I saw an interview this morning on the Insiders, with Martin
Ferguson. It seems that the Govt has a philosophical problem
with Telstra having a 90% share of the profits from telecommunications.

Given that Telstra have made 90% of the investments in infrastructure,
why shouldn't they? When the Govt charged 45Billion $ for Telstra,
it sold that infrastructure. Analysts value the copper wire network
at around 15-20 billion$. The Govt now essentially wants that
for its own purposes, why does it not buy it back at its value?

Using the threat of no new spectrum for its mobile network, if Telstra
does not hand over the copper network, remains blackmail in my
opinion.

Why should profits from telecommunications not go to those who
have invested in infrastructure? Why should it go to fly by night
resellers, who frankly do little but annoy us with marketing calls
from India?

Martin Ferguson tried to use the banks as a comparison. Well the
banks have put tens of billions of $ on the table, they deserve
a return on capital risked, as does anyone else. That is not the
case in telecommunications, where few but Telstra are risking
their investments. In telecommunications, everyone wants Telstra
to risk its capital, they simply ride on the Telstra's back to
make handsome profits. Philosophically this is little more
then a joke and I think Ferguson is wrong.

Graham,

Thanks for your civil response.

OK, there are two different things that are happening here that are at cross purposes. On the one hand, you’re saying that people who have just followed the rules are being disadvantaged unfairly. Fair enough. On the other, I think that Telstra’s one-sided market domination can only be stopped and corrected by a similar one-sided domination of it where it is brought to heel and forced (over time) to play a new game in the ICT sector. These two waves have smashed into one another and have left some turbulence in their wake.

The caveat emptor (“buyer beware”) idea I was talking about is simply about the individual making his own decision to put his money wherever he likes. I wasn’t trying to elevate it to any sort of contractual pre-eminence.

>>Same thing but in different ways applies in consumer law. Sell someone some goods that aren't "fit for the purpose" and you'll have to accept their return, or pay damages. Caveat emptor? No way.

In this case you have the vendor deliberately changing the rules on the purchaser to damage their investment because now it suits them. To me, that is unconscionable.<<

I believe the technical term for this is “moving the goalposts”. The glibness with which I say this should illustrate how ubiquitous the principle has become in modern society. I can’t disagree with what you say – but it also illustrates the lumpiness or piecemeal nature I talked about earlier. A “hard-and-fast” principle which is followed religiously in one area of human commercial relations, is totally ignored, or completely unthought of, in another! This is one aspect on which government policy should surely be brought to bear to embed decency into all commercial dealings, big and small.

Yabby,

“You know perfectly well that between inflation and taxation not allowing for inflation, bank deposits go backwards in real terms.”

That’s debatable. Investment returns go up and down. What do you mean, “go backwards in real terms”. Are you talking about short-term or long-term trends? About a year ago the banks’ headline term deposit rates were up to 8.5%. That’s pretty darn good. It’s only now, since the financial crash, that they have come down to about 4-6% depending on the length of the term. You get less return for more security … that’s an accepted fact of life in any sort of investment gamble. Ask any respected professional in the field.

As a postscript to this discussion, I saw Lindsay Tanner on TV this morning saying that the introduction of broadband is very likely to throw up a lot of opportunities, many of which have not even been thought of yet and that Telstra was still in a very good position to capitalise on that. I don’t know if that’s a socialist ruse or not, or misguided optimism, but I am fully expecting that it will happen and, in fact, be capitalised on when the Liberals next get into Government.

As a general principle, where’s the justice in merely handing over your cash and receiving a dividend for doing nothing of substance to enhance the productivity and hence profitability of a company. I realise that, in reality, many shareholders are people who are already, or have been, in business and who are probably getting their just reward for years of having the fruits of their work skimmed by bigger players in the financial sector. So for them, they are just getting even. And to them, fair enough.

But are the ordinary grey nomads in quite the same league? I suppose you could say they are getting their taxes back that the Government has skimmed off them over the years.

I endorse the comments here that productivity in a telecommunications company is currently technologically-driven. I work in a place where we deal with bigger and bigger electronic data sets. Productivity is wholly dependent on bigger disk storage, faster transmission speeds, faster computers and more intelligent design of data and metadata files for easy harvesting and processing by computer programs. It’s the way all serious data businesses must go.

What tends to happen is that there is a small core of technical experts who design and implement the systems which are rolled out over time. This is followed by the bulk of staff in an enterprise who learn how those systems work and then exploit them to achieve a certain aim or quality of product. The real enablers are the core of technical experts who make everything that follows possible.

*As a general principle, where’s the justice in merely handing over your cash and receiving a dividend for doing nothing of substance to enhance the productivity and hence profitability of a company.*

Ok, lets sort this out first. As a general principle, if you were
going to rent out your house, would you rent it out for free, or
charge rent for them using the infrastructure provided by you, for
them to live in and benefit?

*Are you talking about short-term or long-term trends? About a year ago the banks’ headline term deposit rates were up to 8.5%. That’s pretty darn good*

I'm talking about long term averages. Headline deposit rates are
commonly a way of sucking in people. They usually apply for a very
short period of time, as was this case.

Over time, you are talking 5-7%, with inflation running at 4-5%.
Pay 40% tax on you marginal income and you are going backwards.

For this very reason, so many Australians negative gear a house.
They are fully aware that the Govt is robbing them, by not allowing
for inflation, as their money in the bank deflates in value, year
after year. If you put 100$ in a bank, 100 years ago, in real terms
you would be left with 3$ of purchasing power.

Yes, I am sure that new applications will generate some new income
for Telstra, as they keep investing. So it should, as otherwise why
bother to invest. That is not the point. The point is that the
Govt flogged the infrastructure to investors for 45 billion$ and
now wants a large share of it back. They have 25$ billion in cash
in the future fund, they are free to buy it back, not try to obtain
it for next to nothing, using blackmail, by inventing new rules
as they go along. That is third world stuff.

"Ok, lets sort this out first. As a general principle, if you were going to rent out your house, would you rent it out for free, or charge rent for them using the infrastructure provided by you, for them to live in and benefit?"

I would not rent it out for free, especially to strangers. It would be different if I was to ask someone to house-sit for me. However, there is a difference between your house and a monetary investment. You've generally put work into your house and the amenities you provide to the renters have generally come after your labours.

"Headline deposit rates are commonly a way of sucking in people. They usually apply for a very short period of time, as was this case."

Not true. The length of time a particular deal is on offer can be short but once you've signed up for a particular rate, the bank is obliged to pay you at that rate even though that particular term/rate combination may have ceased to be available in the meantime.

Also, headline rates constantly chop and change in terms of the investment duration they apply to. (This is designed to wrongfoot investors who just want to leave their money in the bank forever without bothering to mother their investment. The way around that is to check out the rates sheet they provide and reinvest under the term with the best rate that suits you.) But the headline rate generally changes slowly over time. For example, the headline rate at the moment is about 4-4.5%. It's likely it will be similar in a year's time, although it will likely apply to a different term (or terms) of investment.