Ballsy move by Australian government, i've got to say i'm actually impressed
Yesterday evening the Australian government announced major telecoms reforms. The dominant operator Telstra will structurally separate under its own steam, or the government will step in and do it anyway. Simon Kearney and Guy Daniels report.
Political double-speak was at fever pitch this week as the Australian Government proposed a “voluntary” break-up of incumbent Telstra, backed by laws that will lock the US$37billion giant out of wireless spectrum sales if it does not comply.Australia’s Communications Minister Stephen Conroy is well-versed in his political party’s tradition of doing the deal first and having the debate later – and this is clearly how he intends to deal withTelstra. Announcing new legislation the Labor Party Senator said: “It is the government’s clear desire for Telstra to structurally separate, on a voluntary and cooperative basis.”And then came the sting, in the background paper: “Telstra will be prevented from acquiring additional spectrum for advanced wireless broadband while it: remains vertically integrated; and owns a hybrid fibre coaxial cable network; and maintains its interest inFoxtel.” The deal was done.
Telstra can sign an enforceable agreement with the Australian Competition and Consumer Commissioner by the end of the year to break itself up or face so-called “functional” separation under legislation that would force its network and wholesale operations to work at arms length from the rest of the company.
Telstra’s new CEO David Thodey expressed “disappointment” and a willingness to discuss “options around separation”. But it seemed Telstra was caught like a rabbit in the headlights. Colourful former CEO Sol Trujillo might have come out swinging but he is long gone.
Like i said - pretty gutsy move.