby Shultz told Computerworld last week he will abstain from voting on the legislation which will allow the government to sell its remaining 51.8 percent stake in the telco.

Prime Minister John Howard could shore up support in the senate through the Australian Democrats or Family First senator Steve Fielding.

But Democrats leader Lyn Allison said yesterday there was no chance that any Democrats senator would support the full privatisation of Telstra under the current deal.

Allison said the Democrats would prefer keeping the telecommunications network in public hands.

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