Labor talks tough on Telstra

Labor communications spokesman Stephen Conroy has unveiled some further details of how a Labor government would implement its broadband policy – and Telstra won’t be happy.

In an interview with The Australian, Conroy reveals that Labor will take a more hardline approach to the operational separation of Telstra’s wholesale and retail components.

“We’ll get rid of it and start again,” Conroy said. “We’ll have a tougher operational separation regime.”

Industry commentators are in almost universal agreement that a greater degree of separation between Telstra’s retail, wholesale and network operations is required if we are to have a properly functioning market for telecommunications services in Australia.

Earlier this year, Communications Minister Helen Coonan quickly backed down after suggesting the expert panel she established to consider tenders for building a broadband network in Australia would look at a more dramatic structural separation of Telstra.

In short, the more robust the separation, the less able Telstra is to leverage its ownership of telecommunication infrastructure to increase its retail profits. It will not be happy about any changes that diminish its ability to do so.

But Conroy didn’t stop there. He also said Labor would seek to use its promised $4.7 billion contribution to a new broadband network to help increase the competitive structure of the market. The underlying message: If Telstra doesn’t agree to separation, Labor will look strongly at non-Telstra bids if it thinks they will improve competition.

And Conroy made it clear that $4.7 billion would not go in the form of a direct subsidy to whoever builds the fibre-to-the-node network. Instead, Labor would put its money into a private/public partnership with the builder of the network, and, Conroy says, will be pursuing a return on its investment.

And, in a final blow to Telstra, Conroy said its much-hated foe, the Australian Competition & Consumer Commission, will be responsible for setting prices for the new broadband network.

If these comments had been made three months ago, Telstra would probably have responded with all guns blazing. But now, with two weeks to go until an election that all the polls say Labor is likely to win, we will probably hear barely a peep. Helen Coonan, the target of so much Telstra bile over the past year, could be forgiven for thinking that life is just a little unfair.