Cometh the sale, cometh the man

commentary Solomon (Sol) Trujillo comes to the senior executive position at Australia's largest telecommunications player at a pivotal point in its history.The company's board, management and controlling stakeholder -- the federal government -- are gearing up for the AU$30 billion sale of the remainder of the carrier (T3) amid intensifying competitive, political and regulatory pressure.

commentary Solomon (Sol) Trujillo comes to the senior executive position at Australia's largest telecommunications player at a pivotal point in its history.

The company's board, management and controlling stakeholder -- the federal government -- are gearing up for the AU$30 billion sale of the remainder of the carrier (T3) amid intensifying competitive, political and regulatory pressure. The sale is expected after the government gains control of the Senate on 1 July.

However, serious questions remain as to whether the carrier itself and the associated regulatory and competitive environment are anywhere near the maturity appropriate for full privatisation.

One of the most critical issues is structural. Telstra's chief financial officer, John Stanhope, is reportedly preparing to present a blueprint to the government for operational separation of the carrier's retail and wholesale businesses.

The move should -- the carrier hopes -- dampen government and industry concerns that rivals are being levied excessive charges for access to the Telstra network relative to the carrier's own retail businesses. (Rival telecommunications companies yesterday afternoon released a statement under the banner of the Competitive Carriers' Coalition saying the proposed arrangements would have to meet three high-level tests: 1. the wholesale and infrastructure part of Telstra would have to have a truly arm's length relationship with the retail group; 2. Telstra would have to accept a non-discrimination principle in the price, terms and conditions under which it sells services to Telstra Retail and other carriers and 3. Thirdly, the arrangements would have to provide the transparency necessary to allow the Australian Competition and Consumer Commission (ACCC) to identify discrimination or anti-competitive conduct).

In the meantime, both the Senate -- through an Opposition-dominated committee -- and the government are reviewing the adequacy of the current telecommunications regulatory regime.

Price controls, the Universal Service Obligation (USO), which details the minimum telecommunications service level for all Australians and the Trade Practices Act are all coming under scrutiny.

The competition watchdog -- whose relationship with Telstra has always been tense -- just over a week ago re-stated its argument that telecommunications competition remains deficient in many areas, including some in which accepted market wisdom is the opposite.

ACCC commissioner Ed Willett said while the carrier continued to lose market-share in dial-up and broadband Internet, the watchdog would continue its vigorous efforts to maximise competition in the area.

Willett also expressed concern over Telstra and Optus' combined dominance of the mobile market and detailed fears the advent of third-generation services could pave the way for opportunities to entrench that position in the content arena.

There is also strong evidence that the capacity of consumers to have their issues heard by members of the communications industry -- including Telstra - is not where it needs to be.

In an interview with ZDNet Australia  this week, Australian Communications Authority acting chairman Dr Bob Horton conceded that while industry self-regulation had come on in leaps and bounds over the last few years, codes enshrining consumer rights were lagging well behind operational codes.

Dr Horton -- who retires at the end of this month -- indicated it would take three years before consumer codes would reach a high level of maturity. (First codes off the rank are covering making consumer contracts easier to understand and giving customers a mechanism to query unexpectedly high bills).

Another issue confronting the carrier is the standard of services to rural and regional Australia.

Tensions remain between the bush-based Nationals and their Liberal counterparts over telecommunications standards for rural and regional communities. The government has made achievement of quality telecommunications services to the bush a pre-condition of the T3 sale and both Telstra and Coonan have worked to bring standards up. Whether their efforts are politically satisfactory remains to be seen.

Another tough issue confronting Trujillo is management of the carrier's own costs. According to some commentators, the carrier's costs are 20 to 30 percent above best practice. To bring them down will likely require staff reductions numbering in the several thousand, always a sensitive issue politically.

According to Telstra, Trujillo's curriculum vitae lists an impressive track record in the management of fixed-line, wireless, broadband and directory businesses.

He will need every bit of his skill and experience to manage the carrier during this tough period.

How do you rate Trujillo's chances of steering through the crises and difficulties of Telstra? E-mail us at edit@zdnet.com.au and let us know.

Iain Ferguson is News Editor of ZDNet Australia.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All