An American high-flyer and bush phones in Down Under

AN AMERICAN high-flyer has taken the reins of one of Australia’s largest and most iconic companies, sparking angst about his philosophy and management style. Sol Trujillo has been appointed the new chief executive of Telstra, the nation’s biggest telecom company.



By Ross Peake (LETTER FROM CANBERRA)

Published: Thu 11 Aug 2005, 9:56 AM

Last updated: Thu 2 Apr 2015, 6:49 PM

Telstra is half-owned by the government although conservative Prime Minister John Howard wants to sell the government’s remaining share holding. But people in rural areas are very, very worried about the impending privatisation of Telstra.

They fear a fully private company will not service the expensive and unprofitable services in remote areas. Some towns in the vast Australian continent are very remote and are closer to Indonesia than to Australia. In those far-flung places, phones are patchy and access to the internet is a joke. Howard has been waging a campaign for several years to sell off the rest of Telstra, in line with his conservative philosophy.

The reason he has not been successful so far is because he has not had control of the Senate, the upper house of the Parliament. All that changes this month. After his stunning election victory late last year, which gave him control of the Senate, he has had to wait patiently for the parliamentary terms of the new Senators to begin. They were sworn in this week. And then all Howard’s dream will come true. Or will they?

A thorn in his side is the National Party, the smaller partner — to Howard’s dominant Liberal Party — in the ruling federal Coalition. The Nationals represent country people and the party’s MPs share the concerns that a fully privatised Telstra might abandon people in the bush.

Telstra is supposed to maintain bush telephone services under its "universal service obligation," a clause written into its operating licence by the federal government. One of the new National Party Senators, Barnaby Joyce, has made it abundantly clear that his vote will have to be won.

He says he will not slavishly follow the coalition line, whereby all National and Liberal Senators normally vote unhesitatingly for the government’s legislation. The sale of the government’s share in Telstra could raise A$30 billion, making it one of the biggest share floats in Australia’s history. Joyce argues that at least $2 billion of the proceeds should be set aside and invested in a so-called rural telecommunications infrastructure fund.

The dividend from that investment — about A$100 million per year — would be used to repair and upgrade phone and data services in the bush. The threats by Joyce to scuttle the Telstra sale unless his demands are met are already paying political dividends. Communications Minister Helen Coonan has announced that Telstra will be forced to keep its office doors open in rural and regional towns after it is fully privatised.

Clearly this new condition is an attempt to assuage the concerns of country people and, in particular, the new Senator Joyce. However, how could the government enforce this condition on a company once it is fully privatised? That’s the million dollar question that is puzzling country people, who want to believe the federal government has their interests at heart but are sceptical. Coonan says that the new condition would simply be added to Telstra’s operating licence. This is where the different views of Sol Trujillo intrude into the debate. He has flown into his new job and has immediately been astonished by the government’s strict regulation of Telstra. In a controversial speech, he described the rules as belonging in the last century.

He said it was not up to his company alone to shoulder the load of delivering services in the bush and called on Telstra’s competitors to play a bigger role. He has been in the job for just over a month, and was widely criticised for what was seen as the most powerful and significant speech to come from a Telstra CEO. Howard was quick off the mark to sharply rebuff Trujillo for his view that Telstra is over-regulated, insisting rural customers will be protected. Howard used Aussie slang to make his point. "One of the reasons that Telstra is highly regulated is the desire of the government to see that the bush gets a fair crack of the whip," the Prime Minister said. People in rural areas believe the imported CEO has no appreciation of how remote some Australian communities are.

They are totally dependent on their patchy phone systems and just want to know repairs will be done within days, not weeks. The unexpected battle with Trujillo has added a new element to the political campaign to sell Telstra. Howard thought all his problems had been solved when he gained control of the Senate. As the Upper House begins its new session, he must now work hard to persuade the National Party and Senator Joyce that selling Telstra will be good for bush telephones.

Ross Peake is a Canberra-based political analyst


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