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Privatisation or government ownership - what's best for the people?

(“just terms”)

Look on the bright side … the government can buy Telstra back at fair market price for less cash than it received when it sold it i.e. in straightforward terms, for a profit ! So you could say that privatisation of Telstra was prudent economic management and a good deal for taxpayers. (“the private sector” is more than just Telstra though. The rest of the industry was never owned by the government to “take back”.)

However would that make sense? If there are places to service that are not “commercially viable” then have the government (the taxpayer) service those places. There are places (most places) where there are multiple choices of commercial provider. Why mess with 90% of the country in order to solve a problem in 10% of the country?

If it is uneconomic for Telstra to service, it isn’t suddenly going to become economic for the government (the taxpayer) to service.

Conversely, NBN Co is rapidly becoming the dominant and monopoly supplier of the underlying telecommunications service (sound familiar?), it is government owned (taxpayer owned) and yet I don’t hear too many people expressing satisfaction with NBN Co.

Which I think is where we fail to communicate. Telstra is not the problem. At least, not all of it.

Telstra, the retailer, is subject to competition. That mitigates its profiteering ways, to some extent.

Telstra, the owner of essential natural-monopoly infrastructure, has no effective competition. Indeed, by definition:
A natural monopoly occurs when the most efficient number of firms in the industry is one.
competition would be a poor allocation of resources.

The task then is to separate out what should be publicly-owned. That has been considered in a blog post referenced elsewhere in this forum:

Remedy past mistakes

Return infrastructure to public ownership.

Separate Telstra into retail and wholesale/infrastructure arms. The best mechanism I’ve been able to come up with takes the form of a de-merger. Telstra is split into two companies, with shareholders given shares in each proportional to their current Telstra shareholding. Government then acquires all shares in the wholesale/infrastructure company, at value.

Return radio frequency spectrum to public control. The easiest way would probably be to not renew spectrum licences as they expire. Associated assets of providers other than Telstra could be acquired at value, where economically and operationally rational.

Establish a statutory Commission to provide telecommunications infrastructure and wholesale services. Vest in the Commission all infrastructure and wholesale assets formerly held by Telstra and nbn™.

Not easy, not cheap. It’s generally cheaper & easier to make a mess than to clean it up.

Which is where we go wrong. Allowing the private sector to cherry-pick lucrative markets, while leaving the rest to the taxpayer. To me, it makes far more sense to cross-subsidise from profitable market to the less-profitable. The most effective way to ensure that is to have the entire network under public ownership.

The NBN is being fattened up for privatisation. Quite apart from the current government’s deliberate sabotage, that’s like shooting a horse in the head, then wondering why it didn’t win the race. A better example is the PMG. Most of us were quite satisfied with its performance. The wheels started to fall off after telecommunications functions were separated from postal. Even then, it worked reasonably well until the Telecommunications Commission was restructured into a corporation.

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Is that actually true? Permitted by law?

I think you mean government control. :slight_smile:

What do you really mean though? since it is all subject to government control now. Do you mean government use? That is, stop private companies using spectrum? Way to destroy billions of dollars of shareholder value.

Hopefully you are planning to leave ISM bands (e.g. 2.4GHz, 433MHz) for private use i.e. spectrum that is generally licensed without charge for short range use (WiFi, Bluetooth, wireless remote control, wireless sensors, …).

On the even brighter side at zero added cost to the tax payer:

The government does not need to do anything, at least in the next few years or decades! It currently owns the NBN Co and all that is good and bad that it brings with it. It could simply run the NBN as a Govt enterprise for ever more.

Telstra does not need to be bought back. It is a public company now 100% competing with the other Telco’s. You would need to consider either buying out all the other Telcos or selling off Telstra’s mobile and Broadband services. Why waste that money when there are enough other things to fix?

The wheels were never on that bus from my experience. Many grumbled about the power bill. Just as many did not have a phone at all, so nothing to complain about. Those that did complained more about the cost of the phone than the electricity bill!

I still remember walking down to the street corner phone box 1970’s to share my germs on the handset and rotary dialed while feeding handfuls of 20c coins in the top at around $2.00 for 3 minutes. Back then 20c would have given change from a litre of petrol!

Yes the good old PMG. Hornsby across Sydney to Sutherland was a local call. Live in a small town and it was STD to call any where further than the back fence.

We have been more equal and paid less for telecomminications since the privatisation of Telstra and the introduction of competition, than anytime prior?

Yes. It’s in the legislation.

Given that they’re not my words, I’ll use some of my own. The terms public and government are not synonymous. As you point out, the government controls spectrum, the public doesn’t.

If you take the trouble to follow the link above, you’ll find:

There was a time when Telstra (or was it Telecom?) advertised how lucky Australia was to have a single, coordinated mobile 'phone network. If you had a mobile, then it just worked - or not. We didn’t suffer the inefficiencies of multiple competing networks. Somewhere along the line, we stuffed that up.

