Article by Terry McCrann September 16, 2009...

Article by Terry McCrann September 16, 2009
http://www.news.com.au/couriermail/story/0,23739,26079833-3122,00.html

Extracts…

It might also be too clever by half. Clever, as in: making Telstra an offer it will find impossible to refuse.
But just too clever, as in: Telstra gets to sell off its 20th century network, while not simply retaining all its 21st century options, but much more importantly its practical dominance. And it might even get to pocket a few billion dollars of taxpayer money on the way through!

For starters, what was said yesterday totally contradicts what Conroy, the grandly named "minister for broadband, communications and the digital economy", told the Senate just three months ago.
His shadow Nick Minchin, with persistent questioning, got Conroy to say that structural separation of Telstra was not in the (government's regulatory reform discussion) paper, And further: "I do not believe I have ever advocated it."
Now Conroy as we can now see was being decidedly 'cute', and he was at it again yesterday.

Now the proximate reason for this, itself "cute", approach is a little matter of compensation. Start at a billion and go up.

If the Government forced Telstra to break itself up, that would almost certainly be ruled an "acquisition of an asset", and under the Constitution, the Government would be obliged to pay Telstra.
Indeed, that was precisely the reason proffered by both government and competition czar Graeme Samuel for abandoning the proposed $12 billion FTTN (fibre-to-the-node) broadband network and jumping to the much grander and also much more expensive $43 billion FTTH (fibre-to-the-home) one.
That the FTTN network would have cut into Telstra's basic copper network, depriving Telstra of its use; and as a consequence the Government would have had to write out a $20 billion or so compensation cheque.

That brings us to the core substantive point. The grandiose FTTH network was supposed to be the killer move against Telstra's dominance, and in particular, its integrated structure. In the most direct and basic sense, the FTTH network would 'structurally separate Telstra'. Instead of forcing it to sell off its basic copper network (and the Foxtel cable), they would be rendered obsolete and useless.
So what does the Government trying on the old structural separation gambit tell us? It's something between admitting the FTTH is a dead duck. At least in commercial terms. The Government could always decide to still build the mother of all white elephants – and pour $43 billion of taxpayer money literally down holes in the ground.

Something, between that and a last desperate negotiating play to get Telstra to come to the FTTH table.
Either way, a monumental admission of weakness on the part of the Government. Albeit dressed up with a very clever – or, too clever – offer.

Comment…
Some very interesting points from Terry McCrann’s article, for example that of compensation, also where Sen Conroy was 'cute' with the Senate.
I feel this matter will not ‘run quietly’; also that Telstra Shares are a good long term investment.