The Rudd government issued a public ultimatum to Telstra this week - split into two separate companies or face losing crucial future business.

The government is trying to force the Telco giant to separate its wholesale and retail arms.

This would allow other telecommunication company's cheaper access to Telstra’s present monopoly on the copper and cable network.

While some commentators say this radical plan will be good for both consumers and Telstra shareholders, others aren't so sure.

But the government is predicting a better outcome for taxpayers, saying the National Broadband plan will be much cheaper to build if Telstra is split.

Telecommunications analyst, Paul Budde is backing the Governments plan.

He spoke with 2SER’s Alex Angel.