Operational separation of Telstra

Operational separation framework1 December 2006

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 sought to provide (amongst other things) greater equivalence and transparency in Telstra’s supply of certain ‘designated’ wholesale services to other telecommunications companies, in order to provide ongoing assurance to these companies, the Minister and the ACCC that Telstra did not favour 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.

Telstra was required under the Telecommunications Act 1997 to prepare and give to the Minister for approval a draft Operational Separation Plan (OSP) directed towards the achievement of the aim and objectives of operational separation. Telstra submitted a draft OSP to the Minister on 3 April 2006, and it was approved by the Minister on 23 June 2006. The OSP took full effect on 1 December 2006.

The ACCC’s role under the OSP was to monitor Telstra’s performance, in terms of Telstra ensuring the delivery of high quality wholesale services (including a requirement to provide equivalent access to network information) and delivering equivalence in operational and technical quality of designated services.  The ACCC had no direct enforcement powers in relation to the OSP and was required to report any breaches of the plan to the Minister.

Upon coming into force of Telstra's Structural Separation Undertaking on 6 March 2012, the operational separation regime ceased to operate.