The GFC has underlined the fragile nature of the unregulated share trade platforms operating in the US particularly. This fragility – and the disastrous minority government situation here in 2010 – makes Australian politicians wary of innovation and development at exactly the time when this country should be expanding greenfield industries and ideas.
There will be little change in the near future with the re-regulation of Telstra underway prior to taking the wholesale arm back under government control – the so-called National Broadband Network (NBN Co). The privatised wholesale arm of Telstra has suffered from new competition and an impossible objective of servicing non-profitable parts of the Australian market, with the share price heading towards its “real” value of around AUD$2.50.
Market failure ensured that rural, remote and poorer suburban areas could not be serviced by a privatised Telstra that needed to report “profits” while simultaneously losing market share. Previously these areas had been reasonably serviced under the old USO rules and under the older “public service” mentality of pre-privatised Telstra. However, with near complete privatisation in 2006-2007, the previous conservative government effectively abandoned proper USO cover for what was curiously a predominantly rural electorate. It is a tribute to government spin that rural voters, normally supporters of conservative governments, allowed this occur – and to add insult to injury – actually bought shares at over AUD$7.00 – in a company that was doomed to fail. Shares are currently heading towards AUD$2.60.
Those left out of government telecommunications infrastructure and support should watch events closely – not the NBN Co which will really only work in densely populated areas – but the newer USO Co that is supposed to address the inherent market failure in the current model. The core of government principles in supporting Australians in need in an equitable manner is embodied in this entity, and it has the potential to free up NBN Co to deliver what policy makers have talked about for so long – a solution to the tyranny and inequity of distance that unfairly handicaps Australians not living at the big end of town.
If the USO Co is successful perhaps similar entities could be deployed in other areas of market failure and inequity in Australia?
Future – Novemeber, 2010
The GFC has underlined the fragile nature of the unregulated share trade platforms operating in the US particularly. This fragility – and the disastrous minority government situation here in 2010 – makes Australian politicians wary of innovation and development at exactly the time when this country should be expanding greenfield industries and ideas.
There will be little change in the near future with the re-regulation of Telstra underway prior to taking the wholesale arm back under government control – the so-called National Broadband Network (NBN Co). The privatised wholesale arm of Telstra has suffered from new competition and an impossible objective of servicing non-profitable parts of the Australian market, with the share price heading towards its “real” value of around AUD$2.50.
Market failure ensured that rural, remote and poorer suburban areas could not be serviced by a privatised Telstra that needed to report “profits” while simultaneously losing market share. Previously these areas had been reasonably serviced under the old USO rules and under the older “public service” mentality of pre-privatised Telstra. However, with near complete privatisation in 2006-2007, the previous conservative government effectively abandoned proper USO cover for what was curiously a predominantly rural electorate. It is a tribute to government spin that rural voters, normally supporters of conservative governments, allowed this occur – and to add insult to injury – actually bought shares at over AUD$7.00 – in a company that was doomed to fail. Shares are currently heading towards AUD$2.60.
Those left out of government telecommunications infrastructure and support should watch events closely – not the NBN Co which will really only work in densely populated areas – but the newer USO Co that is supposed to address the inherent market failure in the current model. The core of government principles in supporting Australians in need in an equitable manner is embodied in this entity, and it has the potential to free up NBN Co to deliver what policy makers have talked about for so long – a solution to the tyranny and inequity of distance that unfairly handicaps Australians not living at the big end of town.
If the USO Co is successful perhaps similar entities could be deployed in other areas of market failure and inequity in Australia?