Comments on: Two good reasons for investors and governments to sell Telstra

By: Ross Kelso

Ross Kelso — Thu, 29 Jul 2004 22:43:05 +0000

Graham
My comment about Optus apparently achieving better network performance was raising the issue that they operate a far smaller customer access network than does Telstra. Only Telstra delivers the full spectrum of nationwide services, so comparisons with other carriers aren’t necessarily valid.
If Telstra were ever to be split up, for starters I’d at least hive off the (telephony/ADSL and pay telvision) customer access networks as well as Sensis, all to be held in public trust, and certainly sell off their share of Foxtel to a new player.

By: Ross Kelso

Ross Kelso — Thu, 29 Jul 2004 22:20:23 +0000

Michael
I fear you are confusing the largest shareholder of Telstra, in effect the executive arm of the federal government, with the industry regulator, primarily the ACCC. Yes, the government of the day does set the regulatory scene through the Telecommunications Act and the Trade Practices Act for example, which can then tie the hands of the regulator. And yes, there is also scope for conflict of interest. However, if you analyse the industry since about 1992, you can conclude that government ownership of Telstra isn’t necessarily the prime indicator of bad or inadequate outcomes; the latter can just as easily be achieved with a fully privatised operation!
I see the main problem as being the promotion of ‘competition’ as the end game, rather than the interests of consumers and SMEs as end users. Too many regulatory or legislated adjustments have been made to protect existing interests, whether privatised or not, in the hope that they will invest (or at least to ward off threats of dis-investment). Australian telecommunications are now witnessing the Microsoft phenomenon – the courts can’t effectively restrain MS in its monopolistic practices as MS can always employ more lawyers and incur never-ending litigation delay, and easily afford to pay hefty court fines! Here we are seeing that Telstra can afford far more legal clout than the ACCC, funding never-ending litigation. A fully privatised Telstra will be even more rampant!
However, I digress; the nub of the problem is the overwhelming focus (by governments of both persuasions) on ‘competition’ as the means of achieving certain social and national goals. The main corruption here of so-called competitive market forces is that of favourable regulatory treatment and application of competition law directed to encourage replicated network and service investment at the expense of the long term interests of end users.

By: Graham Young

Graham Young — Thu, 29 Jul 2004 13:25:00 +0000

Ross, it’s a better argument than the one that runs that because Telstra is not doing as good a job as it should it should be left in public hands!
Do I take it from your comments about smaller operators being better than larger operators that you would be happy to see Telstra split into baby Telstras?

By: Michael J Lee

Michael J Lee — Tue, 27 Jul 2004 15:45:57 +0000

Ross
To my mind the problem as I see it at the moment is that the single largest shareholder of Telstra happens to also be the people that regulate the industry. Surely there is a conflict in how the government deals with the industry.
Perhaps part of the reason that the regulatory stick isn’t very effective is for these very reasons.

By: Ross Kelso

Ross Kelso — Tue, 27 Jul 2004 14:22:03 +0000

This article provides NO good reasons for governments to sell Telstra; think about the key points made: 1. None of the Telcos meet the CSG timeframes; 2. Optus does better than Telstra.
Telstra operates some 95% of this country’s customer access network (CAN) and by far the lions share of backbone telecommunications infrastructure. If Optus ‘does better’, the reason could be more likely that smaller operations may be more manageable than larger ones!
If no Telcos meet the government’s Customer Service Guarantee, the reason could well be that there is no incentive to do so, or in other words, no administrative ‘stick’ with which to beat a defaulting carrier!
I agree that voice over Internnet Protocol (VoIP) is threatening to Telstra, and any other carrier of significance, however the threat is greatly lessened once an IP call has to interconnect with the public switched telephony network (PSTN). By now Telstra has a long history of monopolistic pricing of interconnection fees – and unfortunaetly seems to be immune from any regulatory ‘stick’.
A fully privatised Telstra is more likely to become an even more shameless profiteer, and hire even more lawyers to confront competitors and the ACCC.