Ben Rees sees Telstra as some sort of benevolent provider of subsidised communication services. He never explains why the bush should be subsidised at all. Why should a low income urban family pay extra to cover the phone costs of country people who may be wealthier than themselves.

We have some something called the Universal Service Obligation that is supposed to ensure that country people pay the same for a phone service as those in cities and towns. This sort of policy can only work in a monopoly situation. Telstra is starting to see pricing pressure in the urban markets from mobiles and eventually wireless broadband. These devices are encroaching on their public switched network (PSTN) and reduces their ability to cross-subsidise rural services. The USO will become unsustainable unless someone invents a technology that makes rural communications cheap and affordable.

Perhaps the rural phone subsidy should be administered by Centrelink and people will understand that subsidy and welfare amount to the same thing.

Ben,

"On ideological grounds the Conservatives are opposed to subsidies". Really ? Next will you tell me that they are also ideologically opposed to their own 30% rebate for private health insurance, 30% rebate for child care, Family Tax Benefit parts A and B and private school handouts. Shakes head.

The first thing that National Party members learn is the means whereby drought relief can be claimed at the same time as flood relief. The inner city socialists should realise that when it comes to real socialism the National Party leaves them for dead. As far as Telstra is concerned, their whole business plan is being shredded so fast at the moment that I worry if anything will be left when Howard gets his chance to sell it off. I am currently using another carrier to make phone calls to the UK at one cent per minute. Needless to say I am not using Telstra. Clarkes Law says that the cost of communications is halving every nine months; what this means is that even if it costs ten times more to communicate from Bourke than Sydney, that difference will be between one cent and ten cents, so does it matter?

Subsidies to private companies is what howard and his ilk are so good at. These subsidies, as I understand it, have been given to private schools. These schools are privately owned and pay dividends.
Then there are the private medical funds, so badly run that without tax payers money they would probably have to file for bankrupcy.
Of course there's telstra, instead of receiving fat dividends every year the government is selling, then giving this company a subsidy, not good economics - surely!
Not to mention howard's brother stanley.
Nor a donor to liberal funds the ownwer of a very large ethanol plant.
Then it's qantas, not receiving money as far as I know but it is getting government protection from the likes of singapore airlines.
Last but not least it is the voters who, it can be said, are paid for voting liberal. Remember howard's compliant bagman running through rural areas throwing money, ours, around.
These are the ones we know about, how many more are there?
Oh for a decent investigative reporter,oops! I forgot, it could be -and has been - said that howard seems to have bought them all? numbat

I think any Telstra sell off debate should be preceded with an attempt by all to reach a consensus on what we consider to be the basic level of services, not just telecommunications, all Australians should be entitled to.

Left to the free market, the best level of services will gravitate to those who can best afford them while those who cannot do without.

This scenario is not acceptable to me and I expect our Governments to interfere and ensure basic services are delivered to all. I assume most people would agree with this.

If so, then the question we should first be asking ourselves is what level of these basic services Governments should be providing to all Australians.
What standard of roads, medical services, education and so on should be provided?

In this case, what level of telecommunication services would you consider acceptable for rural/ regional areas? This should be answered before entering the Telstra debate as your answer certainly has a bearing on it.

I have answered these questions it in my mind. People exiting to the coast should not have to make this decision due to a low level of basic services

Sorry I forgot another recipient of tax payers money or payment in kind is the Tasmanian desert creators, gunn's. Yet the pathetic unionists thought they were being looked after. numbat

Rob88,

if you take your view on city folk subsidizing the country then perhaps we should not build country roads as most of these are paid for by state taxes contributed by city dwellers, nor railroads as state funds cover these as well.

Perhaps we can close off the major cities and then Telstra can save a bucketload as well as state governments.

Problem is the cows, sheep and farm produce will have to walk! ;)

BTW I live in the inner city of Sydney and have no friends, relatives etc living in the rural areas of Australia! Nor do I belong/support the Nats, Greens or Labor, however, I think telco facilities are an essential part of infrastructure and critical infrastructure should NEVER be owned by private enterprise. I realize and accept that we have Vodafone et al but Telstra owns all of the copper; this may be irrelevant for the city as mobile cells have become ubiquitous!

