Australia Gets Serious About NBN, Plans to Split Telstra

September 15th, 2009 by · Leave a Comment

In the spring, the Australian government announced a sweeping broadband initiative, dubbed the National Broadband Network or NBN, which would bring 100Mbps to everyone in the country and would initially cost some AU$43B.  Since then, there has been much jockeying for position by the various players to agree on precisely how to do it, with incumbent giant Telstra seeking ways to deflect the incoming attack and perhaps turn the situation to its advantage.  Well, it didn’t work, it’s hard to imagine Telstra being happy at all right now.  Today the government followed up by proposing a sweeping telecom reform bill that does the following:

  • Requires structural separation of Telstra, cleaving the wholesale and network operations from the rest
  • Lays the regulatory framework for competition while the NBN is created
  • Strengthens consumer protections, cuts red tape, etc

While the latter two certainly have long term implications, it is the structural separation of Telstra that would have the most immediate impact.  Telstra is one of the more dominant incumbent telecoms, a parallel in the USA would be if Verizon and AT&T merged, then bought 50% ownership of Comcast.  If the government gets its way and splits it, it will be the end of an era in Australia.

And they do not mince words, the proposal would force Telstra to structurally separate voluntarily or have it done by fiat, and would restrict the company from owning spectrum for advanced wireless broadband until it happens.  Furthermore, what they mean by structural separation is that Telstra should contribute its wholesale arm and assets to the NBN, unless of course they want to spin it off and compete against the NBN without the benefits of vertical integration.

For now it’s just a bill, but it appears that Telstra doesn’t have many friends left and there isn’t much standing in the way of it.   Where exactly the NBN goes from here is an entirely different question.  It’s still in the hands of the politicians, not the engineers, so anything goes.

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