Kiwi experience may not apply to Australia

Telco separation debate in New Zealand much more advanced, says Ovum

Analyst firm Ovum says the operational separation of Telstra is unlikely to run as well as the parallel exercise in New Zealand.

Ovum says it is misleading to compare the Australian situation with either New Zealand or the UK, where far more preparatory consultation and discussion took place.

“The whole debate in New Zealand was much more advanced,” says Melbourne-based Ovum consultant David Kennedy. “There has been nothing like that in Australia. Our government simply established that operational separation of Telstra was a good thing in principle, but it’s never gone past that question of principle.

“Ovum’s view is that separation is always a local solution to local problems.

“Overseas policies cannot simply be copied into the Australian market, which has many significant differences to the UK and New Zealand.”

The local conditions should always be factored in when deciding how to approach the change, he says. Complicating the Australian situation is the fact that the government has committed to a huge nationwide fibre-to-the-home (FTTH) project, to run in parallel with the separation. In theory a supplier or suppliers for the network is scheduled to be chosen by the end of this year — though realistically, says Kennedy, it will probably be early next year.

Regulatory consequences will flow from that project and “folding it in” with the implementation of separation makes both more difficult.

Separation does not appear essential to success in telecoms infrastructure provision in any case, Kennedy says. “France, for example, hasn’t adopted separation as policy, but it is a FTTH leader in Europe.

“Operational separation might be implemented in Australia, but before that could happen a lot a hard work would need to be done to identify the right approach,” he says.

“The reality is that we haven’t even begun to do this work.”

However, all is not rosy — or run to its conclusion — in New Zealand, he says.

“When the New Zealand government announced its 2006 package of reforms, which included operational separation, Telecom New Zealand’s share price dropped around 30%. 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.”

The jury is still out even on the costs and benefits of the NZ separation, he says.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags TelstraseparationNetworking & Telecomms ID

Show Comments