As an example of how serious privatisation can be, the US government wants to consolidate information on major assets such as power supply, gas distribution etc as part of its emergnecy response planning. Guess what, private enterprise own nearly all of these assets and are resisting "big time" on providing the essential data on this infrastructure. They somehow see it conflicts with their profit/competitive goals! Damn terrorist/natural disasters and the sad part is that the US can not legally enforce compliance.

Bens comments re the sale of Telstra provide interesing reading, I,m with Geof and Peter, as are about 80% of Australians, Telecomunications as with power are essential sevices. it would be fine if we all lived inside the city boundary, or perhaps on a isle like say England where current technology can easily cover and profitably. In WA mobiles are only avail on main highways or around large population bases...where else would you expect, they pay? Same over most of our Nation OZ. Bad accident, country road, no phone, no ambo or hostpital either I suppose, no schools? I'm discusted,.. at johns lies as well.

Idiology has driven public policy for some time, since Whitlam we have progressed down the same path, Rob 88, Crockodile, Numbat and plerdsus...you have to kidding!! and you want to be fed.

I thought we may have at last found a real oposition...but alas it just took a couple billion and Barney bailed.

Nev.

Nev is right about mobile phone usage, but forget WA, take a drive down the Hume Highway and 2 kms south of Bowral there is no Telstra coverage until you drive into Goulburn. This has nothing to do with rural Oz as business people need to travel backward and forward on this major highway.

Like it or not our economic future is squarely in the domain of fast, reliable, affordable and ubiquitous telecommunications.

Alas, as they say "we get the politicians we deserve" I am not sure I did anything to deserve our current batch of Libs, Labs etc. They stand for nothing but self interest and blind ambition. (Oops must not get too far off the current topic!)

The worst thing is that there is no rational opposition party responses to the Telstra sell off - there are so many flaws in the arguments for its sale but all we get is the 10 second sound bite of Kim being outraged! That's it!

Thanks Ben Rees for a useful article.

It is astonishing that the Government has turned logic and reason inside out in order to avoid using the most blindingly obvious means, which it has at its disposal, to fix problems with our telecommunications system, particularly for rural users, that is to use its majority control of Telstra to simply direct Telstra to serve the public and rural users.

Privatisation will inevitably cause money which could be used to fix our telecommunications services to be diverted into the hands of stock brokers, investors, fincancial advisers, accountants, bankers, regulatory red tape and general paper shuffling.

People may be interested to read other discussion on Telstra here :

http://forum.onlineopinion.com.au/thread.asp?article=3737

(The debate on welfare 'reform' advocate Peter Saunders' article "Defining Poverty" got a little bit off track, but I would plead that it was not primarily my doing.)

Other on line forums include :

http://johnquiggin.com/index.php/archives/2005/08/20/dont-minchin-it/

http://johnquiggin.com/index.php/archives/2005/08/06/telstra-yet-again/

Most importantly, if anyone wants to help us stop the Government selling without your consent, what is, after all, YOUR property (and not Howard's, Costello's, Minchin's, Coonan's or Trujillo's), please get in touch with us through

http://www.citizensagainstsellingtelstra.com .

Essential services should never have been placed in the hands of private industry. I concluded that back in the 80's and have not observed any evidence thus far to change my opinion. As Ben Rees says there is no valid reason for the sale of Telstra apart from ideology.

Assuming that regulations are put in place to protect communications in rural areas (which in and of itself invalidates privatisation), just how long are these 'regulations' guaranteed to last? For perpetuity? Somehow I doubt that. Times change and so do regulations. The demand for continually rising profits will be the ultimate determinate of how well the rural sector is considered.

Peter King
I am not opposed to the government providing essential services but we we should have priorities. Open up your map of Australia; it's a big place. Are we going to provide mobile coverage for all or provide better health and education?

I would like country people to have good broadband but not at the expense of destroying Telstra or draining the Treasury.

