ABC Channel 2 - Possible structural split in Telstra

ALAN KOHLER: Well, the contentious and potentially expensive idea of forcing Telstra to separate its retail business from its infrastructure surprisingly lurched back into the headlines this week. Twice Communications Minister Helen Coonan said that the Federal Government's expert panel examining who should build the new national high speed broadband network would also have to investigate a split of Telstra, as well, or structural separation, as it's called.

I spoke to Senator Coonan about this week's escalation of tensions with Telstra.

Well, Minister, in talking about structural separation of Telstra this week, were you just kind of thinking out loud or were you announcing a change in Government policy?

HELEN COONAN: Well, certainly neither. I think that this story has really got ahead of itself, and people are getting a bit excited about nothing. This argument about structural separation has been going on for about 15 years since Labor first corporatised Telstra, and it's been looked at in great detail by my predecessor and by Labor.

However, what is clearly the case and has been the case since I announced an expert task force to look at the proposals to build a fibre to the node in capital cities and in metropolitan centres, by implication some proposals may test these arguments. Quite clearly they would test these arguments if anyone other than Telstra were to be recommended to undertake that bill.

ALAN KOHLER: Yes, but the Government has been implacably opposed to structural separation of Telstra all along, including yourself. In 2005 you said that structural separation could not be considered under any circumstances. Now, you do seem to be changing your mind and saying it must be considered in some circumstances.

HELEN COONAN: Well, look, the circumstances in this portfolio practically change over a weekend. If you goto sleep on a long weekend it will be different on Tuesday morning, so my comments, I think, are perfectly valid in the context of the privatisation of Telstra. I mean, quite clearly, the egg was scrambled once you undertake a privatisation process, and the process needs to be completed.

ALAN KOHLER: The Government also signed off on the prospectus of T3 in which the Government promised there would be no adverse changes to regulation. It's possibly illegal for you to change your mind on that, as well.

HELEN COONAN: Well, not necessarily, but I mean clearly we wouldn't be doing anything that would be illegal or otherwise not appropriately disclosed in general terms in the prospectus.

But, as I've said very clearly, we have no current intention to unilaterally require structural separation of Telstra. Now, I've said that clearly, and I have also said, as is clearly the case, that an expert task force may be required to test these arguments in the context of a proposal by anyone other than Telstra to undertake a whole new fibre build.

ALAN KOHLER: But isn't it the case, as you kind of said, that if somebody other than Telstra is to build a fibre to the node network, so there is competition, that some sort of regulatory change has to be imposed on Telstra so that they can connect to Telstra's copper, last mile of copper.

HELEN COONAN: Well, I'm quite sure that irrespective of who is looking, which Government might be looking at this, you've clearly got to look at the circumstances of those arrangements, but this is something for the expert task force. The legal implications are clearly something that the task force needs to take into account. We don't yet know what any proposal will contain, and so I'm not going to be speculating about it.

ALAN KOHLER: In general, what's your attitude towards Telstra's fairly pugnacious attitude at the moment?

HELEN COONAN: Well, look, I think that the issue with Telstra at the moment is that, as I've said over the last couple of days, I think it's a great shame that they're actually missing commercial opportunities with this pugnacious view of the world that they're currently taking. They're missing an opportunity to engage not only with broader customers, but perhaps with their own shareholders.

I mean, what is their growth story here? They've missed out under a strange set of circumstances whereby they, apparently, were prepared to put in a non-compliant bid. They missed out on a billion dollars in the new wholesale network. They say that they're very happy with the fact that there won't be regulation of ADSL2 plus, yet they are not turning on 480 exchanges that would roll out fast broadband, up to 20 megabits per second, in 480 exchanges across the country.

So, you know, they have a very strange attitude, I think, to making new investment, and this recent outbreak from Telstra has all been about their insistence that they can turn off the CDMA network on the 28th of January in circumstances where what the Government requires is a safeguard that if the - if they, Telstra doesn't stand up to its promise that the new Next G network will provide equivalent or better coverage it won't be turned off.

So, really, these arrangements that we have can be difficult, but I've certainly urged Telstra to get on with it, get on with servicing customers, rolling out services, and that's really ultimately what counts.

ALAN KOHLER: Do you regard them as a rogue company?

HELEN COONAN: Well, look, I think some of the aspects of - or some of the spokespeople on behalf of Telstra ramp up the rhetoric to absurd levels. It's not necessary, and I think what they need to do is to look after their shareholders interests by engaging in commercial opportunities that are available in this country to undertake investment.

It's not the Government holding them back, it's this attitude, and I've just given you a couple of very specific examples where they're simply eschewing commercial opportunities and prefer to keep up the rhetoric.

ALAN KOHLER: Thanks for joining us, Senator Coonan.