Telstra’s plan to split into three entities is the most radical shake-up of Australia’s largest telecommunications company since the Howard government began privatising it in 1997.
But as David Hetherington, a senior fellow at progressive think tank Per Capita, has suggested, it comes 23 years too late.
In privatising a public monopoly – controlling the copper wires and other infrastructure – the Howard government created a perfect storm for imperfect competition. It meant Telsta competed against other telcos to which it provided critical infrastructure services – hardly an ideal situation.
With the politicised and botched roll-out of the National Broadband Network, the market has become even murkier.
The NBN model championed by the Labor governments of Kevin Rudd and Julia Gillard – fully replacing the century-old copper-wire network connecting the nation’s homes and business with fibre optics – might have corrected the mistakes made in in the way Telstra was privatised, putting monopoly infrastructure back in public hands.
But the Abbott government neutered that by choosing to roll out a half-baked NBN, and now the federal government has its eyes on privatising the broadband network.
This is why Telstra wants to split into three entities. It is positioning to acquire NBN, putting itself back in a monopoly position. That might be good for shareholders. But it’s not good for competition and consumers.
Strategic sense – for shareholders
Telstra’s plan is this. Its existing infrastructure business, InfraCo, will continue to operate Telstra’s fixed-line assets. Mobile infrastructure will be hived off to form InfraCo Towers. The third entity, ServeCo..…………. ………….. Continue Reading…… ……….. ………..