Regulator wants Telstra to be split

Australian competition watchdog Graeme Samuel has called on the Rudd government to split the country's largest telecom company Telstra and undo the mistakes of the past. He said the government should split the company's wholesale and retail businesses.

Speaking at a conference in Canberra, the chairman of the Australian Competition and Consumer Commission said Australia's competition in the Australian telecom space had been considerably constrained by the structure of Australia's largest telco. He added that this was one of the most important regulatory issues facing the Australian telecommunications industry.

He said there were "fundamental errors" that have had very serious implications for competition in telecommunications.

He added that the NBN project provided an opportunity to undo the mistake of the previous governments that handed over control of both the copper network and its retail operations to Telstra.

"The ACCC considers these decisions to have been fundamental errors that have had very serious implications for the development of competition in the telecommunications industry,'' he said.

The watchdog and Telstra have long been at loggerheads over regulatory issues related to the Australian telecom industry.

Analysts believe that exist of former Telstra chief Sol Trujillo known for his abrasive approach will finally end the protracted standoff between the two. David Thodey, who took over the reins at Telstra from Trujillo is said to be better disposed towards Canberra.

Thodey is expected to push a more conciliatory line towards ACCC but the battle between Telstra and the watchdog has not yet come to an end. The telco has appealed its third knock-back from the ACCC over the network access prices it wants to charge rivals.

At the Australian Telecommunications Users Group regional conference yesterday, Samuel said that since 1997, there have been 157 telco access disputes with judicial review being sought for almost all decisions over the past 24 months.

Speaking about the NBN project he told the conference, "Covering 90 per cent of households, the Australian fibre-to-the-premises network will easily eclipse what is currently the world's most broadly available network, in South Korea, which has a penetration rate of 45 per cent. The next three largest, in terms of penetration are Hong Kong and Japan, both with close to 30 per cent, and Taiwan with 16 per cent."

Samuel added that the $43 billion network was "the most momentous policy initiative in the Australian telecommunications sector since the introduction of full competition over a decade ago."

However, Samuel came in for criticism from opposition communications spokesman Nick Minchin who said Samuel was speaking out of turn.

He said that Samuel, was a regulator and not a telecommunications expert, and at the end of the day he did not have to pay for the network. He added that the Australian taxpayer finally paid for the network.