Telstra head David Thodey said the telco was willing to talk. It's a sign of changed times. ''Telstra of two years ago - we would have been talking about physical violence,'' one telecommunications veteran said yesterday. ''We would have had [former Telstra PR head] Phil Burgess breaking down doors at Parliament House.''

Of some 140 public submissions to the Government's discussion paper on the broadband network, about 139 pushed for some sort of break-up of Telstra. It was friendless.

While the Government's preferred option was structural separation, a split of the two into different companies, it knew it would face a claim for compensation from shareholders, many of whom already feel they have been dudded after buying in at higher prices than the current $3.24 during three rounds of privatisation.

So the Government thought up a way of pushing Telstra towards that outcome by constructing an alternative proposition so odious that it would have to play ball.

The idea hatched was to attach an enormous cost to a failure to co-operate with the structural separation plan - Telstra would have to choose between its 50 per cent stake in Foxtel and and access to new spectrum, the lifeblood of mobile broadband, on the other.

Telstra will need to act quickly - the timeline pushed by the Government involves the company deciding by mid-December whether it will opt for the structural separation option or the Government-imposed functional separation, which means the two distinct parts stay within the one company.