Telstra’s operational separation plan approved

Federal ICT Minister Helen Coonan has approved Telstra’s operational separation plan aimed at promoting transparency and equivalence in Telstra’s supply of services to wholesale customers.

Coonan said the plan committed Telstra to the operational and organisational separation of Telstra Corporation Limited, the equivalent provision of wholesale services to Telstra’s wholesale customers and its retail business units.

“The plan is only one of three key elements to the operational separation framework with the detailed strategy documents and price equivalence arrangements completing the package,” she said in a statement.

Telstra’s operational separation strategies have also been released together with the plan while the price equivalence framework will be finalised and released on 30 June 2006, said Coonan.

“Telstra is now required to implement the strategies for service quality, information equivalence, information security and customer responsiveness, which relate to the telco’s wholesale services generally, and notional internal contracts, key performance indicators and the price equivalence framework, related to services.”

Also under the plan, Telstra is required to establish and maintain within the company separate wholesale, retail and key network services business units.

This is designed to prevent the internal functions that its wholesale customers rely upon to compete effectively with Telstra from being operated in a way that systematically advantages its retail business, she said.

Telstra is now required to have separate staff and separate premises for the Telstra wholesale and Telstra retail business units. Anyone who works for Telstra retail unit can no longer work for the wholesale unit.”

Coonan also said before making a price change to a retail equivalent of a designated service, Telstra will use a retail pricing tool to determine whether the ACCC would be likely to have concerns about price squeezing or other competition concerns under the Trade Practices Act.

“The operational separation strategies will collectively provide performance standards around the provision of Telstra’s services to wholesale customers. In particular, the strategies will ensure equivalent delivery of services to wholesale customers with Telstra’s retail units,” she added.