Communications Infrastructure - what the?

Can anyone please tell me why Australia, the country renowned for its innovation and creativity, has such a poor telecommunications system?

I've been scratching my head lately as to why Telstra hasn't been privatised already. Or at the very least, why the darn thing hasn't been split in half.

I know some of you would say that since its a government enterprise, built with taxpayer's money - it should remain in taxpayer's hands. I'm not so sure about that. I know Chob will want to qualify me severely on this one, but the practice of privatising government owned businesses (otherwise known as Public Trading Enterprises "PTEs") stems from at least two things:

1. An underlying ideological belief (whether founded or not) that the private sector is more efficient at running certain enterprises.

and

2. The government needs money, lots of it, and really soon.

How do we all feel about the privatisation of the Commonwealth Bank (1991 through to 1998 - raising a total of $8.1 billion), or QANTAS (1993 and 1996 - raising a total of $2 billion), or Australian Airlines (whoops - 1992 - $400 million). Are you still burning with anger?

As for staying in the public's hands - the government isn't giving it away - its getting money for it. I suppose what the government does with the proceeds is a related yet separate issue.

Now to Telstra. It owns pretty much all of the copper wire and telephone exchanges that carries all of our usual phone calls on the Publicly Switched Telephony Network (PSTN) otherwise known as the good old Plain Old Telephone System (POTS). Only recently has Optus laid some of its own cable and infrastucture.

So - how do you get phone services from other carriers like AAPT or Primus Telecom? These companies rent the phone lines from Telstra via wholesale, and rent the lines back to you via retail. So Telstra is a wholesaler. However, you can all get Telstra phone services to your place. This also makes Telstra a retailer.

No big deal right? No until Telstra the Wholesaler and Telstra the Retailer do something like this:

OPTUS: Hello Mr Telstra Wholesaler - I would like to rent some wholesale phone line from you.
TELSTRA THE WHOLESALER: Certainly, that will be $30.36 per month.
OPTUS: Umm, but your good buddy, Telstra Retailer is offering phone line rental to the general public for $26.95. I can't even sell to the public at that price.
TELSTRA THE WHOLESALER: That's why he's MY buddy. Now bugger off or pay.
OPTUS: Or go to the ACCC.

And it did happen in December 2005.

And even if Optus wins the court case, the fact remains that Telstra is one company that does two things.

Although the plan to operationally separate Telstra has been approved by the government, its still one company - which will always carry the risk of "internal collusion". In my opinion, the best way to ensure that Telstra the Wholesaler treats Telstra the Retailer just like every retailer is to fully privatise Telstra the Retailer. As for Telstra the Wholesaler - I'm not sure what we should do about that one. Perhaps we could keep in in the government's hands for now. However, the government doesn't exactly have a good track record with encouraging or producing an environment conducive to rolliing out fibre optic cable or whatever else is better than the good ol' twisted pair copper lines we all know and love.

So I say, split Telstra, flog off the retail part, and keep the wholesale part for now. Maybe then we'll see some decent pricing on phone line rental, which is the major sticking point for consumers trying to get a good deal on ADSL.