The Guardian March 29, 2000

Country and city together can stop Tesltra sell-off

by Marcus Browning

The Government's bit-by-bit privatisation of the remaining 51 percent of 
Telstra is in full swing with the sale of its internet service already 
completed. The sell-off of its IT operations (also to Optus through its 
partner IBM) and a deal in the pipeline for the Fairfax media giant to buy 
the Yellow and White Pages are looming. Telstra is to open up its local 
call technology to Optus by August.

In addition, the universal service obligation (USO), introduced with 
deregulation around 10 years ago but carried mostly by Telstra, will be up 
for tender.

Telstra will continue to bear the main burden of the most costly provision 
of services to regional Australia, while the private operators will 
"obligingly" take the USO only where high returns are guaranteed.

The USO tender spells the beginning of the end of cross-subsidisation of 
services to rural and remote areas. (Telstra's cross-subsidisation keeps 
the price of phone calls in regional Australia down at the level of the 
major population areas and is part of the Universal Service Obligations.)

Prior to deregulation Telstra, as the universal service provider, had no 
need for a USO because it was integral to its operations to subsidise non-
profit making areas.

When the Government first began to publicly promote its agenda for full 
privatisation in 1998 there was a rural uproar. It then fiddled some 
figures and came up with the claim that cross-subsidisation would cost only 
$253 million per year.

This ridiculous amount was refuted even by the outgoing Telstra chairman, 
Frank Blount, who said the real cost was $1.8 billion.

The figures were then fiddled again, to $425 million, and then again to 
$580.2 million.

Now, "competition" is the Government's latest burnt offering to the rural 
electorate, but they won't swallow it.

They know that the end of cross-subsidisation means that they will pay more 
for their telecommunication services. On top of this they will be presented 
with a hodge-podge of systems backed up by a skeletal repair and 
installation service.

Optus will not provide anything like a comprehensive back-up service to 
remote and rural areas because of the simple fact that its priority is 
profit and only profit.

Telstra's widespread job elimination program has already had a detrimental 
effect on its ability to service the bush.

The main Telstra union, the Communications, Electrical and Plumbing Union, 
said that the introduction of competitive tendering for USO services was 
flawed and would involve increased risk for rural users.

"Telstra's standards in these areas are not what they should be", said the 
union's Communications Division President, Colin Cooper. "But at least 
Telstra has an existing, highly reliable network in place throughout 

He said the proposal that Telstra should remain as a "carrier of last 
resort" in areas where the private operators had the USO was unrealistic.

"It is simply a nonsense to expect Telstra, especially since partial 
privatisation, to maintain unutilised assets in a state of readiness just 
in case one of the new USO providers gets its business wrong and goes 
broke. In the end it won't happen."

Vested interests

It is the nature of the privatisation process which makes it rotten through 
and through with corruption and collusion from the vested interests who are 
to profit by it.

The bogus inquiry into Telstra's service provision is a prime example. It 
will be conducted by three individuals, with its chairman, Tim Besley, set 
to make another killing from his involvement in yet another sell-off of a 
lucrative government asset.

He raked in the dough from the two Telstra share floats as a member of a 
board advising the Government. The board was set up by the Credit Suisse 
First Boston investment bank which coordinated the international sale of 
Telstra shares.

He was also chairman of the Commonwealth Bank when it was privatised and is 
currently chairman of Leighton Holdings, the company at the top of the list 
to get hold of Telstra's Network, Design and Construction division when it 
is sold off later this year.

The other two are shoe-ins for privatisation: Jane Bennett is a former 
Howard Government advisor and Ray Braithwaite is an ex-Coalition 
frontbencher and a formulator of the Productivity Commission's national 
competition policy.

The Government continues to deny that the inquiry will be used as 
ammunition for privatisation. But Telstra chief Ziggy Switkowski, the 
former head of Optus, is unambiguous about its purpose.

"By setting up this inquiry the government is honouring a commitment it 
made as part of its 1998 election policy", said Switkowski.

"The policy states that the inquiry must certify that service levels are 
adequate prior to any sale of Telstra beyond 49 percent."

Speaking to The Guardian, CPA General Secretary Peter Symon, 
condemned as a "conspiracy" the various moves by the Howard Government.

"It's vital that the Howard Government's gallop to privatisation be 
stopped. It is to be hoped that the whole of the labour movement, together 
with all the organisations in the bush, be united and mobilised to spike 
the wheel of Howard's criminal push.

"Everything the Government is doing has the end objective of privatising 
the whole of Telstra. Government Ministers are prepared to tell any lie to 
smooth the way to kill off the public ownership of Telstra."

Mr Symon said the Government obviously has a priority commitment to various 
"mates" among the big corporations who will make millions in profits from 
the sell-off and subsequent operation of Australia's telecommunications 

"These politicians have no commitment at all to the overall interests of 
the Australian people in the cities or the countryside. Their feigned 
concern for `the bush' is only a smokescreen to minimise the certain loss 
of votes when country people suffer an even greater loss of services and 

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