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Manifestation

April 15th, 2004

I’ve been interviewed by the 7:30 report regarding the resignation of Bob Mansfield, the Telstra chairman. Unless something more newsworthy bumps it, some of the interview should go to air tonight. Those who don’t care about the visual component can read my general views on Telstra here, here and here.

On the proposal that led to Mansfield’s downfall, that Telstra should buy Fairfax, my reaction is “What were they thinking!?” Obviously the majority of the board could see howinappropriate this idea was for a company owned by the Federal government and directly controlled by the shareholding ministers. But even if Telstra were fully privatised, it would be a terrible idea for a major regulated monopoly to own large chunks of the press or, as in the previous proposal to buy Channel 9, TV.

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  1. April 15th, 2004 at 21:26 | #1

    Goodness John, you look much taller on the telly!

  2. Jill Rush
    April 16th, 2004 at 00:42 | #2

    As one of those “Mums” burnt by Telstra 2 there is some small satisfaction in seeing off an Adventurer who has done so little to look after Australian consumers or shareholders interested in having sound telecommunications infrastructure. The rise in share price suggests that I am not alone.

  3. kyan gadac
    April 16th, 2004 at 04:29 | #3

    I’ve no quibble with your oft repeated call for the state ownership of the infrastructure and the general ludicrousness of being half pregnant! Whilst the opportunities of the dot.com bubble are no longer there to finance the thing, it doesn’t mean that opportunities can’t be created.

    Consider the fact that government owned infrastructure really pays for itself when it has clear goals – ‘free, compulsory education’ ‘ gauranteed delivery times’ etc. So setting a goal for Telstra infrastructure e.g. one fibreoptic cable in every suburban street, hi band wireless communication across the country etc. etc. could create the means for a well grounded government buy back…It’s just a thought…

  4. April 16th, 2004 at 11:29 | #4

    The idea to split Telstra up into a network owner (which would probably remain in government hands) and a fully-privatized retailer which would be freer to do stupid things like buy Fairfax has been floating around for a while now.

    Any view on this?

  5. April 16th, 2004 at 13:12 | #5

    Yeah, as a layman, I’ve kind of wondered about the feasibility of splitting up Telstra’s businesses, keeping some government owned and cutting the rest loose.

    The problem is that what is a premium service these days, i.e. broadband, will come to be considered an “essential”, in the same way that landline phone services are at the moment. So should that be part of Telstra Private’s business, or should it be regarded as a basic service and kept as a public utility*?

    (* although that hasn’t stopped electricity and gas providers from being privatised.)

    Also, after such a split, that the government-owned business would probably not be profitable, which might lend itself to rank politicisation (not that the current setup hasn’t…).

    It should also be borne in mind that the telecommunications is moving even more quickly now than it was in the dot-com days, what with wireless services taking off, other such services. As we’ve seen with Telstra dragging its feet (until recently) on broadband whilst it’s been investing in all sorts of Mickey Mouse dot-bombs which of course have brought down their share price, it’s not a particularly savvy organisation.

    So, I don’t know. The ground is shifting, and it’s hard to know where to draw the line. (What I do know is that Richard Alston should not be allowed anywhere near the chair of Telstra.)

  6. April 16th, 2004 at 14:09 | #6

    Telstra’s monopoly is based on the fact that it owns the wires that go from the exchanges to people’s homes, and to a lesser extent the wires that join the individual exchanges to the higher-level linkups. The exact same wires are used for “broadband” as for voice services, the only difference being the equipment attached at either end.

    Essentially, the exchange infrastructure and the wires are the bit that should be split off and placed in a seperate company/government authority. Telstra Private could then pay for access to that just like any other private telco does.

  7. kyan gadac
    April 17th, 2004 at 04:06 | #7

    There’s the value of R&D to consider – government owned utilities have always an implicit duty to maintain an interest in R&D. R&D, as a public versus private utlity, is a rather critical element of the debate one would think especially in a field where the paradigms are changing rapidly and Saw’s law continues to apply. But is this just eschatalogical gossip?

  8. Brian Bahnisch
    April 17th, 2004 at 23:04 | #8

    I was one who got in on the first Telstra float, sold as it peaked and stared to slide and have stayed out of it ever since.

    The reason I sold is that I couldn’t see where the growth was going to come from as a large company with the domestic playing field designed to make it lose market share. As a yield stock it was over-priced at $8 or so.

    For once I got it right!

    Now I’d favour a split with the network in public hands. I’d like to see its services priced to make an operating profit, but with all profits ploughed back into R&D and network enhancement. That way we might end up with a world class telecoms infrastructure, making us all more efficient and competitive, rather than decisions being influenced by returns to shareholders.

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