"So who is going to compete with the NBN, when its a fat and lazy Govt monopoly?"

Yabby,

Now this is the bit I don't understand. Is Telstra going to become a Government monopoly or not? My understanding of Conroy's decision is that the company would effectively be forced to split its retail and infrastructure arms only. Is that correct? In which case, Telstra is going to become two commercial companies not one. Where is the "fat and lazy Govt monopoly" in that? Someone please correct me if I'm missing something.

Yabby,

Thanks for responding re the shares v proceeds going to the Future Fund. I admit I was not sure of my ground there. Assuming that you are correct, and that the Future Fund still remains the largest Telstra shareholder, it would seem that the FF would have a vested interest in at least the sustenance of the Telstra share price until some time after the expiry of the prohibition on share disposal that was emplaced upon the FF at the time of share transfers when Telstra was 'privatised'. That is, if the FF felt that the long-term profitability prospects of Telstra were not likely to be good, and that selling its shareholding while the price was still held up would be its best course.

I share RobP's perplexity as to whether this proposed dismemberment is an expropriation of Telstra or not. I always understood that it was a condition of the 'privatisation' that the privatised Telstra was obliged to give other telcos (its competitors) access to its infrastructure on equal terms, as commercially crazy as this arrangement would appear to be. A principal jewel in Telstra's crown was its possession of an already largely existing, but undeployed, optical fibre infrastructure. How any CEO worthy of the name could have taken on the job of CEO of Telstra with any degree of integrity in the face of this requirement to share access to infrastructure without indicating at the outset of his tenure that the profitability of Telstra would inevitably be in jeopardy escapes me.

I cannot escape the feeling that the privatisation of Telstra from the outset was not necessarily so much a Howard-government-driven agenda as a trans-political-parties/ Commonwealth public service driven agenda. The theory behind the push being to flog of Telstra to a largely unsuspecting public before the foreseeable effects of new technological developments already on the horizon diminished the market value of its then-existing infrastructure assets.

Answering Fractelle's question as to who is more important: neither shareholder, consumer, nor elector; because the politico-bureaucracy's trough needs filling.

RobP said;
In which case, Telstra is going to become two commercial companies not
one. Where is the "fat and lazy Govt monopoly" in that? Someone please
correct me if I'm missing something.
end quote
Yes you have missed something.

Telstra would remain two commercial companies.
The government monopoly comment referred to the NBN company.
If the government is to retain 51% then it will be a monopoly with
the other shareholders going along for the ride.
However there was a suggestion that if Telstra put its network into
the NBN it might get 49% of the NBN shares.
It appears to be offered 49% or Telstra wants $20 billion instead.
Where the other shareholders would go I don't know.

I just wonder if the pollies offsiders have tried to value the pipes
and ducts in every street in Australia ?
I know that in my short street there was just enough room for the
Foxtel cable.

I have read what appear to be knowledgeable comment that a cost of
$40B will require around $100 to $150 per month from every address
in Australia if every address is to be served with fibre.
If this covered typical domestic phone bills, internet and perhaps
pay TV it could be a goer, but as the charges of the ISPs, phone
providers and pay tv will be on top it looks a bit dodgey to me.

This is what I think Turnbull was referring to when he asked if a
business plan had been done for the NBN.
The answer implied that FTTPremises was such a good thing it did
not need a business plan.

If the scheme becomes too expensive by the time it gets to say, 25%
or 33% installed, it may fall into Telstra's lap by default.
Telstra Network Company could offer to take it all over.

*Where is the "fat and lazy Govt monopoly" in that?*

RobP, the majority owner of the NBN will be the Govt. It will have
no competition, Conroy is seeing to that.

The joke is that Telstra could compete quite well with the NBN, it
in fact offered to build a fibre optic system, the argument came down to return on
investment and costs in rural areas. Telstra insisted that it was
a commercial operation and needed a fair return on investment.

Conroy seemingly does not want Telstra to compete with the NBN,
so has put a gun at Telstra's head. Hand over the copper system
and customers etc, or Telstra won't be able to buy any more
mobile spectrum for the growth of its mobile division.

I call that blackmail!

This is one article about it, from Business Spectator.

http://www.businessspectator.com.au/bs.nsf/Article/Invitation-of-mass-destruction-pd20090918-VZ4PJ?OpenDocument&src=ea&ir=4

Frankly I do think that Telstra are being given a raw deal. They
are meant to maintain and fix all the wires, all I get in terms
of "competition", is yet another Indian call centre trying to
flog be yet another "phone company", which seemingly is little more
then an office, no investment in infrastructure at all.

Yabby,

Here's a little bit more background from the same site. Alan Kohler's analysis of where the bungling really started which put Telstra on its current trajectory.

http://www.businessspectator.com.au/bs.nsf/Article/Trujillo-should-be-sued-pd20090917-VXTC6?OpenDocument&src=mp

In light of this analysis, I think Kohler could be right. Maybe the Telstra shareholders should be suing the Two Amigos for their less-than-impressive custodianship of the company. Then maybe they should try to get compensation for the loss in value of their shares.

Also, what hasn't been said on this thread is that Telstra shares have been slowly slipping downhill ever since the T2 tranche was put on the market. It is not a recent phenomenon. Does Howard bear some responsibility for putting Telstra on the market in the first place?

*Does Howard bear some responsibility for putting Telstra on the market in the first place?*

Rob, the problem with Govt monopolies, is that in the end, they
commonly do little but create much fat for those who work there,
bugger the consumer. The success or failure of a privatisation,
ultimately comes down to the details, of how it is set up.

I think you'll find that Libs and Labor were as keen as one another
to sell off Govt assets, so I think its pointless to try to score
blame.

I'd read Alan Kohler's analysis, I subscribe to his Eureka report.
Yup, Sol and co made some mistakes, business in America is played
differently to business in Australia, he never did understand that.

But I still don't think that this gives the Govt the right to
blackmail Telstra.

I also think that Sol did in fact do alot of good for Telstra. It
was him who had the balls to ditch the old cdma system, standardise
the technology, within a short time, due to him, my internet speed
increased tenfold, for much less cost. Given that the old Govt system
had screwed me for 9$ an hour, why should I complain about Sol?

Sol was also aware that Telstra could compete quite well with any
Govt NBN, if push came to shove and he was correct.

But of course if the Govt makes up new rules as it goes along and
uses blackmail to achieve its objectives, well that is not
normal business practise, but more like political thuggery in my
opinion.