Australia's Broadband Blunder
By HOLMAN W. JENKINS, JR., NOVEMBER 3, 2009, 7:08 P.M. ET
As annoying as it may be that bankers defend their pay, that Goldman Sachs insists on every dollar owed it by now-taxpayer-backed AIG, that businesses everywhere lobby in their own interests—well, it could be worse. To adapt a quip, the only thing more disagreeable than being lobbied by capitalists is not being lobbied by them.
Ask Phil Burgess. He's an American executive who recently gained fame in Australia as one of the "three amigos," a group of associates of U.S. telecom executive Sol Trujillo, who was hired to overhaul one of Australia's corporate icons, Telstra, the country's Ma Bell.
They came, they saw, they did as they said they would — and were roundly vilified in the Australian media. Mr. Trujillo, who left in February, was seldom caricatured without a sombrero and bandoleers, in obsessive reference to his Mexican heritage. Mr. Burgess, as Telstra's head of regulatory affairs, was the company's public face during the Trujillo years — "petulant" and "bellicose" was the verdict of the Sydney Morning Herald.
Their sin was to carry out the mission given them. Four years ago, Telstra was on its way to being fully privatized when Mr. Trujillo was recruited with a specific brief, in Mr. Burgess's words, to make it a "private sector, fast-moving company."
He did so. Head count was slashed. Aging and neglected infrastructure was upgraded. Three different wireless platforms were junked and replaced with the fastest, most-advanced 3G network in the world.
What most infuriated their hosts, though, was Telstra's abandonment of its traditional deference to policy makers. The company took regulators to court over mandates requiring it to lease its network to competitors at knockdown rates. Mr. Burgess bashed civil servants and politicians by name, in a fashion apparently deemed unbecoming a corporate citizen in Australia.
He argued in colorful terms that regulators not only were pillaging Telstra's 1.4 million shareholders, but undermining the very competition they claimed to be promoting by making it too easy for rivals to prosper without building their own networks.
And though he's back in the states now, Mr. Burgess hasn't let up, leading the charge against a new plan by Australia's Labor government to dismantle Telstra (which must be a surprise to investors who just bought shares from the government) in order to advance Labor's own dream of a government-operated national broadband network (known as NBN).
"If you don't call a blackmailer for what they are, you pay the price forever," Mr. Burgess told an Australian reporter during a recent return visit. He was referring to threatened legislation that would forbid Telstra from bidding for new wireless spectrum and force it to divest its Foxtel TV business unless it "voluntarily" plays ball with NBN.
Most interesting for an American audience right now, though, is the perspective Mr. Burgess brings home on the value of self-interested, even aggressive, business lobbying.
Australia lacks America's bottomless think-tank and K Street resources for publicizing policy differences. Its parliamentary government puts all the policy levers, including a ready resort to secrecy, in the ruling party's hands. Australia is a small nation, with a small elite that tends to place limits on burn-the-bridges debate.
This may sound ideal to Americans, but the results aren't always good, says Mr. Burgess. Australia, like America, has its "wingnuts," he says, but they don't get a hearing. "There's no sharpening of issues. Policy ideas aren't fully vetted."
The NBN, a tremendously awful idea, is a case in point. The government wants to spend $39 billion to deliver 100 megabits to every household in the next decade, without the slightest idea how it might be done commercially or whether customers, who already can get 21 megabits through wireless in most of the country, would be willing to support NBN's huge costs.
The government wants to seize Telstra's wholesale network partly to eliminate competition—i.e., even as Labor castigates Telstra as a "monopoly," it wants to create a true statutory monopoly.
Of course, it takes an unwonted faith in government to believe it will deliver the promised digital nirvana on-time, on-budget or at all. In the meantime, Telstra would have no incentive to invest in its own network, so Australia could end up with the worst of possible outcomes: neither a shiny new functioning government network nor an existing Telstra network that keeps pace with technology and customer demand.
Mr. Burgess no longer lives in Australia and no longer works for Telstra, and he certainly doesn't have the appreciation of most of the Australian media — but, by keeping up the fight, he just might be helping Australians avoid a terrible mistake.
Holman W. Jenkins Jr. is a member of the editorial board of The Wall Street Journal and writes editorials and the weekly Business World column. |
