TELECOM Digest OnLine - Sorted: Breakup Revisited

Breakup Revisited

D. Dude (xzzyxREMOVE@THIShotmail.com)
Wed, 22 Jun 2005 12:54:18 GMT

Readers other than Australians may not be aware that Sol Trujillo
one-time CEO of US West and formerly an executive with Orange Europe.
has recently been appointed as CEO of Telstra, Australia's largest
telecommunications provider and former monopoly provider.

One of the major issues concerning the full privatisation of Telstra
(currently 51% government owned) is whether and how retail and
wholesale functions of Telstra should be separated to prevent unfair
competition from Telstra.

In an interview published in the /Sunday Telegraph/ (an Australian
Murdoch tabloid) on June 19, 2005, by Jim Dickens, Trujillo is quoted
as saying, referring to "similar" moves overseas:

"It didn't work well, didn't work well for the customer, didn't work
well for the shareowners and ultimately it didn't work well for the
marketplace."

Of course, I expect him to say that. I'm prepared to accept that he
may be largely correct in regard to share owners of incumbent
carriers, but I see little truth that (assuming he is referring to the
US) customers and the marketplace aren't better off overall.

I'd be interested to know whether you disagree and whether a true
retail/wholesale style separation is a better proposition than what
has occurred in the US.

With both my consumer hat and share holder hat's on, I'm in favour of
maximum separation with the wholesale arm being able to offer any
product currently offered by the retail arm and the retail arm being
free to choose obtain product from any wholesaler.

However, it's unlikely to come to that: with the government seeking to
maximise the price of the offering for the remainder of shares and
with a majority in both houses of parliment, it's likely the outcome
will be an internal separation only aimed at providing transparent
pricing.

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