Sympathetic Stupid

Friday, August 12, 2005

Telstra Schmelstra

The sale of Telstra was botched in the first place, and it's not getting any better with subsequent proposals to get out of it. (Unless Trujillo's latest plan is good; don't hold your breath.)

What happened?

Once upon a time there was Telecom. It was a government-owned monopoly. Monopolies are bad for consumers. To encourage competition some deregulation was needed; fair enough, this hasn't really hurt. But as it seems unlikely to have the government regulating an industry in which it is the major player, privatisation seemed logical.

This was the big mistake: they shouldn't have sold off the whole damn company.

Australia's a big country. It's kinda expensive to get infrastructure out to the many remote areas. Fair enough, it's hard, but these people pay taxes and deserve their share. So they get roads. They get power lines. They get, wait for it, phone lines.

When Telecom turned into Telstra, it owned the copper phone lines. Sounds good for Telstra, right? Well, these need to be maintained cause they degrade. And apparently there are more people who want to be connected. That's OK though, because we've got a state-of-the-art copper network which covers the whole country. And because no-one else has got one, we can charge what we like for use of it. It's still a monopoly.

But suddenly, copper's not so cool anymore. People want broadband; well, the only broadband you can get over copper is ADSL. If the stars align correctly. And it turns out mobile phones are making fixed lines obsolete. So all of a sudden the unimaginable amount of copper sitting all over Australia is a rapidly depreciating liability.

OK, we'll just replace the copper with optic fibre. But we're run for profit, so we'll do it in the profitable places. Cities. Rich suburbs of those cities. Why aren't we doing it in the country? It's not cost-effective. You can't tell us what to do, we're a private company.

We're a rich country. Everyone in Australia should be guaranteed certain basic services. A road. Electricity. Running water. A phone line. (A fair go?)

Telstra shouldn't own the infrastructure, the phone lines. At the time of the original privatisation, the company should have been split into infrastructure and business. The infrastructure should have stayed in government hands. This could guarantee the basic service, and allow the government to invest in the country's future by upgrading the network with our taxes.

The Telstra business could than have been fully privatised easily. It would just be another customer of the infrastructure. Market forces could do whatever market forces do. (Judging from the Telstra culture, send it bankrupt.)

Is it too late for this option? Probably. I can concoct a scheme where the government buys the infrastructure from Telstra, giving as consideration the rest of the shares, which Telstra then floats or cancels, as it wishes. Probably cancels, seeing as the company would have shrunk.

But I'm not running the country, so that won't happen.