Telstra expected ACCC concerns about structural split: Thodey

Telstra chief says the ACCC's concerns about its structural separation undertaking (SSU) "do not really come as a surprise"

The Australian Competition and Consumer Commission’s (ACCC) warning this week that it cannot accept Telstra’s structural separation undertaking (SSU) in its current form has come as no surprise according to the telco’s chief executive officer, David Thodey.

Speaking at an analyst briefing, Thodey said the ACCC’s objections were merely preliminary assessments of Telstra’s SSU and not cause for concern.

“The ACCC has raised a number of concerns but they do not really come as a surprise to us at all,” he said.

“Telstra has been in a positive discussions with the ACCCC for a number of months now and we were aware of the issues that the Commission has raised.

“I’d also like to note [ACCC chairman] Rod Sims has commented that he thinks the issues are not insurmountable.

"We too believe the issues can be resolved in away consistent with our principle of protecting shareholder value and the company will continue to work closely with the ACCC to address the concerns with a view to obtaining acceptance to the structural separation undertaking and draft migration plan before the AGM on 18 October 2011.”

Thodey said if the ACCC’s concerns could not be resolved Telstra may still press ahead with its shareholder approval vote.

“However, commencement of the definitive agreements with the NBN CO and the Commonwealth would still be subject to acceptance by the ACCC of the SSU and approval of the draft migration plan,” he said.

Earlier this week, Sims said the ACCC’s view was that the SSU that had been provided by Telstra did not address legislative requirement, and had a number of issues, such as not having a compliance plan to meet Telstra’s commitment to be structurally separated from 2018 — a mandatory requirement established in the separation legislation.

“The ACCC’s main area of concern, however, relates to the adequacy of Telstra’s proposed interim equivalence and transparency measures,” he said.

In a discussion paper on Telstra’s SSU and draft migration plan, the ACCC said that the interim equivalence and transparency measures are not supported by a clear and enforceable commitment to an ‘equivalence of outcomes’.

These outcomes will enable wholesale customers and Telstra’s retail businesses to access key input services of equivalent quality and functionality.

Further, that agreements subsequently negotiated between Telstra and NBN Co could potentially gain the benefit of a legislative authorisation — exemption from competition laws — without undergoing further ACCC scrutiny.

The provisions against Telstra promoting wireless services as substitutable for NBN Co’s fibre services and the limitation on Telstra’s ability to provide HFC services to new channel providers also militated against the ACCC accepting the undertaking.

Follow Tim Lohman on Twitter: @Tlohman

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