Given that the Howard Government sold T1 and T2 tranches in 1997 and Oct 1999, and Turnbull got his $57M for OzEmail from Worldcom in early 1999, this conversation must have taken place after Telstra started to be privatised and not with the Telstra CEO or Board, but with the owners: the Government, Richard Alston, the Minister and/or John Howard and Peter Costello as Prime Minister and Treasurer. A similar team that Sol Trujillo fronted in August, 2005 for the first time.
I think this is a startling an exceedingly important admission by Turnbull about both:
- his financial good judgement as a merchant banker and very successful Internet Business operator said ~15 years ago "Structurally Separate", but his voice wasn't heard when he was a Howard era Minister, albeit not from Communications, and
- about the bizarre and economically deeply dysfunctional nature of the Howard Government:
- They cost themselves, and shareholders, billions (T2 in 1999, $7.40 and T3 in $3.60 in 2006, the then 2010 record low of $2.82 ($2.64 in March, 2011), and 2 years later after the NBN deal, at $4.54)
- From this comment and the 2005 Trujillo presentation to the Howard ministry, we know that they'd been advised on the impending and inevitable consequences of their lack of action and insistence on, seemingly, trying to maximise the sale price of Telstra, while denying them reasonable and prudent investment in the business. [The Frank Blount plan to replace the Copper Access Network with Fibre by 2010, out of normal funding.]
The only reason Rudd/Conroy were forced into creating the only Government built National Broadband Network in the world, is because of over a decade of dysfunctional management of Telecomms by the Howard Government.For Turnbull to now argue that "Labor has got it wrong" would be side-splittingly hilarious, if not so expensive and serious for our National economic viability over the next 50 years. The real achievement of Turnbull is not allowing this facet of the National Broadband story to be debated.
From the Q&A session, not in the transcript, reaction to a question at 1:08:05 asking if the NBN could be built by the "incumbent", Telstra. Britain and New Zealand, where functional separation or via independent compn
MT: "That's an analysis that's so rational and sensible that it could never get any traction".
Two best examples of getting National Broadband upgraded are Britain and New Zealand. In both places the Govt required the incumbent Telco, BT & TC-NZ, to separate their Customer Access business. In Britain, they did a functional sep. into OpenReach (Division) and TC-NZ a separate company Chorus, a separate listed company.
1:09:52 If you could wind the clock back, and Telstra would have to playball, and I suspect this is all fantasy football, The smartest deal would've been to split its Customer Access into a separate business, then you'd have all the years of Corporate Knowledge/Expertise, you'd actually have it run by people who knew what they were doing
1:10:18 and then you're dead right. We want you to upgrade everyone's broadband, we know that a lot of it is not commercial so lets have an arm-wrestle about the subsidy.
The great thing about that is that the Govt knows what is up for. Problem with NBN Co is its a blank cheque.
"no budget on the NBN Co". govt said that peak funding will be $44B - a guess.
1:10:55 AK. Are you going to have a crack at that then?
1:10:58. MT: I think that in practical terms, that is too hard. But if you could achieve that, it would be a very sensible outcome. You couldn't turn around and say we're going to abandon structural separation.
1:11:25. "When I was a banker like you, years ago, I actually went to Telstra, eons ago, it might've been last century, and said to them,... I always thought it was in Telstra's financial interest to split its Customer Access business into a separate utility because then they would cease beating up with the regulators and Government and the rest of their business would get a higher rating, a multiple uplift, because they'd be seen as more of a growth stock". "They haven't done it, so..., I've been very careful that we don't promise anything in our policy that we cannot actually deliver." 1:12:13
1:12:68 AK: But you could actually sell NBN Co to Telstra? That is a possibility.
1:12:30 MT: there are a lot of legislative problems and Telstra have no interest in doing this. Takes two to tango. If you had a "Chorus" done in Australia, a separate company that was the wholesale Network Business. Would it be better if that company ran a national broadband network rather than the government? Of course it would. Everyone would be in favour of that. 1:13:18
The concern about the network is not that it belonged to a private company but belonged to a big retailer. So if you could achieve structural separation along the lines of New Zealand, that would be great outcome. But again, I don't see that... That's a bridge too far. ... Politics is the Art of the Possible and that well may be an opportunity that was missed. 1:13:54