Further separation of Telstra's network and retail businesses could seriously damage Australia's telecommunications industry, a leading independent analyst has warned.
Most submissions on the Government's plans for a national broadband network have demanded that the company that wins the rights has separate network and retail businesses.
Many of
the submissions say separation of the company that builds and operates the network would be required to ensure effective competition and the best deal for consumers.
But David Kennedy, an analyst with telecommunications advisory firm Ovum, says "naive approaches to the issue of Telstra separation could do serious damage" to the industry in Australia.
"Ovum's view is that separation is always a local solution to local problems," Kennedy said. "And it is not essential to success. France, for example, hasn't adopted separation as policy, but it is a fibre-to-the-home leader in Europe."
Telstra has already undertaken a form of operational separation, where its wholesale and retail arms have been "separated" but are still owned by the telco. It has argued against further separation of its structure.
Kennedy said when the New Zealand Government announced its 2006 package of reforms, which included operational separation, Telecom New Zealand's share price dropped around 30 per cent.
"Separation made a major contribution to that drop, and it's too early to say whether the cost of separation will generate compensating benefits. At the very least, it is going to take years. If we saw a similar drop in Australia, it would crimp Telstra's capacity to invest in new networks and technologies. This could have the perverse effect of delaying investment in new broadband infrastructure."
There are at least seven bidders for the project which will provide high-speed internet to at least 98 per cent of the population.
The Government has set aside A$4.7 billion to build the network, with the winning bidder to invest the rest, which is expected to be at least double that figure.
- AAP
