Communications Minister Stephen Conroy has been getting a kicking on Crikey in recent times, so it’s nice for once to feel a warm inner glow about him. A tentative warm inner glow.

Conroy has given an indication that he is prepared to bite the bullet on the issue plaguing any attempt to get real competition in telecommunications – splitting Telstra up so that the infrastructure arm is separate from the arm selling retail access.

Every independent commentator who has looked at the issue since the privatisation of Telstra was first contemplated has advocated something like this – but successive communications ministers have baulked or wimped it in the face of fierce opposition from Telstra. (Read this Age article for Telstra’s arguments on the issue.)

The problem is that Broadband and telecommunications infrastructure is a natural monopoly. If it isn’t to be in public hands, then a raft of regulation becomes necessary to make sure there is real competition.

This is not only a business issue. In the converged environment of the future, Telstra is not only a telco, but also a media proprietor. Without good competition, its power over both network and content could transform it into a mogul to make Murdoch and Packer look puny. Telstra’s aggressive power playing over the last few years, including its role in the 2007 federal election campaign, suggests that it would not be reluctant to use this power in a self interested fashion. What politician would dare to oppose it?

Former Minister Helen Coonan opted for the lesser operational separation, which proved to be less than window dressing. Towards the end her term she indicated that structural separation was back on the agenda.

So what did Conroy say? Speaking about the planned national broadband network at the Sydney Institute last night, Conroy said:

Labor opposed the current operational separation regime that applies to Telstra because we regarded it as ineffective. Now in Government, we have not changed our view. We are prepared to carefully look at structural arrangements similar to those adopted in countries such as UK, NZ and Singapore.

In the UK and New Zealand, there is structural separation. And late last year the Singapore Government declared that it would demand structural separation of the new national broadband network infrastructure from the operating company – arrangements described as the most extreme regulatory requirements in the world. It is significant that Conroy referred to them.

The problem is that whatever he does, Conroy will make enemies. As he said last night, Optus has said it won’t bid for the National Broadband Network unless there is a promise of structural separation for Telstra. Meanwhile Telstra says it won’t bid if there is.

It’s possible to feel sympathy as well as tentative warm inner glows for Conroy.

But let’s hope he holds to his line.