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History Telecommunications services were originally controlled by the (government-owned) Postmaster General's Department (PMG). On July 1, 1975, separate commissions were established by statute to replace the PMG. Responsibility for postal services was transferred to the Australian Postal Commission (Australia Post). The Australian Telecommunications Commission (ATC), trading as Telecom Australia, ran domestic telecommunication services. In 1989 the ATC was reconstituted as the Australian Telecommunications Corporation. In 1992 the Overseas Telecommunications Commission, a separate government body established in 1946, was merged with the Australian Telecommunications Corporation into the short-lived Australian and Overseas Telecommunications Corporation (AOTC) which continued trading under the established identities of Telecom and OTC. The AOTC was renamed to Telstra Corporation Limited in 1993. It has since been partially privatised but as of mid-2005 remains majority government-owned. A depressed share price is expected to delay the government selling its remaining 51.8% of the company for some time. Telstra began to establish its new identity and to disengage from its previous trading identities. Telstra has faced competition since the late 1980s from Optus and a host of other smaller providers. It retains ownership of the fixed-line telephone network, as well as one of two competing pay-tv and data cable networks. Other companies offering fixed-line services must therefore deal with Telstra. Privatisation Telstra was partially privatised by the coalition government in the late 1990s, but it is still 51.8% owned by the government, which would like to divest the remaining portion but this had been blocked until the 14th of September, 2005, both by a hostile Senate, and because of financial and electoral considerations. Earlier partial floats attracted a great deal of public interest but have, in many cases, been poor investments, a majority of which was caused by global sentiment about telecommunications companies first inflating, and then just as quickly deflating the share price. There seems no immediate prospect of the share price climbing back to the level at which the earlier shares were originally sold. The Australian Labor Party (ALP) has consistently opposed full privatisation and continues to do so, even though under a previous Labor PM, Paul Keating, they were thinking of selling it to BHP. Their official party platform also notes a desire for the wholesale and retail arms of Telstra to be more "clearly distinct" within the company to enable fairer competition with private telecommunications providers who use Telstra's lines. In the past, Labor Party figures (including Lindsay Tanner) floated the idea of a breakup of the company into separate retail and wholesale businesses, though this proposal was dropped after opposition from trade unions. The Australian Greens, the Australian Democrats and key independent Senators Meg Lees and Len Harris held similar positions to the ALP, which meant that until the 2004 elections any bill for full privatisation was guaranteed to fail in the Senate. Since the Coalition gained control of the Senate, it passed the privatisation legislation with a majority of 37-35. In many rural areas, the availability of mobile phone services and broadband internet services, as well as general service quality, remain topics of contention for many rural customers. Additionally, rural voters feel that a privatised Telstra will neglect its much less profitable rural networks, placing further pressure on the National Party not to support the sale. Ultimately, the National Party supported the sale, drawing criticism from state Farmers Federations, but not the National Farmers Federation. On 14th September 2005, the Australian senate concluded that the sale of Telstra would be legalised. The decision coincided with Mark Latham's press release stating bitter remarks about Australian politics, overshadowing the sale of Telstra. In the Senate, Senator Barnaby Joyce drew criticism for reneging on his campaign promise to oppose the sale of Telstra. Since parliamentary approval of the final privatisation in 2005, the actual final sale of the government's remaining stake in Telstra has proved somewhat difficult to achieve and, as of mid-2006, there were no signs that it would occur soon. There were two key reasons for this situation. First, Telstra remains a company that struggles to maximise shareholder value. In the past two years, but especially since the appointment of American Sol Trujillo as CEO, the share price has fallen consistently. Second, voter concerns in rural areas of Australia — which are the most at risk of any negative consequences of full privatisation due to the current effective cross-subsidisation of experience regional and remote telecommunications — continue to weigh on the government's mind. Despite the aforementioned reasons, the Australian Federal Government announced on August 25 2006 that it would sell a third of its remaining Telstra shares in October and November of the same year (approximately AU$8 billion), with the remainder being placed into a Future Fund to sell down over time. This sale was approved in a senate vote on September 14 2006. Ownership Fixed-line services Telstra owned and operated the majority of copper line-based PSTN services in Australia. One competing fixed-line service is the Optus network which uses HFC to deliver telephony services to a rather limited percentage of the population. Most of Telstra's profit is generated from fixed line services. Telstra recently issued a profit warning due to declined growth in the fixed line market. People seem to be shifting from their fixed line services to mobile carriers. Telstra outsources a significant portion of network installation and maintenance to private contractors and businesses, such as ABB Communications and STCJV. Mobile telephony (Telstra Mobile)
Telstra Wholesale Due to their ownership of existing copper phone lines and telephone exchanges, Telstra is the incumbent and dominant wholesaler of ADSL related services to other Internet Service Providers. They installed the first DSLAMs in exchanges prior to 2000, and began wholesaling access in late 2000.• As of October 2006, Telstra Wholesale offers port speeds of up to 1.5Mbit/s on its ADSL network. Broadband
Dial-up Telstra, through its retail Internet Service Provider, BigPond, sells dialup internet access. Subscription television As well as owning 50% of the Australian Subscription Television provider Foxtel, Telstra's Hybrid Fibre Coax (HFC) Cable network is one of the delivery systems used by Foxtel. Telstra also resell Foxtel's "Digital" products in Foxtel's service area and Austar's "Digital" product, in Austar's service area. Telstra's ownership of Foxtel has in the past come under fire from the Australian Labor Party (ALP) Directories and advertising (Sensis)
Market position and power
International expansion Telstra has attempted to expand into international markets. Recently Telstra acquired 51% of China's SouFun, a real estate and property website. SouFun will be integrated into the Sensis business and provide Telstra with an entry point into China•. Also notable is a joint venture with Hong Kong entrepreneur Richard Li and his company Pacific Century Cyberworks during the late 1990s telecommunications boom. Their undersea cable venture, Reach, has struggled, with its book value downgraded to zero by the company in February 2003 (it continues to operate, though, and the company believes that it may still be viable in the longer term). In 2002, Telstra also acquired PCCW's remaining 40% stake in Regional Wireless Company (RWC), giving it total ownership of CSL, then the most prominent of Hong Kong's six mobile operators. CSL announced in April 2006 that it was to enter a joint venture with New World Mobility Ltd in order to capture a larger share of the market•. CSL comprises just over 75% of the joint venture. Telstra also fully owns New Zealand subsidiary TelstraClear. The company was formed in 2001 from the merger of subsidiary TelstraSaturn (a 50/50 joint-venture with Austar which had previously acquired ISPs paradise.net and NetLink) and the telco Clear Communications purchased from BT Group plc. TelstraClear also operates a Cable TV brand Saturn. Sponsorship Telstra has naming rights to two national sporting arenas, the Telstra Dome in Melbourne and Telstra Stadium in Sydney and is the naming rights sponsor to the National Rugby League. Data | |||||||||||||||||||||||||||||||||||||||
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