Increasingly it appears as though the government is going to get away with the privatisation of Telstra without much change to its current flawed telecoms competition policies – this despite the fact that virtually everybody is warning the government against this.
Professor Alan Fels; Professor Peter Gerrand; ACC’s chief, Graeme Samuel; the government’s own Productivity Commission; all opposition parties; industry bodies and consumer organisations – they all agree that the government’s current telecoms policies are flawed and that serious changes are required.
Will the government listen? I don’t think so – unless these industry and community leaders begin taking a much stronger stand on the issue. It would also be timely for some of the chiefs of industry to indicate the importance of state-of-the-art broadband infrastructure to the national economy.
There is certainly a bit more of a groundswell now and I, for one, will be trying to push it further. Only when we have enough reputable people standing up for this issue will we be able to influence the government.
Without good government regulations we will see a continuation of Telstra’s borderline anti-competitive business practices. They are all aimed at slowing down competition and delaying investments. Competition is essential, not just for affordable prices, but, more importantly, for innovation.
We are behind the eight ball in Australia. Other countries are 3 to 5 years ahead, and their economies are profiting from these new developments much earlier. Their companies can produce new products and services and start exporting them to the countries that are lagging behind – that is, Australia.
I don’t believe this is for good for our country. We should be right up there with the other leaders!
Under the current circumstances (self-regulatory regime) Telstra is in a position to continue these borderline practices indefinitely. With its vast army of lawyers and financial resources the incumbent is under no real threat from the ACCC, who only has access to limit government funds
Most serious competitors have long since abandoned their legal challenges. They simply can’t afford the money or the distraction, and they have been relegated to eating the crumbs off Telstra’s table.
In a privatised world – if you believe that Packer and Murdoch are dominating the Australian media politics, what about Telstra? Its market is six times larger than the Australian media market. The political power that Telstra would have in a privatised environment will be far greater than the government’s. It will apply the same strategy as it has done in respect of the regulatory situation. Around the country there will be an army of political lobbyists, with gigantic budgets, all employed by Telstra.
And it can easily buy media companies and extend its monopolistic and anti-competitive behaviour into that market as well. Once it is privatised, Telstra will use every means to prevent any further regulations being laid down. It will be ruthless in this respect, using expensive PR, media and political lobbying strategies
All of the above can be fully justified by Telstra’s management and its board as being in the shareholders’ interest. But, as I have argued before, there is more to telecoms than financial gain alone. In every other country except Australia it would appear that the governments understand this, and they have either maintained ownership of at least part of their national telco (27 out of the 30 OECD countries) or they have imposed very strict regulations on their national telco (UK). The USA is big enough, and has enough infrastructure-based competition, but the government there is also employing a strict hands-on approach.
I cannot understand why the Australian government believes that we are different, and that we can privatise Telstra without imposing the same sort of security measures that have been put in place in all those other countries. This is the same government that advocates competition reform – obviously only in areas where their own finances are not affected.
Why can’t we have a proper debate on this? Why is the government behaving in such an undemocratic fashion by abandoning the structural separation inquiry? Why is it ridiculing those who are asking the sort of questions posed above?
But be careful – we don’t need another BAG (Broadband Advisory Group). The participants of that group may have enjoyed being involved in policy-making matters, but they were definitely sidetracked. Before they even began their area of operations was already curbed, and their watered-down recommendations could not be used to address the real issues – such as real commitments to infrastructure roll-out, regional policies, industry structures, etc.
The Estens Inquiry was a bit more successful, but it was also heavily restricted, and it was not able to address the real structural issues either.
We should not fall for another whitewash Inquiry. Also, we should insist upon a guarantee that such Inquiries are taken seriously. The government has a cupboard full of reports, all pointing in the same direction, but they have no intention of implementing any of the more structural suggestions made in these documents.
Based on previous behaviour, an unshackled and privatised Telstra will ruthlessly pursue total dominance in the name of shareholder value. I know that we don’t want this. While I have generally been given support for my arguments there have also been people who have told me that I was being pessimistic. It is interesting to note that it is now these people who are warning of the dangers of the current government telco and media policies.
There are plenty of ways out of this doomsday scenario and, as I have been saying since 1999, there are win-win scenarios in structural separation models. If structural separation is not a goer at the present time, then we should fight even harder to transform the industry and market policies of the current self-regulatory regime into a much stricter regime – one that will give the ACCC more far-reaching powers of intervention, linked to immediate penalties appropriate to a thirty billion dollar company. The Ofcom model in the UK is perhaps the best example to look at.
Paul Budde
See also:
Australia – Privatisation of Telstra
Telstra – Private or Public – an analysis
Telstra Corporation Limited – Corporate Strategies Analysis – 2004
Telstra Corporation Limited – Broadband Analysis – 2004
Telstra Corporation Limited – Infrastructure Analysis – 2004
