In early August, I was initially pleasantly surprised by the fresh approach that the new Minister for Communications, Helen Coonan, was taking towards structural separation. However, the very next day she made comments that were basically the reverse of those made on the previous day.
On 3 August, the Sydney Morning Herald quoted from a leaked report that she had written, along the following lines:
‘Splitting Telstra in two could appease concerns over the Government’s plan to sell off its remaining 51% in Telstra.’
‘I can see how that has appeal… addressing resistance to the privatization of Telstra in rural and regional Australia, by more or less saying the Government is putting its arms around the infrastructure part of the business and providing the necessary assurances.’
Questioned in Parliament on her remarks, she executed a 180º about-face.
‘There are many people around who do advocate structural separation, vertical separation, spin-offs from Telstra, hollowing out Telstra…’‘None of that really addresses what kind of industry you would have if you actually did that.’
Even on a subset of a structural separation policy (the divestiture of Foxtel) she is not putting the national interest first.
‘My view is that at this stage it’s difficult to see that there is any compelling case that would warrant Telstra divesting itself of its interest in Foxtel.’
‘As far as I’ve been able to tell, there’s been no cost benefit analysis that actually indicates that there would be any net benefit if Telstra was required to divest itself of its interest in Foxtel.’
The most charitable spin I can put on this is that Ms Coonan is completely uninformed.
Overwhelming evidence from around the world shows that, in all countries where telcos and cable TV companies compete with each other, broadband penetration is at least three times higher than it is in Australia. And politicians in all these countries agree that broadband has very significant economic and social benefits (including President Bush in the USA and Prime Minister Tony Blair from the UK).
But, after only a few days in her new job, our new Minister apparently knows better.
If you can make sense of all this please, enlighten me, as I am at a loss to understand her telecoms policy.
For more than five years I have argued that the absence of a solid government vision on the future of telecoms infrastructure in Australia – and regional Australia in particular –would make it impossible to swing public opinion behind the full privatisation of Telstra.
In 1999 I indicated that the government should come up with a vision before they launched the bid for the full privatisation of Telstra. They had plenty of time to do this and I believed that the then Minister for Communications, Richard Alston, a veteran telecoms minister with a first-class understanding of the telecoms market, was capable of producing that vision.
But, year after year, he failed to come up with a vision, and I began to think this was due to the lack of support from his boss, the Prime Minster, and the Treasurer, Peter Costello. Given the recent conflicting statements from the new minister, are we now seeing a repeat of this scenario? Did Coonan think it was a good idea, only to be whistled back by her superiors?
By separating the infrastructure from the rest of Telstra, and keeping it under government control, she could create the right environment to privatise everything but the infrastructure, as was evident from her initial comments.
Another very promising part of her policy is her strong support for competition. This, of course, is easy to say – all her predecessors have taken the same position, but so far her colleagues have failed to deliver. But, based again on her initial comments, her approach towards competition, taken in conjunction with her statements about structural separation, would indeed most probably deliver equal access to the ‘government-owned’ infrastructure. And this would open the way for competition where we would like to see it – on a ‘services to the customers’ level.
Telstra and Hutchison made the first move towards infrastructure-sharing voluntarily, demonstrating that there obviously must be benefits in such arrangements. It is about time the government recognised this and stopped ignoring the issue.
So, Minister, could you please explain what your real telecoms policy is?
Australia – Government Policies – 2002-2004
Australia – Privatisation of Telstra
Telstra – Private or Public – an analysis
Australia – Structural Separation
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