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The waiting game continues over bill to split Telstra

News Clippings Ari Sharp, Sydney Morning Herald, February 22 2010

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TELSTRA shareholders awaiting information on government decisions affecting the company’s future would be best advised not to hold their breath.

For the past month the government has signalled that this would be the week in which legislation to split the company would come before the Senate.

But the debate on the bill has been pushed back to Thursday and might miss out altogether if debate on the private health insurance rebate bill is as drawn out as expected.

Even if debate does start this week, the earliest conceivable time for a vote is in the fortnight of sittings beginning on March 9.

The legislation, which would compel Telstra to separate its wholesale and retail businesses or be denied valuable spectrum, has been proposed amid discussions over Telstra’s involvement in the $43 billion national broadband network.

There are conflicting views on the government’s best approach to the legislation. One school of thought is that the delay is far from accidental.

With the numbers in the Senate uncertain, the continued delay means the government can use the threat of separation as leverage in its talks with Telstra.

Were it to come up for a vote and fail, the government’s negotiating position would be weakened.

But the counter argument is that the government would rather bring it up for a vote. Ideally, from its perspective, the legislation would be passed.

But even if it failed it would give the government a political weapon against the opposition, which it could accuse of stymying reform.
With the numbers in the Senate finely balanced, the government needs seven extra votes for the bill to pass and can be confident of winning the support of the five Greens and the independent Nick Xenophon.

The Family First senator Steve Fielding appears opposed, based on his sympathy for the company’s 1.4 million shareholders.

The Nationals Barnaby Joyce and Fiona Nash are looking less likely to come to the government’s rescue.

Raising the pressure to support the bill, on Friday senators received a letter co-signed by the Australian Communications Consumer Action Network, the Competitive Carriers Coalition and iiNet.

“Australian consumers deserve and need these reforms, none more so than those in regional Australia,” the letter read. “These Australians have been let down repeatedly by policies that have sought to paper over the symptoms of poor competition without addressing the root causes.”

As for the broadband negotiations, Telstra and the government have recently given indications that they are some distance from conclusion.

“We are continuing to negotiate an incredibly complex, enormous set of regulatory changes,” the Communications Minister, Stephen Conroy, told ABC radio on Friday.

“We’ve never put a deadline on it. We’ve never said there’s a drop-dead walk away time.”

The tone was similar to that taken by Telstra when it delivered its half-year results on February 11, when David Thodey signalled that the discussions could go on for another six months.

“I have to stress, these are very complex considerations,” he said. “We need to move slowly and very deliberately.”