Australia: head of competition authority calls for the break-up of Telstra

COMPETITION watchdog Graeme Samuel has urged the Rudd Government to "undo the mistakes" of the past by splitting Telstra's wholesale and retail businesses.

Mr Samuel said these "fundamental errors" had very serious implications for competition in telecommunications.

Speaking at a Canberra conference yesterday, the chairman of the Australian Competition and Consumer Commission said the structure of Australia's biggest telco had significantly constrained competition and been one of the most substantial regulatory issues facing the Australian telecommunications industry.

"The NBN project raises the opportunity to undo the mistakes made by previous governments that decided to leave Telstra in control of both the copper network and its retail operations," he said.

"The ACCC considers these decisions to have been fundamental errors that have had very serious implications for the development of competition in the telecommunications industry."

The ACCC has long been locked in a regulatory war with Telstra.

Mr Samuel's former sparring partner, former Telstra boss Sol Trujillo, formally handed over the reins to new chief David Thodey this week.

Mr Thodey is expected to take a more conciliatory approach but the battle between Telstra and the watchdog continues, with the telco appealing its third knock-back from the ACCC over the network access prices it wants to charge rivals.

At the Australian Telecommunications Users Group regional conference yesterday, Mr Samuel said there had been 157 telco access disputes since 1997, and judicial review had been sought of "almost all" of the ACCC's final decisions over the past 24 months.

He said powers for the ACCC to set access conditions upfront, as canvassed in a federal government discussion paper into regulatory reform, could help address "some of the gaming that has occurred in recent years".

Mr Thodey has said Telstra will work through the discussion paper, and he was looking to see what will be the best outcome for Telstra.

The debate over whether Telstra's businesses should be split was taken to a new level when the Federal Government announced a regulatory overhaul of the sector last month, alongside its plan for a $43 billion national broadband network.

Submissions on its discussion paper are due in less than two weeks.

Opposition communications spokesman Nick Minchin used his appearance at yesterday's conference to call for a Productivity Commission inquiry into Australia's broadband market.

Senator Minchin's comments came after he last week flagged his intention to introduce a Bill to ensure proper assessment of the NBN, following his sparring with Communications Minister Stephen Conroy about whether a cost benefit analysis is needed.

Senator Conroy said Access Economics and IBM research showed the economic benefits of investing in the network -- including the expected creation of at least 33,000 jobs by 2011.

Fix Telstra now, says ACCC's Graeme Samuel