Leading telecoms analyst Paul Budde has backed the Labor Party's plan to split Telstra into separate service and infrastructure entities, disagreeing with the Governments plan to fully privatise the telecommunications giant.

-[The separation of Telstra is] a good idea," Australia's leading telecommunications analyst Paul Budde told ZDNet Australia. -The Government should not be involved in service elements. The Government should make sure we have a first class infrastructure."

Labor's discussion paper, 'Reforming Telstra', commits the opposition to maintaining majority government ownership of Telstra, and suggests that some form of structural separation of Telstra is required. One form of structural separation was proposed in an OECD paper in November of last year, and involves separating the service element of telecommunication companies from the infrastructure element.

-There is a clash of interest between being a private company and looking after the national interest," said Budde. -We should split commercial interest from national interest... All services run over the infrastructure could be fully privatised."

-We are pretty unique that we have such a large country with such a small population," said Budde, alluding to the main sticking point of a full sale so far, the level of service available to regional and rural Australia. The National Party has stated it will not support the full privatisation of Telstra until services in the bush are improved.

Senator Alston has responded to Labor's discussion paper by saying separation would destroy the profitability of Telstra and be difficult to introduce in the current situation of a partially privatised Telstra.

Budde agrees restructuring Telstra would be difficult. -It will be very messy, it's not something you can do easily. If we agree as a nation that we do not want to privatise Telstra we have to find a solution."

He pointed to examples such as BT and privatised American telcos that have been experiencing financial difficulty, and said that there are many examples of government owned telcos that were providing superior levels of service.

-Competition [in Australia] is going backwards rather than forwards," he said. -A monopoly is not the way forward, no matter whether it's a private or public monopoly. Private ownership would fight harder to maintain its monopoly."

Budde was pleased with the Governments April initiative of the virtual separation of Telstra, seeing it as a good first step on the way to structural reform. -My fear is that the government will water down its initial initiative. We have to bite the bullet and make some serious decisions."

-It has to be a combined sort of a decision," said Budde. -The general attitude is that no-one is really happy with the full privatisation of Telstra at this point in time."

Copyright © 2009 CBS Interactive, a CBS Company. All Rights Reserved.
ZDNET is a registered service mark of CBS Interactive. ZDNET Logo is a service mark of CBS Interactive.