Regulators put telcos under the lens

Regulators more willing to put telcos under the lens

Presently attempting to work through a large backlog of articles. The article that is the basis of this post continues to keep the spotlight on the regulatory changes being proposed for Telstra. Australia’s incumbent operator is squarely in the sights of Australian regulators:

Australia’s competition watchdog said imposing a tough structural separation regime on Telstra Corp. (TLS.AU) is the only way to guarantee an equal playing field during the transition to a planned multibillion dollar national broadband network but the company argues there’s no need for such a move.

This calls for looking at regulatory issues comes while Australia attempts to roll out the $43 billion NBN:

“The ACCC is of the view that structural separation of Telstra is the only framework that will ensure equivalence in access during the transition to the NBN and is the only form of separation consistent with the type of wholesale-retail market structure the Government envisages for the NBN environment of the future,” the watchdog said in a submission to a government review of current telecommunications regulations.

In recommending a structural separation of Telstra, ACCC appears to go a step further than other jurisdictions that have imposed functional separation on their dominant telcos in recent times.

In New Zealand, the government in 2007 required former state-owned monopoly Telecom Corp. of New Zealand Ltd. (TEL.AU) to undergo a three-way functional split into wholesale, retail and network divisions.

This followed a model adopted by U.K. telecoms regulator Ofcom in the case of BT Group PLC (BT) several years earlier.

The Aussies propose to go even further:

However, under the ACCC’s structural separation model, the split of Telstra would go even further, requiring a legal separation of Telstra’s assets and activities into separate corporate entities with entirely separate owners and shareholders.

Of course, all of this is necessary because politicians deem it necessary to achieve certain outcomes:

Communications Minister Stephen Conroy said Friday that regulatory reform is “urgently required” to deliver better outcomes for consumers.

In uncharted waters, policymakers have to consider all pragmatic solutions:

The center-left Labor government doesn’t yet have a “predetermined view or a preference” on the degree of regulatory reform required, a government spokesman said.