Disconnected competition

On this basis, it’s not hard to be confused by ACCC statements that it will give Telstra a fair deal and promote competition.

The Howard Government didn’t vertically separate Telstra because it wanted a world-class telco with integrated network and retail operations. This is sensible provided your policy framework doesn’t also expect long-term competition.

An efficient Telstra keen to deliver a national service will necessarily dominate. The only way to check this is to allow others to cherry-pick urban customers through third party access. This is now a problem because Telstra understands it cannot win. Expect the petty name-calling and shifting of the blame for a fragmenting industry to intensify.

The Government wants it both ways: to encourage a vertically-integrated Telstra to provide a national telecommunications solution, while also demanding it yield to a regulator that cannot adequately cover its true costs because the regulatory regime favours competition over big picture needs.

The Telstra chaos offers Kim Beazley his best opportunity yet. The Howard Government’s ideological attachment to competition and private ownership means there is no way through the current impasse.

A credible policy alternative is to buy back the partially privatised Telstra (as Tony Blair did with the railway network in the UK), separate out the network and then sell off the retail function.

There would be a loss of synergies, but at least Australia would have a dedicated vehicle for delivering our telecommunications requirements. The obsession with competition can then be played out between independent companies able to access a single network focused on our nation as a whole.