Communications minister Senator Stephen Conroy and shadow communications minister Nick Minchin recently squared off at the CommsDay summit in Melbourne on the Telstra separation and the NBN. As usual the politicians had sharply varying views and squawked load and long. Here are the key, cracker-sized squawks from each minister on the issues.
First off we look at Nick Minchin, shadow minister for broadband, communications and the digital economy:
"Those that bought Telstra shares in T1, T2 and T3 have every right to feel deceived by the Rudd Government as until 15 September, structural separation had never been Labor policy."
Minchin’s key concerns with Labor’s $43 billion NBN Mark II proposal are that:
- It involves the re-nationalisation of our fixed-line telecommunications infrastructure.
- It gets the Government back into the business of running a telecoms company, a business the government successfully and sensibly exited with the sale of Telstra.
- It exposes taxpayers to all the risks inherent in running a complex and costly telecoms business.
- It renders the government once again hopelessly conflicted as the owner and operator of a commercial business which it is responsible for regulating
- It involves massive borrowings underwritten by the taxpayer.
- There is substantial opportunity cost in relation to other much-needed infrastructure.
- It will be very unlikely that the government will be able to privatise it as promised five years after it’s built, leaving taxpayers stuck with up to $43 billion locked up in a telecoms company which may well not be commercially viable.
"The Coalition's priority remains those parts of Australia that do not currently enjoy affordable access to decent broadband services today. It is those areas that Labor totally ignores with its vague promise of broadband on the ‘never, never’."
And now Stephen Conroy: minister for broadband, communications and the digital economy:
In his speech to the CommsDay event, Conroy made the following points:
- Recent commentary suggesting a delay in the Telstra separation until after NBN discussions are complete ignores that regulatory reforms are critical, irrespective of the NBN.
- The commentary ignores that the existing regime has failed, over many years, to deliver the right competitive outcomes for Australian consumers and businesses.
- The current regime is prone to delay, gaming and uncertainty for all parties with 150 access disputes since 1997.
- Those wanting to hold back the government’s telco reforms must explain how more delay would benefit consumers and our small businesses.
- The coalition has a single telco policy platform – delay.
Conroy also claimed much of the Telstra separation commentary has focused closely on the implications for Telstra, and the destruction of shareholder value. These institutional investors, he said, ignore the fact that that many analysts in the market see the positive opportunities that are open to Telstra through a combination of the NBN rollout and the regulatory package.
Further key squawks were:
- The Government’s job is to act in the interests of all Australian consumers and businesses.
- Telstra made it very clear in the T3 prospectus – as was entirely appropriate – that the forward looking regulatory settings could change.
- In fact, the previous Government itself had scheduled a review of the existing regulatory settings in telecommunications, for 2009.
- They had scheduled a legislated review of the existing operational separation framework before 1 July this year.
- They had also commenced a FTTN competitive bids process, which asked parties to put forward changes to the existing regulatory regime for consideration by an Expert Panel.
- Despite these disclosures, and our extensive consultations on the regulatory reforms, some large institutional investors have expressed surprise at our recent announcements.
- Under the previous Telstra management, the Telstra share price fell almost 40 per cent from when Sol Trujillo was appointed to his departure announcement [$5.10 to $3.15].
- The day before the Government announced its regulatory reform bill, the Telstra share price was $3.25. Two days later, the share price had recovered to $3.24.
- Bloomberg analysis found that found that out of 17 brokers who cover Telstra, 11 recommended a ‘buy’ and only three recommended investors a ‘sell’. This suggests that many in the market also see a ‘win-win’ outcome is possible.