Telstra split hits a wall

KEVIN Rudd's bill to force the break-up of Telstra looks doomed to fail, with the Coalition resolving to vote against it.

KEVIN Rudd's bill to force the break-up of Telstra looks doomed to fail, with the Coalition and a key cross-bench senator resolving yesterday to vote against it.

Opposition communications spokesman Tony Smith said the Coalition was "utterly opposed" to the move to force Telstrato separate its wholesale and retail arms by denying it access to the spectrum it needed for its future business.

"Labor's legislation is a deliberate assault on Telstra and its 1.4 million shareholders and 30,000 employees," he said.

"(It) is all about trying to prop up their reckless $43 billion national broadband network, which they embarked upon without a cost-benefit analysis or a business plan."

The government is seeking to reach an agreement with Telstra to fold its assets into the national broadband network.

Family First senator Steve Fielding also vowed not to support the bill until negotiations between the government, Telstra and the NBN Co are finalised.

"I don't think putting a gun against Telstra's head is the way to go. The government, Telstra and NBN Co have all said they want a negotiated outcome and we should allow that to happen,'' he said.

"I can't support it at the moment while we're waiting for that negotiated outcome.''

The Coalition had previously resolved to delay the vote until the release of an implementation study into the NBN. But yesterday it agreed to vote against it regardless of the outcome of the implementation study.

This is despite a view previously expressed by some Nationals senators that the break-up of Telstra would deliver better outcomes for rural and regional Australians.

Nationals senator Fiona Nash appeared to leave the door open to crossing the floor to support the measure.

A spokesman for Senator Nash yesterday said she would not comment on the bill until it came before the senate.

However, it is understood that no Coalition MPs or senators spoke against the decision to oppose the bill at a joint party room meeting yesterday.

Communications Minister Stephen Conroy signalled he was willing to negotiate changes to the bill.

A spokeswoman for Senator Conroy said: "The government believes the bill is essential to introduce genuine competition and consumer protection measures to the telecommunications sector.

"The government will always have an open mind to amendments that it believes will improve the bill.''

Competitive Carriers Coalition executive director David Forman yesterday vented his frustration at Senator Fielding's position.

"There is enormous and growing frustration in the industry about Steve Fielding's continuation to talk about a gun to Telstra's head,'' he said.

"He seems to refuse to acknowledge that all consumers and competitors have been held to ransom by Telstra for years.''

The Opposition has indicated it is willing to consider supporting consumer safeguards included in the bill, if the government separated out the provisions forcing the break-up of Telstra. But Mr Smith said it would not be prepared to do so until after the NBN implementation study is released and considered.