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The Sydney Morning Herald

Government looks at split Telstra, an idea it hates

Author: Cosima Marriner
Date: 12/12/2002
Words: 394
          Publication: Sydney Morning Herald
Section: Business
Page: 29
Communications Minister Senator Richard Alston has ordered an inquiry into splitting Telstra in half and selling its service businesses a proposal the Government claims that it completely opposes.

The Government-controlled House of Representatives Committee on Communications, IT and the Arts yesterday agreed to inquire into the mooted structural separation of Telstra.

Structural separation is one of the key proposals that Labor is toying with as an alternative to the Government's plan to privatise Telstra. Labor raised the concept of selling profitable arms, such as mobiles, and retaining majority government ownership of the network in its Reforming Telstra discussion paper issued in May.

The Government, which opposes any structural separation of Telstra, is confident the inquiry will expose the deficiencies of such a policy. ``It will show up what we believe is a pretty weak policy," a spokesman for Senator Alston said.

The Shadow Communications Minister, Labor's Lindsay Tanner, called the inquiry a ``major backflip" and welcomed ``the Government's move away from its obsession to privatise Telstra to consider alternatives".

The Government is adamant that the findings of the inquiry won't change its opposition to structural separation. Treasurer Peter Costello has indicated the Government hopes to introduce legislation for the full sale of Telstra into Parliament early in the new year. The structural separation inquiry will not conclude until August at the earliest.

The inquiry will examine the potential impact separation would have on the efficient provision of services (particularly to the country), ongoing investment in new infrastructure, and Telstra's ability to continue to provide a full range of phone and data services. It will consider the wider impact of structural separation on the telecommunications industry and the regulatory regime. It will also assess the impact on Telstra's value, its shareholders and the Commonwealth budget.

Meanwhile, the Australian Communications Authority reported that telecommunications service improved last year a finding at odds with its recent survey which revealed consumer dissatisfaction with services had doubled in the same period.

The ACA reported Telstra is meeting the standard for connecting services and repairing faults in 91 per cent of cases. Optus is meeting the required standard 95 per cent of the time.

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