November 4th 2000

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Articles from this issue:

United States: ClintonÂ’s legacy to determine U.S. presidential poll

Editorial: TelstraÂ’s infrastructure - public service

Agriculture: Apples - whoÂ’s fooling whom?

Canberra Observed: Whitlam's apologia on East Timor role

National Affairs: Economic conversion for Democrats' leader?

Taxation: Why the attack on family trusts?

Telecommunications Inquiry: Telstra's country services deficient - TSI report

The Media


Straws in the Wind

The courts and commercialised medicine

Drugs: Needle exchange programs - the shocking reality

Family: Medical professor endorses the condom culture

Society: Markets and morals

Books promotion page

Editorial: TelstraÂ’s infrastructure - public service

by Peter Westmore

News Weekly, November 4, 2000
While the focus of the recently-concluded Telecommunications Service Inquiry involved the standard of services delivered to rural Australia, the report indirectly raised again the question of how to provide adequate infrastructure for Australians living outside the capital cities.

The Inquiry recommended that this should be done through a widening of competition in telecommunications rather than relying on government regulation: introducing more players into the fixed and mobile phone markets, Internet, digital and video communications.

Its report, Connecting Australia, observed, "Consultations revealed a strong expectation by customers in all parts of Australia that they will have access to a wide range of telecommunications services, that those services will generally work well, and that when difficulties arise, they will be able to get advice and assistance promptly. People in regional, rural and remote Australia told the Inquiry they want access to services on an equitable basis compared with their counterparts in metropolitan and large urban centres."

Growing need

The need for a comprehensive Universal Service Obligation to guarantee access to all major telecommunications services throughout Australia is rapidly growing. The computer revolution has prompted major changes in communications, business and education, and Australians living in rural areas have even greater need for these services than people living in the cities, due to the depopulation of country areas and the decline in other rural services in areas such as banking and education.

Yet the report itself highlights the practical impossibility of achieving this.

The cost of upgrading existing communications links to give people in rural Australia fair access to the information economy is prohibitive, with a cost in excess of $4 billion, and little prospect of making a profit from providing services to people scattered across outback Australia.

Another problem is the practical impossibility of giving most mobile phones users full coverage over the continent at low cost, despite the fact that each of the mobile phone companies has spent millions of dollars in duplicating networks around the country.

The lack of co-operation between most of these companies is seen in the unwillingness of most of them to permit "roaming" - sharing of communications links in remote areas - although each of them boasts that it provides roaming access internationally!

The unnecessary duplication of facilities in mobile telephones is repeated in the cable industry. Several years ago, Telstra and Optus spent an estimated $4 billion each in rolling out optical fibre cable past around two million homes and businesses in cities around Australia.

Since telecommunications were deregulated, assorted other companies have been competing with each other to build high speed optical fibre cable and mobile links around the metropolitan areas, and between cities.

While people living in the cities will undoubtedly benefit from all this activity, the certainty is that many people in rural Australia will be left out, yet again.

The alternative is for Telstra's infrastructure, which includes the largest fixed and mobile networks in the country, to be kept in government hands to provide a necessary public service to enable people living in all parts of Australia to have equivalent access to communications services.

One way to do this would be to divide Telstra, which is currently 51 per cent government-owned, into two parts: one of which is infrastructure, and the other retail services (including the highly profitable MobileNet and Big Pond Internet services).

Most of Telstra's capital is tied up in infrastructure, while most of its profits are generated by its retail services.

Part of Telstra's infrastructure constitutes a natural monopoly (such as telephone exchanges and the copper wires hanging between poles down streets), other parts such as the optical fibre and mobile phone networks are not.

In principle, Telstra's infrastructure, including access to its copper wire, cable, microwave and satellite services, could then be leased to retail communication companies, with the objective of raising enough money to provide high quality communications even to remote areas that have a high cost of servicing.

This would require strong political will to stand up to the commercial interests which, in the drive for more short-term profits, are only interested in the heavily used communication routes.

What stands in the way of this proposal is a blind faith in "market forces", even when they have transparently failed.

It is significant that in the Asian region, no country has completely privatised its telecommunications system, and in successful countries like Hong Kong, Japan, Malaysia, Thailand and South Korea, communications services are still basically government-owned.

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