Operational separation of Telstra

The Telecommunications Legislation Amendment (Competition and Consumer Issues) Act 2005 (and subsequent ministerial determinations made under the Telecommunications Act 1997) introduced an ‘operational separation’ framework for Telstra as a statutory condition of Telstra's carrier licence.

This framework seeks to support (amongst other things) greater equivalence and transparency in Telstra’s supply of certain ‘designated’ wholesale services to other telecommunications companies.  This will provide an ongoing assurance that Telstra is not favouring its retail business units by supplying services to itself at prices which are unjustifiably lower or of a higher quality than those offered to downstream competitors.

The Telecommunications Act 1997 requires Telstra to prepare and give to the Minister for approval a draft operational separation plan (OSP) which must be directed towards the achievement of the aim and objectives of operational separation. As such, the implementation of the operational separation of Telstra is primarily the Minister’s responsibility: the ACCC’s role is essentially to monitor and report on the OSP that has been approved by the Minister. Telstra submitted its Draft OSP to the Minister on 3 April 2006, which the Minister approved on 23 June 2006.  The OSP took full effect on 1 December 2006.

Price equivalence

'Equivalent’ pricing is to be addressed through a Price Equivalence Framework (PEF) that is specified in the OSP. 

The ACCC’s Retail Pricing Protocol forms one part of the PEF that has been specified in the OSP, but it is of an advisory nature only.