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Telstra lodges Structural Separation Undertaking and Migration Plan with ACCC
Telstra today announced it had submitted its Structural Separation Undertaking (SSU) and Migration Plan with the Australian Competition and Consumer Commission (ACCC).
Telstra CEO David Thodey said in line with the Government’s desired policy outcome and the Definitive Agreements signed with NBN Co and the Commonwealth in June, the SSU committed Telstra to structural separation over the period of the National Broadband Network (NBN) rollout.
“The submission of these documents is another important step in finalising Telstra’s participation in the rollout of the NBN,” Mr Thodey said.
“Along with seeking shareholder approval, ACCC acceptance of the SSU and approval of the Migration Plan are critical conditions precedent to the Definitive Agreements signed in June.”
Telstra understands the ACCC will soon commence a public consultation on Telstra’s SSU and Migration plan.
Telstra has submitted the SSU under the legislative regime put in place by the Government to facilitate the rollout of the NBN. The SSU fulfils two roles:
- it commits Telstra to structural separation by 1 July 2018. This will occur through the progressive disconnection of fixed voice and broadband services on Telstra’s copper and HFC networks, and subsequent migration of these services onto the NBN; and,
- it sets out the various measures which Telstra will put in place to provide for transparency and equivalence in the supply of regulated services to its wholesale customers during the transition to the NBN.
Consistent with the Government’s decision to frame structural separation as an alternative to functional separation for Telstra under the legislative scheme, the Interim Equivalence and Transparency measures in the SSU do not constitute functional separation
“We believe the interim equivalence and transparency commitments, which are binding and court enforceable, offer substantial and practical improvements in areas of known industry and regulator concern. These commitments will provide faster resolution of perceived issues and will reduce unnecessary administrative costs for all parties,” Mr Thodey said.
“Importantly, the SSU delivers robust, effective and appropriate equivalence and transparency during the migration period in a way that avoids the complexity, cost and industry disruption that would be caused by functional separation.”
The interim Equivalence and Transparency regime includes:
- The publication of a rate card for fixed line access services, which will be made available to all access seekers who are buying new services after the commencement of the SSU;
- Equivalence reporting of input costs based on the Telstra Economic Model (TEM), the primary management accounting system used internally by Telstra for its own business planning purposes, and a commitment to allocate costs equivalently between retail and wholesale business units;
- An expanded set of specific non-price equivalence commitments targeted at known areas of concern which reach beyond the current Operational Separation regime;
- The option for automatic wholesale service level rebates where Telstra fails to meet a committed functionality and availability service level metric for wholesale customer IT systems;
- The creation of an Independent Telecommunications Adjudicator (ITA), based on the successful United Kingdom model, whose appointment and charter will be approved by the ACCC;
- A fast track complaint resolution process via the ITA, who will have the power to quickly and conclusively resolve equivalence complaints within 6 weeks without regulator or court involvement.;
- New internal ring fencing obligations governing the permitted functions and interactions of staff in ‘retail’, ‘wholesale’ and ‘network services’ business units.
Unlike the existing operational separation rules, the provisions of the SSU are directly enforceable by the ACCC in the Federal Court. If the Court finds that Telstra has breached the SSU, it may impose a wide range of remedies to address the breach.
Telstra has also lodged its Migration Plan with the ACCC for approval. The Migration Plan is a binding instrument which sets out the steps Telstra will take to disconnect voice and broadband services on its copper and HFC networks as part of the migration process.
Importantly, the Migration Plan gives wholesale customers control over the timing of the migration of their end users’ services to the NBN. They will be able to lodge orders to cancel services at any time before the required disconnection date so they can be aligned with any related connection orders the wholesale customer has with NBN Co. This enables wholesale customers to coordinate connection and subsequent disconnection themselves, in a way that maximises service continuity for their end users.
Summaries of the Structural Separation Undertaking and the Migration Plan are attached. The SSU and Migration Plan, along with a detailed explanatory of the SSU, have been lodged with the ASX and are available on request.
Reference Number: 218/2011
Related information
Documents
- ssu-and-mp-briefing-summaries.pdf (PDF, 91KB)
