November 30, 2006

Horse 675 - I Aint Paying For Telstra

Welcome to the 21st Century proper. This is a land in which the services for which your forebears paid for have been flogged off and now are in private hands. One such example is Telstra.

Despite Australia's telcos announcing advances in technology with great fanfare in recent months, more consumers are now unhappy with the telecommunications industry than last year. The telecommunications industry ombudsman has just released his annual report, which shows complaints are up 10 per cent. The internet was the main cause of concern, with a doubling in complaints about internet contracts, and guess what, Telstra was the worst offender.

Specifically there's been a 44% increase in the number of complaints over the last 12 months, and I will now suggest that this will only get worse. If you read through the reports of the company going back to 1996, you'll find that the level of government investment has proportionally dropped off directly with its shareholding in the telco. With T3, although the government still holds about 17% ex-board, the regulatory effect of this is that its now no longer required at law to trump up any money at all for investment.

Around about $4bn would be required for a full roll-out of broadband services to areas outside of the major cities and whilst in 1995 this would have been paid for out of taxation receipts, the amount that the goverment is now required to find is... $0 The plan for a fibre optic broadband network has also been shelved because supposedly negotiations over regulatory issues with the ACCC broke down.

Perhaps in one of the only occasions I've ever agreed with Rupert Murdoch on anything, is in reference to a comment he made about access to broadband in this country. In the speech he gave to a Press Club Luncheon he called it a "disgrace"; interestingly Sol Trujillo was forced to agree with him, but again there's really little that can be done unless the money is found elsewhere.

The only real solution I can see in the giant investment hole here is for News Corporation to buy out a substantial stake in the telco. News Corp already goes halves with Telstra in the FOXTEL cable TV business, and certainly they have the money.

The bottom line is that as a taxpayer, my share in Telstra is now nil. Telstra has been pushed out of the nest and now should not be allowed to sponge even a red cent off the government. Whether they survive, prosper, fail or die is now longer my concern. If they happen to have a better deal then so be it, but like the Commonwealth Bank or Qantas, I'm not showing any brand loyalty to them.

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