Prior to last week's bombshell, there was speculation that Telstra could
have gone it alone outside the $43 billion NBN mega-project. There was still
some potential for improving broadband speeds using the existing network. It
could have held onto its 50 percent stake in Foxtel and its cable network
and competed on price with the NBN. Telstra's management has argued that it
has a legal obligation not to take decisions detrimental to the interests of
The remaining mum and dad investors who bought some of the first and second
tranche of shares in the telco will be worried about the value of their nest
egg. The 10,000 workers involved in the upkeep of the copper network likely
to be superseded by the Rudd government's National Broadband Network (NBN)
are right to be worried about the security of their jobs. People in the bush
have been left wondering how firm the commitment to Telstra's Universal
Service Obligation will be under the new telecommunications regime.
The separation gives the opposition a lot to talk over. Their spokesman,
Senator Nick Minchin, is warning that the NBN will be another government
monopoly of the type he worked hard to kill off. "What we're seeing is a gun
at the head of Telstra to force them to offload their fixed line network and
hand it over to a government entity," he said. Former Australian Competition
and Consumer Commission chairman Allan Fels agrees in part. He fears that
the national broadband network will be a cosy arrangement favouring big
telcos at the expense of smaller potential rivals.
Most political players seem to be persuaded of the benefits of the NBN.
"Whatever Telstra shareholders are going through at the moment, the
long-term impact will be a boost to the telecommunications sector,"
Independent SA Senator Nick Xenophon said. The breakup of Telstra is
prompting some reflection on the way Telstra was formed and then destroyed
as the publicly owned telecommunications provider. Xenophon thinks it was a
mistake for the Hawke government to have combined Telecom and the Overseas
Telecommunications Commission in 1991. Others think it was a mistake for
Howard to ignore National Competition Policy and not insist on structural
separation when it stated to sell off Telstra in stages in 1997.
This sort of selective hindsight tends to ignore the fact that the
Australian public never wanted the privatisation of Telstra. It was sold off
slowly and using false pretences in order to prevent a public backlash.
Against the public's wishes, it was finally turned into just another greedy
competitor in a market flooded with a confusing "choice" of expensive
"products". Australians would have preferred a publicly-owned telecoms
provider and would, no doubt, have preferred the national broadband network
to be part of that community asset. As it is, the investment needed to
create the NBN is beyond the capacity of private enterprise. It will be
built at vast public expense as a conduit for private profit. Unless the
Australian public puts its foot down it, too, will become a target for
privatisation - more theft in the name of "competition".