The regulatory discussions taking place in Australia in relation to structural separation do offer a good insight into the underlying issues that.
Let’s to step back to review this situation.
The reason the Australian government came down hard on Telstra was because, under its previous management, it had become clear to the government that Telstra had become so powerful that it believed itself to be above the law. No government should tolerate such a situation and therefore had to be firm and say, enough is enough. If Telstra had been more cooperative over the last five years there would have been little need for any forced structural separation. But without that cooperation structural separation became part of the extended NBN policy which the Australian government introduced in April 2009.
While all of the telecoms policies are intertwined, we now need to look at the NBN policies in a separate way. From the beginning, the Australian government rightly decided to aim for structural separation between the infrastructure to be developed from scratch, and services. The infrastructure here is not just for telecoms services, but will also be for e-health, education, smart grid and the digital economy. This trans-sector concept is something that most visionary people in the industry share. Therefore it didn’t come as a surprise, for example, that David Thodey, the new CEO of Telstra, supported this concept from day one. The concept is also actively supported by KPN in the Netherlands and promoted by organisations such as the OECD and the ITU.
So in the long term, and based on that trans-sector approach, most leading people in the industry accept structural separation.
The crunch now is, how to get from here to there.
In most countries the current situation is still very much along the lines of vertical integrated telcos and this remains a major obstacle. There simply is not enough margin for the many other players in this market. Surely this is evidence enough that something is structurally wrong within this industry. The reason we are in this mess is because in 1997 the previous government introduced a self-regulatory regime for the telco industry, this led to indecisiveness and lengthy delays. The problem for the regulator is that, in order to come up with some good interim regulations, they first need to have an idea what the future might be
So how do we implement this transition?
There are increasing signs of industry cooperation and that offers an opening towards new solutions. Any decision to bring the whole telecoms picture together will be based on a complex combination of the old and new telco worlds. In general terms the end result needs to include a position for the incumbents within the NBN policy that will allow them to thrive, together with a commitment from them to change their wholesale structures in anticipation of the structurally separated environment that it will ultimately end up with.
Such a commitment from the incumbents needs to be acceptable to its wholesale customers and then needs to be implemented in such a way that it is easily enforceable by the regulator. Many in the telecoms industry will say this cannot be done, but we currently do have a situation where this is actually possible. As long as the outcome for the telecoms industry is the same as what would be achieved through structural separation, this separation in itself is not a big issue.
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