Friday, December 7, 2007

Paying the Privateers...

The chief amigo at Telstra, Sol Trujillo, has spoken. It seems that after a long battle with the previous government in regard to investment in broadband services, Telstra is now prepared to take on the new government. Prior to the election Telstra’s position appeared to support the Labor Party policy for a national broadband network. Now the government has changed, and Telstra has now clarified its support for the plan. Putting it as bluntly as he could, Sol Trujillo said “We are only going to participate in the things that we own and control.”

Now this is a potential problem for the new governments plan to invest almost $5 billion of taxpayers money into broadband infrastructure. Quite understandably, the government wants to have some kind of joint equity arrangement, which is a sensible protection of the taxpayers’ investment. At the same time, Telstra would be happy to take the money, or even spend its own money to build the network, but will only do so if it can own, control and set the fees for the use of the asset.

This demonstrates the very reason that it was a bad idea to sell off Telstra as a going concern in the first place. If the intention was to create competition, the network and the service provision components of the business should have been separated at the beginning. By allowing Telstra to keep its network intact the process preserved the monopoly. Even now other providers depend on the Telstra network to deliver their services. If Telstra is allowed to have sole control of the new broadband network, nothing will change and the monopoly will continue to be preserved.

As privateers (and yes I know that’s another word for pirates) Telstra is perfectly entitled to protect its interests and pursue whatever it determines to be the most profitable course. What matters is whether the new government has the fortitude to stand up to the bullying tactics of Telstra and, if necessary, build the infrastructure with another partner.

Sol Trujillo is right about one thing: if Telstra invests its own money it should be entitled to set its own prices. But that same argument suggests that if the taxpayer is also investing in the project, then the taxpayer is also entitled to have a commensurate level of control.

No comments: