Cabinet Minister are divided on plans to separate Telstra

With preparations underway for the government to separate Telstra a number of key cabinet ministers have offered contrasting views on the telecommunications giant’s ownership of Foxtel.

Competition in the telecommunications sector has “been dreadful” because of the role Telstra has had in pay TV said one of the cabinet ministers. If Telstra do separate into two companies as the Government has demanded, it may, however, get to keep its stake in Foxtel according to another minister.

Australia saw a huge slowdown in competition because of Telstra’s involvement in subscription TV said Lindsay Tanner, the finance minister.

In a recent interview Mr Tanner said “(In) virtually every other developed country, the main competitor to the traditional phone network is the cable TV network. Here, the phone company owns both. It’s been dreadful for competition.”

Back in 1995 the Keating government allowed Telstra, which was than a publicly-owned company and the News Corporation that was owned by Rupert Murdoch, buy into Foxtel. This, said Mr Tanner, had been a ‘significant mistake’ on the government’s part.

Telstra may necessarily need to give up its stake in Foxtel as long as it gives in to the reform agenda laid down by the government according to Stephen Conroy, the Communications Minister.

In order for it to determine its future Telstra would require ‘flexibility’ said the minister.

Senator Conroy advised “As is clear in the legislation, the minister has the discretion not to enforce that if an acceptable form of structural separation is put forward.”

Nick Minchin the Opposition communications spokesman was not very keen on plans to separate the current telecoms incumbent, Telstra saying that plans to split Telstra would simply create a state-sponsored monopoly in Australia and would effectively ‘renationalise’ fixed line broadband services throughout the country.

Source – Brisbane Times