Australia's Senate passed legislation on Friday to force dominant phone company Telstra Corp (ASX: TLS) to separate its wholesale and retail arms. This 'paves the way' for the Canberra's planned $36 billion national broadband network.

The laws effectively force Telstra to split its wholesale arm from its retail arm, enabling the government to finalise an A$11 billion deal with Telstra for the use of its fixed-line assets in developing the network of super-fast broadband communications.

The laws will be formally rubber stamped by parliament's lower house on Monday, before a competition ruling due at the end of November on how internet retailers can plug into the new government-owned wholesale network monopoly.

The network plan helped the Labor party to regain power at elections in August as Australia's slow and expensive Internet service has often frustrated voters.

The Opposition made a number of last-ditch attempts at delaying a vote on the draft laws, but were ultimately unsuccessful.

The party last week failed to pass a bill in the Lower House to refer the NBN to the Productivity Commission for scrutiny. Similar moves as well as an attempt to put off the vote until late this afternoon also failed to gain support.

Labor's legislation passed the Senate by 30 to 28 votes with the support of all seven crossbench senators: five Australian Greens, Family First senator Steve Fielding and Independent senator Nick Xenophon.

While the Senate was due to rise for the summer break yesterday, the Government extended sitting hours into today to ensure the vote was taken this year.

Communications Minister Stephen Conroy says the Government has achieved historic reform in Australia's national interest.

"This legislation paves the way for a more efficient rollout of the NBN," he said.

With Reuters