As Kenneth Davidson wrote in 2002:
“Optus has spent $14 billion duplicating the Telstra network … There are four mobile phone networks, each with their own towers, billing systems and shrill advertisements.

As a result, Australia’s relative efficiency in telephony has declined. …

Competition means black spots in the country and a “choice" between four mobile phone networks in the city.”

The mobile network, it seems, is no less a natural monopoly than land lines.

An interesting assertion. Can you prove cause & effect? How things might have developed without privatisation, we’ll never know.

Anyway, this is degenerating into ideology. Best take it to the Departure Lounge.

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So noone is confused … I am not advocating that Telstra be bought back. I was responding to a post that appeared to be suggesting that Telstra be bought back (or taken back).

Any clues about which Act?

Again, don’t confuse Telstra with the infrastructure. They’re not the same thing.

Don’t know the act, but it’s in this bill:
https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd1011a/11bd064
and all over the media. I’m surprised that you’re surprised.

This, from the explanatory memorandum, is pretty clear:

The Companies Bill establishes the regulatory framework covering the ownership and operations of NBN Co, and the arrangements for the eventual sale of the Commonwealth’s stake in NBN Co.

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That answers the second part (“is it permitted by law?”). It doesn’t answer the first part (“is that actually true?” that it is being fattened up for privatisation).

I think in this topic we have canvassed the good and the bad of “monopoly”.

Good: Could be economically more efficient. Will get a better sale price for the government (taxpayer).

Bad: Internet - take it or leave it. NBN gives me no good internet options but as a monopoly prevents me or anyone else from solving that problem. Just like the ‘good’ old days when it was Telstra or nothing.

Probably best to take the whole discussion on what the government can or can’t do with the NBN, or best for Telstra or even the future or past of telecommunications to a separate topic. I can’t move the posts though from where the discussion diverged from just Fixed Wireless and services on the NBN.

A meaningful discussion of the value of the overall circumstances of the NBN, mobile phones etc also touches heavily on political circumstances. It remains highly likely that the majority of those in the cities may see their problems with the NBN very differently to those outside the larger centres.

Adding this very important discussion to the FW topic may be distracting from it’s value for those who need to relate specific FW issues or problems.

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“Fattened up” is just a figure of speech. What significance have you ascribed to it?

Yes, sorry.

Back to FW.

Not any longer.

And here we are.

Your misconception is that telecommunications infrastructure is a monopoly because someone declared it to be. A natural monopoly is a monopoly by its very nature (hence the name).

Privatisation of the NBN is discussed here:


Bear in mind that this topic covers telecommunications infrastructure in general, not just the NBN (or wireless/mobile or copper or fibre).

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It’s far more often used than “Fattened down” - which is interesting … significantly, in an overly politically correct brave new world, it could be considered significant in its insignificance … or not.

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I thought the correct political terminology is “economically prudent”?
Also often found near to the equally quaint term “efficiency dividend”.

P.S.
“Privatisation or government ownership of telecommunications - what’s best?”

Did we forget to qualify who it is best for? :smiley:

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There has always been the argument that monopolies should be in public ownership, while duopolies or more (2+ competing organisations in the same industry) maybe best suited to private ownership. This is also not to say that some functions of monopolies can’t be undertaken b y the private sector, where such services are provided by a large numher of competing companies. For example, a hospital owned by the government could contract out cleaning services to a private company, whilst the hospital is still owned by the government.

Likewise with technology industries, these have historically have possibly best placed in the private ownership as government is a lot more conservative (more risk adverse) and less like to achieve the same technological advances seen in the private sector.

If we allowed telecommunications to be wholly privatised, then less than profitable services would be ditched/never built, previously this was the copper infrastructure and now the NBN. This would/does then require large Govt involvement through legislation and taxpayer dollars to force private enterprise to service those “loss centres” but not at “break even” rates but at more costly “commercial” rates.

I think we are better off having the onus for service finally coming back to sit in the responsibility of our elected reps than in the control of some profit focused private or shareholder corporate structure.

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“Before electricity prices doubled over the past decade, Energy Australia used to be owned by Australians. It was the property of the governments of NSW and Victoria, state assets. Chasing a short-term buck, and urged on by investment bankers and assorted fee-hunters, politicians sold them off.
Now the profits, privatised, are washed through a tax haven in the Caribbean before ending up with the CLP Group in Hong Kong, an industrial empire controlled by the billionaire Kadoorie family, which is also known as China Light & Power Company.”
https://www.michaelwest.com.au/energy-australia-four-years-30-billion-zero-tax/

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I’ve edited the title - and no, corporations are not people (legislated perversity notwithstanding).

The problem is broader than I’d considered, evidently. I’ve edited the title to broaden discussion. Hope it isn’t too broad now.

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