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Memories of Kim Beazley

Tuesday, 27th June, 2006

One thing Kim Beazley can not be accused of is far sightedness. As evidence of that we need look no further than the current regulatory mess that is Australia 's telecommunications system.

Today's Labor Leader is the man who 15 years ago was Minister for Transport and Communications. It was he who persuaded Cabinet that while a competitive market was a good idea a monolithic government owned player should continue.

And not only continue but be strengthened by amalgamating the old Telecom, which operated within the country, with the Overseas Telecommunications Corporation which carried telecommunications overseas.

From the very start the newcomer Optus, rewarded only with some government owned satellites, was seriously outgunned. What was to become Telstra not only started with all the customers but Optus had to do negotiate with its rival over what it paid to access all those cables and telephone lines controlled by its big competitor.

Sure Mr Beazley set up a so-called regulatory framework which supposedly meant there was a level playing field but the result was the madness of the 1990s which saw Telstra and Optus laying cables alongside each other down streets. The politician of wisdom would have foreseen the difficulties of Telstra being both competitive retailer and monopoly wholesaler and split the two functions from the very beginning.

That Mr Beazley did not do so owed much to the advocacy of the trade union movement which was loathe to see any weakening at all of a government monopoly. Feather bedding and wage gouging are much easier to achieve when an employer can pass on the cost of buying industrial peace.

The inevitable conflict within an organisation of being a fair service provider to all comers on one hand and a competitor with the same clients on the other was made more complex by the subsequent part privatisation in 1997.

From that time onwards Telstra directors have had an impossible task. What is in the best interests of shareholders is rarely in the best interests of the broader community. Naturally Telstra has obfuscated and fudged the figures in every way possible to make its wholesale operations as profitable as possible.

Now at last there is at least talk of making some kind of division between the retail and wholesale arms of Telstra but the belated acceptance of the need to fully separate the two is apparently not on the agenda in Australia .

It is, however, in New Zealand where the Government announced a decision on May 3 to force Telecom to open its network to broadband rivals. The Government at the time said it was also considering a forced separation of the company into retail and wholesale.

Today the company announced it is voluntarily splitting the company into two separate, independent operations. Telecom NZ's Incoming chairman Wayne Boyd and chief executive Theresa Gattung said the move would create one wing for retail customers and another for the services it provides to other internet and phone providers.

“The country expects world-class broadband services and our decision to reorganise our business is one more step towards ensuring healthy competition exists to provide that," Mr Boyd said.