Saturday, November 22. 2008Is The Worst Ministerial Appointment In Australia' s History........John Linton ...that of Stupid Stephen to the post of Federal Communications Minister In November 2007? ..and yes I know that standard has been set remarkably high with almost all the Whitlam appointees (including Whitlam himself) challenging Rex Connor for this title. This question was brought to mind when I read part of the transcript of the Telstra's Chairman's address to shareholders in this morning's paper: http://business.theage.com.au/business/telstra-silent-on-broadband-bid-20081121-6e64.html Now let me say that I, personally, regard Mr McGaughie as flagrantly incompetent to be the chairman of Telstra as I have regarded the previous incumbent and therefore don't expect him to ever say anything either logical or correct and especially if it is on a subject that has any relationship to, or bearing upon, telecommunications. However I would expect the Federal Communications Minister, even if he is as stupid as the current one and who almost certainly knows less about telecommunications than the current chairman of Telstra to have, long ago, debunked the outright lies and total cr** that has become McGauchie's 'mantra": "Mr McGauchie said a split of its business would "wipe out jobs", significantly increase costs and dent productivity" These claims are so totally nonsensical (and they have been made several times over the past few months) that there have been many opportunities for SS to rebut them using nothing more than the statements themselves and applying basic commercial logic to them a la: Splitting Telstra Would Wipe Out Jobs Why? How does splitting the current operating divisions of Telstra wipe out a SINGLE job? If such a split was to made then all the current jobs would remain exactly as they were before you cut the Telstra organisation along the dotted line separating infrastructure build, development and maintenance from the bit of paper listing the retail sale of the various services? Sure - some current Telsta employees might go and work for a Telstra competitor but 'jobs' will not decrease - unless of course Telstra is so significantly over staffed that the 'jobs' shoudn't be there in the first place. Splitting Telstra Would Significantly Increase Costs Why? How does cutting the Telstra organisation chart in two pieces increase costs? Everybody listed on the mythical piece of paper one millionth of a second after making the separation and thereafter will continue to do exactly the same job at exactly the same remuneration as they did before the scissors were picked up. It seems highly likely that some costs (retail sales spring to mind) would actually significantly reduce. Splitting Telstra Would Dent Productivity Why? Everyone will remain doing exactly the same job at exactly the same cost as before and no tiny issue or task will be done any differently. It seems likely that when the retail side of Telstra becomes leaner and more efficient that productivity would actually increase. Even someone as stupid as SS, or as stupid as SS's staff must be, should be able to demand a public explanation of these statements phrased much more incisively than my casual words written without research or more than the time it takes me to type the actual sentences. But they are never rebutted and that, among all the other stupidities and inactions of this minister and his office, has allowed the current situation to develop where in just on 12 months in office SS with the full 'support' of Krudd has placed Australia in the position of re-monopolising the Australian communications industry because they were so totally, stupidly incompetent that they have allowed 'Sol's Puppy' (I claim no authorship for that phrase but I can't get my brain to recall who first used it) to continue to make these outrageously incorrect statements in the Trujillo bluff poker game with the clearly intellectually out-gunned Labor 'government'. The ONLY result of Telstra separation would be lower prices for Australian residential and business users and a higher share price for Telstra share holders. Of course, that bald statement of mine can be easily dismissed on the basis that I haven't supported it with any factual/referencable evidence. WHICH IS WHAT SS HAS ALLOWED TELSTRA TO 'GET AWAY' WITH FOR THE 12 MONTHS HE HAS HAD THE RESPONSIBILITY!! You actually don't need to be either very bright or to have any great depth of commercial understanding to KNOW that McGaughies statements are the sheerest nonsense. You need to be even less bright and have less commercial understanding to know that my 'bald' statement is likely to be correct based on every previous transformation of a government monopoly in to one or more privately owned enterprises and that true competition always produces the best results for both customers and shareholders. So Conroy gets my vote for the single most inept minister to have ever held federal office and will have done more in 12 months to ruin the future lives of all Australians than any other individual since January 1st 1901. (Rex Connor can now relinquish his hard earned crown). Trackbacks
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During the meeting a shareholder asked McGaughie a question about structural separation and McGaughie started raving on about sub-loop unbundling!
Comment (1)
Under the current separation environment Telstra IT and accommodation only requires firewalls to separate network, retail and wholesale, staff, IT systems and so on.
Under structural Separation separate IT systems, accommodation and so on is required. Telstra would have to duplicate much of what already exists. Structural Separation entails a great deal more than which business unit owns the staff. Comment (1)
If you read the comments together they don't make sense. Surely if separation was going to cut jobs, then wouldn't that reduce costs?
Telstra has been sacking people left right and centre for a while now - surely they can't use the "separation will cause job losses" bit with a straight face? Telstra have also significantly outsourced maintenance and install work to Sentinar, VisionStream and ServiceStream already. Surely moving the split up just a few notches wouldn't really mean much. Comments (2)
Wouldn't it be appropriate for the government minister responsible to ask those questions?
Comments (3)
You're funny John!
Seriously though - Telstra has pulled the "it won't work without us" rubbish before. Witness Southern Cross Cable for which they are the biggest customer but not an owner because they chose not to participate. FTTN won't happen. Telstra will ignore it, Terria will fold due to an inability to raise capital (which may still be a risk for Telstra) and Telstra will gradually use the "network modernisation" clauses to do FTTN by stealth or may even just start pushing FTTH more and use their economic muscle. Australia's economy will be left behind on a world scale due to incompetence by this and previous governments who took the fistful of dollars by leaving Telstra vertically integrated and not thinking of the long term economic health of our country. Comments (2)
I gather you should be referring to federation on 1st January 1901, in the last paragraph.
Tim Comment (1)
Much as I hate to say this, I agree with Telstra,
If Telstra was split into two operations, network and retail what would stop the monopoly network company jacking UP prices? Why not jack up prices? I will tell you, regulation, heavy regulation. So the Network company would not be very profitable, earning a poor rate of return. So job losses, stagnation and no incentive at all to innovate. The Retail section would have to compete with leaner smaller companies who currently just service the populous cities. So Telstra will do the same. Bottom line, Telstra shareholders get screwed. So Telstra's position on this is logical in my opinion. Apparently structural separations in Britain and NZ went badly, very badly for the companies concerned. Comment (1)
I’m not sure about New Zealand's separation, but I know that in Europe, particularly in the Netherlands and Britain, functional and operational separation has been completely successful.
In British Telecommunication’s case they have even enjoyed massive amounts of growth since 2005. In fact from various sources it’s been said they have enjoyed 24 consecutive quarters of growth. Not only that but competition has become so much that Ofcom was able to deregulate most of the wholesale market. "Ofcom's proposals include the removal of regulatory obligations in areas of the country where strong competition is now a reality, in keeping with its commitment to regulate only where it is necessary. The area covered by this proposed de-regulation accounts for approximately 65% of UK premises." - http://www.ofcom.org.uk/media/news/2008/02/nr_20080214 And here is why... "From a regulatory point of view, the UK’s experience with operational separation has been a success story. Almost half of all unbundled exchanges now have four or more providers in them, and many are served by up to a dozen competing operators. Compared to the lamentably slow LLU growth shown until mid-2005, take-up of LLU since the formation of BT Openreach in January 2006 has been phenomenal: by August 2008 there were 4.961 million unbundled lines compared to 360,000 at Openreach’s inauguration." - http://www.buddeblog.com.au/europe-structural-separation-measuring-its-success-in-2008/ Hope that helps... I don't want go into it further as I just got home from work and its late and I need some sleep. Comment (1)
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