The telecommunications industry needs an environment that promotes
investment and encourages competition. Telstra under government control has a poor record of investment. It paid out more than 100% of its profits to shareholders last year. This was a board decision and guess who controls it. The government will collect $5.25bn in dividends, company tax and shareholder tax receipts from Telstra. Most large public companies retain 20 to 50% of their profits for investment and growth but Telstra is a government cash cow, not a growth engine. Typically, in areas of population growth, the supermarket will be built before the broadband. Private companies will invest in supermarkets years before Telstra gets around to upgrading the phones.

I can understand the annoyance of people relying on Telstra to fix their phones but government ownership and USO is the problem not the solution.

When Telstra service was unsatisfactory on my phone I switched to Optus; the quality improved and the cost plummetted. Telecommunications technology is changing rapidly, particularly wireless. Small towns that were uneconomic in ADSL will become a commercial proposition with wireless. It is essential that more operators get into the market and investment is profitable. Competion and lower prices will follow.

Obviously there are areas that are uneconomic for wireless and perhaps a subsidy is justified, but before we hand out public money we should look at the income and assets of the recipient. Maybe they should pay more.

Your analogy with country roads is invalid. The roads are there for all to use but the phone connection is private. There are plenty of main roads in outback areas that are impassable after 5mm of rain. The people living their might prefer sealed roads instead of broadband.

Rob88,

Perhaps, before we discuss whether or not we should subsidise rural telecommunications users, we should first decide as a community, whether or not we should be subsidising the finance sector. The reported cost of $500 million to sell Telstra is on the beginning of the story (see :
http://www.theadvertiser.news.com.au/common/story_page/0,5936,16351874%255E911,00.html)

We are also paying, as a community, for much of the red tape, which is necessary to set up a contrived environment of competition, not to mention all the idiotic duplication of infrastructure. Examples include the five different digital mobile phone networks covering the same geographic area in the major cities and the duplicated rollout of optical fibre cabel performed by Telstra and Optus in the 1990's. Who do you think must ultimately pay the cost of all of this?

If we had simply maintained public ownership of the natural monopoly of telecommunications and had run Telstra to meet the needs of Australians, rather than under its inappropriate corporate charter, introduced in 1989, we could have easily met the needs of rural telecommunications users with the money saved.

Just finally, I would like to put in a plug for another online discussion over Telstra, here :

http://edcrain.com/forums/viewforum.php?f=2

People need to realise the speed at which communications technology is changing, and the fact that we have to go along with the changes in order to remain internationally competitive. Wireless internet has the potential to gut the current mobile phone providers in very short order, just as fast as wired broadband is gutting fixed line services. The reason Telstra should be sold as fast as possible is to get some return for the assets while there are still mugs (sorry, investors) who are willing to buy it. The future for remote communications, both phone, data, internet and mobile, will be satellite broadband, which will be accessible throughout the world, and will require NO maintenance staff to be stationed in rural areas. The resulting social changes will be very dislocating, but cannot be avoided. Any attempt to resist these changes will be futile (know any morse code operators?). Any subsidies or special treatment will only be useful to ease the transition to the new order. Remember Tim Berners-Lee's comment last month "People should realise that we are just at the very beginning of the technological revolution".

How on earth does the speed of technological change justify selling off an essential public utility? If anything the possibilities of new technology should be kept away from those with only a profit motive. Can't believe that this is the best that plerdsus can present for an argument. Try again.

Hear hear, Trinity.

>>How on earth does the speed of technological change justify selling off an essential public utility? If anything the possibilities of new technology should be kept away from those with only a profit motive.<<

The US example of 911 (emergency) calls and the VOIP (Voice over Internet Protocol) service providers should ring alarm bells here.

Here's a quick summary of the problem, courtesy of CNET:

"Because of a range of technical and other problems, VoIP 911 calls are often unreliable. After-hours calls in particular may be misdirected to emergency-services administrative offices, where a recorded message explains that the offices are closed and that callers should dial 911 if there's an emergency. What's more, VoIP 911 calls that do reach dispatchers often aren't accompanied by the caller's phone number and location."

