New Australian minister seeks Sol-mate

26 Nov 2007

Telstra's long-running war with the Australian government has been one of the telecom industry's livelier diversions.

Now a new Labor government has been elected, lucky Senator Stephen Conroy is the communications minister-elect. He's promised a "fresh start" in relations with the telco.

Easier said than done, especially he has also hinted strongly at imposing "structural separation" on the carrier - code for breaking up the wholesale network and retail service divisions.

Telstra boss Sol Trujillo and his bomb-throwing right-hand man Phil Burgess are unlikely to take that well.

They've been at the barricades against the government - to the point of mass-mailing their customers during the campaign - over what they see as a playing field slanted against the carrier. The world might view Telstra as a lumbering $20 billion incumbent that dominates voice, mobile, broadband and pay TV, but in the parallel universe of Trujillo and Burgess, it is a world-class enterprise being held back by the over-bearing officials. One wonders why, if Telstra is so hamstrung at home, it has not pursued business in less regulated markets abroad, as SingTel has done.

Suffice to say, communications infrastructure is ever a vexed issue for a country like Australia with a small population scattered over a large area. It's not been helped by past government decisions which set up the Telstra-Optus duopoly and which gave the incumbent the right to build out an HFC access network for pay TV. The absurd result is that in a country where infrastructure capital is scarce, Telstra now owns two broadband access networks.

To address the broadband divide between city and country, the outgoing government awarded a A$1 billion ($870 million) tender to run Wimax in regional areas, kicking in another A$960 million of its own.

In response Conroy has proposed a national fiber to the node buildout by a public-private partnership - a questionable proposition given the remoteness of many communities. No wonder he has agreed to honor the wireless rollout.

Whatever industry model the new government adopts, it will need the cooperation of the industry's 800-lb gorilla. Conroy should not expect to feel the love from Sol just yet.

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