The nation’s largest telco Telstra has filed two key documents with the national competition regulator which will pave the way for the final conclusive step in its decades-long journey from Australia’s telecommunications monopolist to an equal player in the telco landscape.
The first document, the Structural Separation Undertaking (SSU), commits Telstra to full structural separation of its wholesale and retail business units by July 2018. In practice, this separation will take place through the progressive disconnection of fixed voice and broadband services on Telstra’s copper and HFC networks and migration of those services onto the National Broadband Network fibre network as it is rolled out.
In addition, the SSU sets out the measures which Telstra will put in place to provide transparency in the supply of services to its wholesale customers during the NBN transition period over the next decade, as well as providing equivalence in the delivery of services — for example, allocating the same terms to rival ISPs such as Optus, iiNet, Internode and TPG as it does its own retail division, which typically operates under the ‘BigPond’ brand.
The Migration Plan, in turn, sets out the process which Telstra will follow when disconnecting customers from its copper network during the transition to the NBN (but not the process of connecting customers to the NBN, which Telstra says is a matter for NBN Co and each individual ISP).
Importantly, the migration plan prohibits Telstra from supplying a new copper-based telecommunications service to a premise where it can be shown that that premise is capable of connecting to the NBN (except for certain services in the early period of the NBN rollout).
In a statement, Telstra chief executive David Thodey backed the proposals which his company today filed with the Australian Competition and Consumer Commission, which is expected to shortly kick off a public consultation on them.
“We believe the interim equivalence and transparency commitments, which are binding and court enforceable, offer substantial and practical improvements in areas of known industry and regulator concern. These commitments will provide faster resolution of perceived issues and will reduce unnecessary administrative costs for all parties,” Thodey said.
“Importantly, the SSU delivers robust, effective and appropriate equivalence and transparency during the migration period in a way that avoids the complexity, cost and industry disruption that would be caused by functional separation.”
A full copy of both documents has been requested from Telstra. According to a statement summarising the pair, Telstra’s SSU includes a number of stipulations which will change the way the rest of the telecommunications industry deals with the company in the interim period while the NBN is being implemented. For example, it calls for:
- The publication of a Telstra rate card for fixed line access services
- Equivalence reporting of input costs based on Telstra’s internal economic model and a commitment to allocating costs equivalently between the company’s retail and wholesale business units
- An expanded set of non-price equivalence commitments targeted at “known areas of concern”
- An option for automatic wholesale service level rebates where Telstra fails to meet certain service levels when dealing with its wholesale customers
- The creation of an Independent Telecommunications Adjudicator (ITA), which will mediate disputes between industry players, based on a similar model in the UK. This new player will have the power to resolve disputes within six weeks without the involvement of the ACCC or the courts
- New internal divisions between Telstra staff in its different wholesale, retail and network services business units.
The migration plan likewise contains a number of different aspects, focusing on the timing of services to be disconnected and how customers are notified, for example. Telstra noted in a summary of its Migration Plan that a number of processes — such as how it mass-disconnects services in regions which have not voluntarily migrated to the NBN already — have not yet been developed.
Overall, the separation of Telstra will represent a process which many in the telecommunications industry have been calling for for years. Various senior Labor figures — as well as much of the industry, including number two player Optus — have openly stated over the past few years that they believe the then-Howard Government got deregulation wrong when the market was opened up to full competition in 1997; with some believing Telstra should have been separated at that point.