Once a service is conducted purely for profit, i.e. placed in the hands of commercial organizations, the inclination to dispense with non-revenue-earning components comes into play. And 911 has traditionally been cost-free to the caller, representing no revenue to the provider. Unfortunately, the technology that enables the VOIP company to identify the sorce of the emergency call, and route it to the closest centre, is an additional cost. Should this be passed straight on to the consumer, or should the government shoulder some of the responsibility, and cost?

If I were the provider, I would charge the government through the nose for adding "proper" 911 routing to my service. After all, what is more valuable than helping save lives? Not only that, but I owe it to my shareholders to maximise every revenue source available to me.

Although I predicted the full sale of Telstra would probably proceed based on Barnaby Joyce’s slush fund for the bush and that fund by itself would not guarantee quality of service by itself the issue has moved on now the Nationals have accepted this loose deal as their best chance of obtaining a sweetener.

I implore other Senators from the bush to get their hands in the bucket right away otherwise that slush fund will just gush out in one direction. Also the only guarantee that service can be delivered still depends as always more on the maintenance of in house skills than any new technology (from a recent letter).

This relates directly to who runs the backbone after Telstra is sold.

Experts can set up many components to have a deliberately exploitable use by date. Government agencies everywhere fall into that common trap and only long term ownership such as we had avoids that.

But we have a new situation where sooner not later the government and the public have lost control of their giant communications backbone. Let’s imagine for a moment it was the entire Australian transport system; our main roads, streets and superhighways as well as railways and ports all suddenly have to make money for the new shareholders. Odd bits everywhere would inevitably be discarded.

The size of the body of practical people left in the telecommunications industry is more critical than ever. We can guarantee some long term service delivery by demanding each part of the industry has to maintain skills and educate to the level necessary for local research and development. That means new partnerships freely offered to other institutions in all regions. States once did that in extracting mineral resources through their School of Mines.

This is more about reading between the lines and we can do it again.

Recall Victoria once had a powerful SECV Tasmania likewise its HEC, Victorians also had its MMBW minding a vast network of water and sewage systems. All were industry leaders in their time and much of their technology became the standard in other states

Privatisation is not simply about selling off public assets. It's about whether we, as a national community, have a right to run our own telecommunications service to meet our needs or whether we must, instead, depend upon one or more private corporation to do it for us. Regardless of what technologies are used we should insist on our right as a community to be able to own and control the means to be able to provide telecommunications services through our parliamentary institutions.

It defies all reason to imagine that plerdsus has knowledge of the pace of the development of technology that is not also apparent to most prospective investors. How can he expect that, if there is any validity to his claim, that this can escape the notice of prospective investors over the coming months, and the value won't drop close to zero? I predict that the price won't drop to zero, although they may have trouble in achieving the $5.25 target price.

Whatever price is paid we will all be screwed in more ways than one. The investors will try to get, from our pockets, what they consider a good return on their investment, whilst the Government can be expected to squander the money on either pork barreling, or the "Future Fund" which will be of little to anybody but the appointed fund managers.

To change the topic a little, some of you might find this article about Sol Trujillo from Dissent magazine to be of interest :

http://www.citizensagainstsellingtelstra.com/resources/2/dissent-trujillo-aug05.html

Given this big "bucket of money for the future", and given its public money allocated to provide infrastructure, why shouldn't other private telcos hold out their hands? Why not flick some cash to Vodafone to wire up Birdsville for G3?

In fact, I think the good bergers of Coolah could do with wireless internet access, so perhaps I should ask for a measly $50 million out of the fund to put them on air! Bargain, I might have a bit of a problem with my shareholders though, my wife might feel the 50 mill could be better used around the house. Still its worth a thought!

There is no way private enterprise could ever profitably provide infrastructure to remote areas, so if we don't have a public entity with the capability and direction it will never happen.

I feel very sorry for Oz rural communities in the next 5-10 years. They were only just starting to catch up with ADSL etc, fat chance of ever seeing fibre optic, CDMA EVDO high speed mobile internet et al.

The pattern of privatisation has been that the Multi Nationals take a large if not controlling interest in the infrastructure, borrow to fund and use the interest to see they do not make large profits for collection inside oz. Quiet apart from the revenue flow, is the question of foreighn ownership of this kind of infrastructue, great for defence I suppose, be interesting to see how Singapore may veiw our request for access in difficult times.

