Telstra: making it easier for Labor

John Howard should be careful what he wishes for. He pushed so hard for so many years for Telstra to be privatised and independent, and vowed to turn Australia into a “nation of shareholders” by encouraging mum-and-dad investors to snap up a slice of the national telco. Well, there are 1.6 million Telstra shareholders (I am not among them), and guess what? That’s a substantial voting bloc. And Sol Trujillo knows this. Which is why his company is trying to mobilise them in marginal electorates to try and get the Government to give Telstra an even more dominant market position. Sorry, I mean, let Telstra bring better broadband to all Australians.

Businesses generally don’t deign to descend into the muck of politicking like this, presumably reasoning that they need good relationships with lawmakers. So to see Telstra getting its hands dirty is a bizarre spectacle. How will a Telstra-style campaign look? Is it going to find some way of charging its supporters a fee for the privilege? Are we going to see thousands of blue-clad technicians turning up at polling booths to briefly hand out how-to-vote cards at some unspecified time between 7am and 12pm?
Helen Coonan has tried to stop this potentially damaging development by asking the board to hose Sol down. She says voters will punish Telstra for its campaign rather than being convinced by it – a massive assertion, although I suspect the Coalition has been looking at who the electorate is in the mood to lash out at with particular care lately.
As has been noted, the irony is delicious. Because this is what Howard’s beloved private companies, those supposedly more efficient bastions of a truly free society, do. If they come up against a barrier, they ruthlessly liquidate it, to the greatest extent allowed by law (or even beyond it, on some occasions). So why shouldn’t Telstra make its shareholders aware of their own financial interests, and get them to vote with their hip pockets? That’s how the Coalition won the last election with their “keeping interest rates low” furphy – why shouldn’t Telstra be allowed to argue that the Government is keeping Telstra’s share price low as well? They’re just making their case to the market. The Government should be applauding their democratic initiative. Especially since, unlike the Coalition, Telstra pays for all its political mailouts.
And Telstra is making its case via the ever-so transparent online spin headquarters, “Now We Are Talking”. Reading this page, you’d imagine that Telstra was some sort of benevolent society, desperate to usher ordinary Australians into a glorious future of fast internet connections, if only the evil government wasn’t determined to keep us at dialup speeds.
While Labor candidates like George Newhouse in Wentworth have been lapping Telstra’s support up, I can’t help wonder whether the telco’s endorsement might backfire on Rudd. Personally I would take great pleasure in voting against whatever Telstra supported, thinking that I’d probably get a better deal if its competitors were better able to compete. Nevertheless, if every shareholder votes Labor, Rudd will have probably, on balance, have been gifted a substantial windfall.
Senator Coonan, nevertheless, is right that Telstra should be split up, although it’s far too late for her to make the point now. To have the same company owning a network that it resells to companies who are forced to compete against its retail division is clearly an ideal recipe for uncompetitive practices, and Telstra’s pinged for this by the ACCC regularly. But Helen Coonan’s belated interest in this idea smacks more of political revenge than sensible regulation. When the Government was still the majority owner, it could presumably have split the company and simply given existing shareholders stock in each of the new offshoots. Now, it will face an almighty legal battle.
Nevertheless, the move is surely likely to lead to lower prices. As a big consumer of telecommunications services (in other words, an internet-addicted nerd), I constantly compare its plans against competitors – for landlines, for ADSL and cable internet, for mobile data (that is getting your laptop on the internet when it’s out and about) and, most importantly, for my mobile phone bill. And every single time, Telstra is not only far more expensive, but wants to lock me into lengthy contracts with hefty termination payments. I often wonder whether Telstra’s main source of revenues is in fact consumer ignorance. For every hardcore technophile like me who shops around, there must be five people who just get everything from Telstra because it’s easy, and pay dearly for it. That’s one heck of a competitive advantage, deriving purely from incumbency.
And the Coalition chose to keep Telstra as such a behemoth. (Although, as Malcolm Maiden points out, Labor corporatised it, it’s the Coalition that made it independent.) John Howard is the one who sold it off without creating a genuinely level playing field. So what we’re seeing is a bit like watching Dr Frankenstein being savaged by his own monster. That is, a bit gory, but wonderfully entertaining.
Most amusing of all is that Telstra is encouraging its shareholders to call talkback. Of course, the telco is no stranger to trying to influence opinion via AM radio, and John Laws got into hot regulatory water only last week for neglecting to mention his deal with the company when making no less than 20 positive comments about the privatisation – including during an interview with the PM. Now John Howard’s favourite medium is being used against him.
I had the bizarre fortune to see Sol Trujillo at a nightclub on Saturday night. (If it wasn’t him, it sure looked more like him than a colleague of mine does) It was 2.30am, and he was dancing up a storm, apparently not bothered by anything. Helen Coonan and John Howard are probably not nearly as relaxed at the prospect of Telstra mixing it out on the political floor.