Competition more important than share price

1. The strengthening of telecommunications competition prior to the sale of Telstra should be the Government's overriding consideration in the lead up to the proposed sale of Telstra. The long term national interest and not the T3 share price should be the Government's priority.

Operational separation

2. Before Telstra is privatised, it must be restructured so that there is a genuine commercial separation of Telstra's wholesale and retail operations to ensure Telstra's operations deal with each other on the same basis as it deals with its competitors.

3. Any service Telstra Wholesale sells to Telstra Retail must also be available for sale to Telstra's competitors. Pricing must be transparent. Negotiations between Telstra Wholesale and Telstra Retail must be conducted on a genuine arm's length basis. Telstra Wholesale and Telstra Retail must prepare accounts on the basis of the quantities of services sold by the Telstra wholesale to Telstra Retail, and the price at which they are sold.

4. The management and governance of Telstra Wholesale must be adequate to ensure its managerial and operational independence from the rest of Telstra. This should include physically separate premises and IT systems; personnel employed exclusive to Telstra Wholesale; and mechanisms to ensure that the executive leadership team of Telstra Wholesale acts only in the interests of Telstra Wholesale, free of pressure from other parts of Telstra.

5. If follows that employees of Telstra Wholesale would have the incentive to maximise the sales and profits of Telstra Wholesale and be remunerated on that basis.

6. The activities of the Telstra Wholesale, and of Telstra Retail, must be subject to regular, detailed monitoring and review by the ACCC.

Non discrimination

7. There must be an explicit legislative prohibition on Telstra discriminating in favour of Telstra Retail, as compared to Telstra's competitors who purchase wholesale services from Telstra, on such dimensions as quality and availability of service, connection times and repair times.

Rural telecommunications funding

8. Any program to allocate public money to provide additional telecommunications services in rural and regional areas should be designed to actively encourage greater competitive entry. There must be specific measures to prevent the funds being allocated disproportionately in favour of Telstra.

9. Telstra's competitors must be released from the requirement to pay a cash cross subsidy to Telstra to fund its universal service obligation, given that the current anachronistic arrangements act to suppress rather than stimulate competition in rural telecommunications.

Stimulation of competitive broadband

10. Australia must seize the unique opportunity presented by the T3 sale to stimulate competitive broadband networks as the most credible alternative to breaking Telstra's monopoly over fixed line communications. Where competition does not stimulate telecommunications infrastructure investment, Government should use targeted measures to support the rollout of competitive broadband networks through a variety of technologies.