Telstra's turning point

11 Dec 2006

I used to believe in publicly-owned telcos until I actually worked for one. For that reason, I can only applaud Telstra's imminent transition into majority private ownership.

The Australian government, after ten years of trying, has finally given the go-ahead to T3, the sale of the third tranche of the national incumbent, my employer a decade ago.

If you've been following Telstra's privatization, you will know that the tedium of the 'debate' has been leavened only by the arrival of former US West chief Sol Trujillo as CEO.

Trujillo, a veritable human headline, has played brinkmanship with the government in order to wrest regulatory concessions ahead of the sell-off.

He's had some success with that, but as a customer or an investor, you'd like to think Trujillo was spending his time on the business; cutting costs, improving processes, meeting customers - all the things that a telco boss usually does.

At which point you can hear the loud bleating of Telstra lobbyists; of how the carrier, which runs more access networks than any other in the world, and which after 14 years of competition still controls 90% of fixed-line access, is 'over-regulated'. Of how rivals paying expensive interconnection and backhaul fees are 'leaching' off its network.

Every incumbent in the world makes the same claims, though few with as little grace as Telstra. In any case, Telstra's problem is it is thoroughly politicized - more so than any other carrier in the region outside North Korea.

Shabby treatment
Every lobby group in the country is a 'stakeholder' - consumer groups, business groups, state governments, unions and, most powerful of all, given their size, the rural lobbies. It doesn't help that it is Australia's most widely-held stock and that in a country with zero indigenous IT or telecom champions, it stands alone.

The small population in rural Australia has been treated shabbily by Telstra and its predecessors over the years. But the rural representatives' political strength today means Telstra is beholden to them and their changing demands.

That may be good practical politics, but bad policy.

Not much has changed since Insideline wore an employee badge. Then as now Telstra's business and ambitions were subject to the political demands of the day.

Sometimes the interference was at a trivial level. My team received a scolding from the minister for making an investment announcement in his electorate. We were advised that in future all such announcements should come from his office. (The minister was later voted out by 27 votes, so perhaps they were on to something.)

When government revenues sagged just 12 months out from an election, it was up to Telstra to pony up A$900 million ($6.93 million) to cover the shortfall. For the good of the country, of course.

Above and beyond all of that, the then prime minister, with no known business experience, tried to prep the company as a major player on what was then optimistically termed the 'information super-highway'.

His big idea was to allow Telstra to own and operate a cable network in opposition to the newly-created Optus, which was using HFC to build its local loop network.

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