Breaking up Telstra

John Howard asserts that Telstra must be sold as a whole. I think not.

At present, Telstra consists of:

Clearly this is a huge, vertically integrated, enterprise. As such, it is not necessarily an indivisible whole.

The problem is that the infrastructure on (and in) the ground is a natural monopoly. This is illustrated where attempts have been made to compete:

Vertical integration is problematic when a monopoly is involved.

The physical, terrestrial infrastructure (exchanges, cables, mobile phone receiver/transmitters - the hardware that carries phone signals, excluding satellites) [the network] has been built up over time with government funds - funds derived from the people. As such, it is property of the people in common, not a government asset.

We tend to think of the network when Telstra is mentioned. They are not one and the same.

Telstra is a company. The network is ours. If we lose control of it, the social and economic health of the nation will suffer as the dead hand of the market comes into play.

There are many planes along which Telstra can be cleft from the network. The most obvious is that between the mobile infrastructure and the satellite interests.

Telstra is already half privatised. Why not split off that half, at the point above satellite interests in the list above? That would leave Telstra as a service delivery company (hopefully, soon to be in competition with a whole slew of others).

The other bit we should retain in public ownership. We might call it Telecom, or perhaps the PMG?

14th August 2002

This is intentionally simplistic. As such, it is undoubtedly technically inaccurate. I am happy to correct any errors of fact, but not at the cost of substantially increasing the amount of text.

David Boxall


Roger Clarke
A more detailed alternative.
Richard Chirgwin
More detail & a bit of the devil's advocate.
Tony Barry
A simple analogy.