The Federal Government has announced in the past week that it seeks structural separation of Telstra from wholesale and retail arms.
This was announced by Senator Stephen Conroy with glee as he had finally worked out a way to drive a stake through the giant and the greatest problem for his career.
The Rudd Government, had recently announced its National Broadband Network (NBN) ambitions, chaired by The Communications Minister, the honourable senator listed above.
This ambitious project is set to spend over AU$40,000,000,000 of tax payer funds to deploy high speed broandband services to every household in Australia. The Government is also expecting the sale of NBN Co. (their $2 company set up to create this network) to achieve the required investment required to complete the network.
This grand plan, is horribly flawed.
With an investment this high, the government needs to ensure it can have a return on its gratuitous investment. The problem is, why would any one bother to switch over to the NBN?
Initial projections have shown that the NBN wholesale cost will be greater than the retail cost of current offerings. In an already extremely competitive market, why would anyone bother?
So the government, well, really the Australian population & tax payers, would be left with a White Elephant which cost billions of dollars, but without any real value.
This represents a big big problem for the Government, which hasn’t even put through the senate for approval on the broadband plan. The government would be left licking its wounds as the Australian voter would hardly be impressed with this loss of funds. With the current Global Financial Crisis, a spend of money this big could be considered over-zealous with no guaranteed return. What can be done now?
This is where the brilliant idea came in, chaired by Senator Conroy and announced by ACCC, the Australian Competition & Consumer Commission. The structural separation and sale of Telstra Wholesale would level the governments playing field. The one competitor they have that is capable of knocking down their house of cards, with the NBN capable network already in place.
Without Telstra having a multi-bullion network already in the ground with the ability to undercut NBN at every turn, they could have success… maybe… just maybe…
There is one major ethical problem though, can the Government force someone to give up their property? According to the Australian Constitution, it states the parliament can:
- The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws
Is forcing someone to sell something that they own, just? What are “just terms”?
If you’ve seen the movie “The Castle”, you’ll know this well. The High Court of Australia rules that the forced sale of The Kerrigan’s house was not “on just terms”.
In my opinion, I don’t think the forced sale of one entity’s possessions so that another can be viable can be considered “just”. The ACCC’s announcement is also against its primary reason for existence, competition.
The act being played out has been done by previous Governments; and they’ve lost. Where they don’t see something they like, they try to legislate.
I hope Telstra’s share holders, who comprise of hundreds of thousands of Australians bring this to the high court, with the support of Telstra’s legal team to fight this “unjust” and politically destroying ruling.