In the event they can not obtain a satisfactory return they go back to the Gov ( the people) for a top up.

There is no logic, just idiology, the real question is how do we change it.

Great comments from you all, even the odd devils advocate.

Nev

Rob88 said in relation to his move to Optus “Small towns that were uneconomic in ADSL will become a commercial proposition with wireless - Competition and lower prices will follow”. Rob avoids all the engineering issues here like how many customers in a given area can go wireless at a given time. Also how far will the customer wireless link go in the bush and how is the regional traffic connected beyond that cell and so on.

Rob may recall we once had a two airlines policy in all regions before we had a three carrier mobile phone policy that started to put independent radio towers on every hill. Rob; competition policy can kill airlines. What a mess we had just after Virgin arrived! Perhaps Virgin will fall over too. Recall; Rex picked pieces in the country regions like they were hot potatoes.

Mate; I don’t trust any policy rhetoric that is flogging another old horse to throw off its legs in the race for pots of gold under visionary rainbows with the notice” Final Price”. In this case we pay for what we get; not the other way round. A company stripped of options or assets and a backbone stripped of flesh is no use to anyone.

A better policy was to flog it off warts and all with no strings attached to obtain a decent float then offer the proceeds back to the states and their regions to fix what ever problems they wished. That way we might have seen some service improvements here and there with out all the red tape.

But I say it again it’s time somebody kept an eye on who is training the next generation of practical people we need to keep working out in the bush. Invest in youth we must to have technology at our fingertips in our old age.

What a lot of schmuck we've been reading
Now that the cat is out of the bag re Telstra i.e delving into Reserves to pay by-yearly dividends, poor management decisions, out-dated equipment, obsolete technology, complaints growing-by-the-minute..and JH professing it's unlawful to reveal these absolutely deplorable FACTs, because it was 'supposed-to-be-secret' between US import Sol Tjuillo and his 3 US muskateers - who have been branded as 'talking down' the mythical Telco's profitability, and 'shooting-in-the-foot' the $3 Billion promised to Nat - poor Banarby Jones.
The coffers just weren't there BJ. Not only were you and your Country mates misled another time by JH. You got dumb-schmusked once again !
Meantime, JH is trying once again to con all the Mum's and Dad's into buying Telstra shares at $5.30, knowing it's not even worth $ 3.30 - specially when Sol's right-hand man delivers a " wouldn't even recommend it to his Mother " - my, it say's it all.
Another of JH's ploy is offering Asian buyer's, particularly the Singaporean's - another crack at Telstra, claiming good value, and ramping up 'Foreign Investment', criteria, another notch when hitherto it was considered unpalatable, unlawful,against Australia's interest.My, how we switch side's when it comes to flogging a dead horse !
I sold my 2800 shares ages ago. The writing was on the wall when Steve Vizard profitered from insider-trading, and the ASIC failed to followup his unconsciousable conduct, as a member of Telstra's Board. Adding insult, JH admitted he personally appointed SV.
As well, Sol Tjuillo is/was another of JH's appointments.
C'est la vie Oz style !

Dal,

Jh has turned lying into an art form, the dreadful little lawyer.
ceo mcgauchie once in charge of the nff and playing a role on the wharfs a few years ago would be yarning with the Feds dayly. I wonder if they have the ability to hood wink us at the next election. Trouble is no real alternative offered. It was labour who kicked off this whole free market push and they do not sound a bit like they have moved. Forget telstra, the deal is done....is it Australia Post next? We did own a bank as well once.

Nev

Nev wrote: "Trouble is no real alternative offered. It was labour who kicked off this whole free market push and they do not sound a bit like they have moved."

This kind of muddled thinking has helped demobilise much of the potential opposition to John Howard and has therefore helped him to win three elections since 1996.

What alternative do you propose, other than having Howard and his successors remaining perpetually in power, if you are not in favour of Labor winning the next election?

Of course life won't be a bed of roses if Labor wins government (as it definitely was NOT from 1983 until 1996), but at least we will have taken the first necessary step to get out of the political rut we have been in since 1996.