Optus chief executive Paul O'Sullivan says federal parliament needs to pass legislation as soon as possible to force the separation of Telstra's retail and network arms to ensure a level playing field in the telecommunications industry.
"This reform will level the playing field and transform fixed line competition today before the NBN (national broadband network) even starts to be rolled out," Mr O'Sullivan said told a Committee for Economic Development of Australia function on Tuesday.
"It will remove the fundamental conflict of interest that exists for Telstra providing access to its monopoly infrastructure to its competitors, whilst continuing to compete in the retail market against the same players."
The government has passed legislation in the lower house that seeks to split Telstra's wholesale and retail businesses, with the aim of rolling out the $43 billion NBN in an evenly competitive marketplace.
Communications minister Stephen Conroy had wanted the legislation passed by the Senate before Christmas, but it was delayed as time was taken over carbon emissions reduction legislation.
The NBN bill is due to be introduced to the Senate in February.
Optus, Australia's second biggest telco after Telstra, has maintained that it continues to be disadvantaged in the retail fixed-line market because Telstra doesn't treat its wholesale customers at an equal level to its own retail division.
"Those who consider the delay to the first Bill a good thing or mistakenly believe that the reform is unnecessary are ignoring the key reasons why it must be passed," Mr O'Sullivan said.
Mr O'Sullivan said the legislation, once passed, would also prompt Telstra to focus on developing new retail products and services, rather than defending its 60 per cent margins on its fixed-line services.
"It will provide incentives for all industry players in growing the broadband market now, knowing they will have a level playing field to keep evolving the services provided to their customers into the future," he said.
Mr O'Sullivan said it was important that parliament decided the deal Telstra made with the government, so that it was a transparent process.
Mr O'Sullivan also said that Optus studies suggested that the NBN would provide a commercial return.
"On our numbers and our estimates, there is a solid business case that supports the NBN," he said.
Mr O'Sullivan rejected arguments that the government's legislation was some sort of theft of corporate assets, citing a High Court decision last year that confirmed Telstra's unusual relationship to its assets.
"Telstra was given substantial fixed network assets, which had been paid for by Australian taxpayers, on the understanding from day one that Telstra would also be required to make those assets available to other players and competitors," Mr O'Sullivan said.
Telstra fought that requirement over many years and it shouldn't be a surprise that the government was now trying to pass tougher legislation, after the separation of Telstra's retail and network divisions had been debated for a long time, Mr O'Sullivan said.
"Its major shareholders are simply not in a position to express great surprise that separation is now on the cards," he said.
However, Mr O'Sullivan also pointed out that Telstra's share price had not underperformed the market after the legislation was announced, and most analysts were rating Telstra a "buy".
Shares in Telstra closed down two cents at $3.43, having gained six per cent from $3.25 on September 14, the day before Senator Conroy announced the legislation. The benchmark S&P/ASX 200 Index gained 4.1 per cent in the same period.
Shares in Singapore Telecommunication, which owns Optus, added one cent to close at $2.35 on Tuesday.
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