Stephen Conroy, Minister for Communications, has released a draft of how Telstra should undertake its structural separation.
The Structural Separation Undertaking (SSU) is designed to specify how Telstra will cease to control the supply of fixed-line services by July 2018.
Currently, Telstra owns the majority of copper lines in the ground that connect most businesses and residential buildings to phone and internet services. Over the years, other telcos have put their own networks down, but they are not on the same scale.
Under the draft guidelines released by Conroy, the nation’s largest telco will have to progressively decommission its network once an area is fully connected to the National Broadband Network (NBN), or come up with its own migration plan.
“Telstra’s structural separation is a critical reform that will enable the telecommunications sector to provide competitive and innovative services to Australian consumers,” said Conroy.
The document is open for public comment for two weeks, after which it will be submitted to the Australian Competition and Consumer Commission (ACCC).
Given that Telstra owns 50% of Australia’s largest Pay TV provider, Foxtel, there is also instruction that users of the cable service would have their internet service migrated to the NBN.
This would mean that Telstra’s HFC network (commonly referred to as ‘cable’) would only be providing subscription television.
The separation of Telstra was made possible by an amendment to the Telecommunications Act in November of last year. At the time, David Thodey, CEO of Telstra, mailed out a letter to shareholders assuring them that it would not involve an artificial and expensive split of the wholesale and retail parts of the company.
“In my guidance to the ACCC, and under the reforms passed late last year, I have made clear that the ACCC must not accept a structural separation undertaking unless it is satisfied Telstra will put in place appropriate and effective transparency and equivalence arrangements during the transition to structural separation,” continued the Minister.
Prior to this, in June 2010, Telstra made an agreement with the government under former Prime Minister Kevin Rudd to effectively sell its copper and HFC networks for $11 billion – enabling the shutdown.
The only people Telstra will be able to continue providing fixed-line services to is the 7% of Australians that won’t be in NBN coverage areas, under the guidelines.
During the transition period, while the NBN is still being rolled out, Telstra will not have to change the way it provides wholesale services.
At present, the telecommunications giant sells phone and internet services over its copper networks to rival providers like Optus, iiNet, Internode and a host of others – while giving a discount to Telstra Retail.
“It is important industry is able to access Telstra’s copper network on a transparent and equivalent basis during the period Telstra is migrating customer services to the NBN,” added Conroy.