The latest fad among US liberals seems to be a new right, the "right to privacy".  Diarists view is that so much privacy exists as an individual asserts by his actions.  If a person appears in public, then they have implicitly given permission to be observed, spoken to or overheard whether electronically or in person.  Anybody who surreptitiously invades another's privacy by trespass and/or placing eavesdropping devices on private property should be subject to criminal prosecution & exemplary damages.

- TRUJILLO -

Telstra's new boss is failing to convey his message to the Australian people.

The problem is as follows.  Prime Minister Howard (quite properly, to my mind) decided to release Telstra from government ownership & control.  Telstra's assets at the time consisted of the "Local Loop" otherwise known as the last mile of copper, a few long distance connections, and the Telephone directory.

I believe that PM Howard should have looked at how the asset came into being.  Telstra's capital to build the local loop was derived from the extortionate connection fees that it charged it's customers.  As such, the local loop should have been given (like the NRMA shares) to those who paid for it.  My own suggestion would have been to give the local loop to local government.

Such was not our Federal government's plan.  Their little pig eyes lit up with dollar signs, and they sold the first 25% of Telstra on the stock market.  Management was handed to an MBA called Ziggy.  Ziggy might have been brilliant at managing generic businesses, but had no appreciation whatsoever of the potentials of the Telecommunications business.  Ziggy milked the copper for all it was worth, and paid excessive dividends instead of upgrading the network (except as a blocking strategy against Optus).  Consequently, when PM Howard sold the next 25% of Telstra he got about twice as much as he got for the first 25%.

Since then, the problems with Ziggy's approach have become obvious, and the price has fallen drastically.

An American manager was found.  Sol Trujillo had some experience with Telecoms, and brought his own expert management team.  He realized that the local loop was his major asset, and that after years of neglect it needed repairing & upgrading.  Enter the ACCC, which is the anti-monopoly arm of our Federal government.  The ACCC (quite correctly) insisted that the local loop was a near monopoly, and that Telstra must rent it out at cost to any bidder.  Once again, I agree with ACCC, especially since I paid for that local loop, and believe that it should be operated to my benefit, not the benefit of Telstra shareholders.  Issues such as the differential price of rural and remote local loops can be solved by appropriate government subsidies.

The local loop is monopoly infrastructure.   One possibility is that Telstra should spin it off, and let the new MD subcontract it's maintenance and upgrading to appropriate commercial banks, and charge an appropriate rental fee to any users (including the rest of Telstra).  That procedure should also make the ACCC happy.

However what about all those shareholders who bought Telstra while Ziggy was paying fat dividends by running down the existing local loop?  The market is pricing Telstra (still too highly in my opinion at $4 - About $2.50 is closer to the true value based on future earnings with continued ACCC intervention) much below the second tranche.  Unless John Howard finds a way to raise the value to T2, then his name when T3 is marketed will be mud.

My bet is that such a sale wouldn't juxtapose with an election.