RealTime IT News

Australian Senator Sinks Telstra Float, Delay Could Affect Internet Services

The delay in the full privatisation of Telstra, Australia's largest telecommunications carrier, could have major implications for the provision of Internet services in the country, particularly in rural areas.

Over the weekend the Australian government was being blocked at its first attempt to fully privatise Telstra, throwing into doubt the gradual deregulation of the telephony and Internet sectors.

The Liberal Government had been hoping to rely on the support of two independents in the Senate to pass legislation that would allow a public offering of the remaining two-thirds of Telstra, after the first one-third was sold in a very successful public offering last year.

Senator Mal Colston, a renegade ex-member of the left-wing Labor Opposition, voted against the bill late on Saturday night.

The failure of the bill to pass the Senate threatens the Liberals' aggressive program of opening up the near monopoly which Telstra had enjoyed in voice and data communications to local and overseas competitors.

Telstra has been fighting several battles with newly-created industry regulating bodies over poor service and anti-competitive practices. It had been expected that full privatisation would enable Telstra to shed its public sector heritage and become more receptive in an increasingly competitive market.

In the Internet service provider market, for example, America Online is beta testing a consumer service to battle Big Pond, the ISP arm of Telstra. Most of the large international providers--including Sprint, British Telecom, Nortel, Worldcom, and AT&T--are now competing in Australia to provide voice and data bandwidth in a market previously exclusive to Telstra.

The delay also puts into doubt the Liberals' plans for the money raised from the sale, part of which was to fund infrastructure projects like the $60 million "Networking the Nation" fund, a third of which was set aside to connect outlying communities to the Internet. The bill cannot be reintroduced until late August.