J.E.Flinn: November 2007 Archives

The Tale of Telstra:The impact of a telecom company (Part Two)

Continued from Part One....

The Postmaster General Split

By 1975, the telephone services were subsiding unprofitable postal services, in turn “starving” the telephone network of the money needed for the growing technology. Thus the Commonwealth split the PMG into two departments: Telecom Australia and Australia Post (Australian Heritage Commission, 2003).
Also known as the Telecommunications Act 1975, this “established a commission for the purposes of planning, establishing, maintaining and operating telecommunication services within Australia” (DuVe, 2005).
The title given to the commission was the Australian Telecommunications Commission, or ATC. They traded as Telecom Australia.

Change of Hats

The Australian Telecommunications Corporation Act 1989 reconstituted the ATC to the Australian Telecommunications Corporation. Still trading as Telecom Australia, the principle function of Telecom is to supply telecommunications services within Australia. A subsidiary function is to carry on, outside Australia, any business or activity relating to telecommunications.
Telecom was given the power to “do all things necessary or convenient to be done for, or in connection with, the performance of its functions” as stated in Section 15-17 of the Australian Telecommunications Corporations Act of 1989. Telecom Australia was roughly 50% owned by the government at the time. This act set the functions and powers of Telecom as a corporation.

Merging into the Telstra Brand

Telecom Australia was incorporated as an Australian public limited liability company in 1991. The Australian Telecommunications Corporation merged with another government body, the Overseas Telecommunications Commission, in 1992. This created the Australian and Overseas Telecommunications Corporation, or AOTC, and continued trading under Telecom Australia until 1993. The name “Telstra” was created in 1993 for branding purposes by combing Telecom Australia (Wikipedia, 2007). Telstra Corporation Limited traded internationally as Telstra in 1993, and domestically as Telstra in 1995 (Telstra.com, 2007).

Privatization

In July 1997, Australia’s telecommunication markets were opened up to full competition. By November 1997, Telstra went through a partial privatization where the Commonwealth sold 33 percent of their shares to the public (Telstra.com, 2007). With competition rising from other telecommunication providers, Telstra still held ownership of the fixed-line telephone network, pay-TV, and data cable networks. Optus and Transact are two telecom companies that began to build their own infrastructure.
Another 16.6% of the Commonwealth’s shares of Telstra were offered in September 1999. These shares were then listed on the Australian Stock Exchange, the New Zealand Stock Exchange, and the New York Stock Exchange (Telstra.com, 2007). This gave the Commonwealth 51.8 % ownership of Telstra with the remaining going to private shareholders. With the dot-com boom, Telstra stocks started the twenty first century nearly double of what they are today in 2007 (Yahoo Finance, 2007).
In Novermber 2006, the Commonwealth sold its remaining Telstra shares, known as T3, raising $15.5 billion for the Australian federal government’s Future Fund. This marked one of the biggest days of trading for a company on the Australian Stock Exchange as nearly 1 billion shares flooded the market (Rossi, 2006)
In March 2007, Telstra announced their intention to de-list its American depositary receipts (ADRs) from the New York Stock Exchange. They made plans to move to an over-the-counter ADR program. They will not be listed on any United States exchanges, but will still be listed on the Australian Stock Exchange (Hextall, 2007).

Telstra Today

Telstra is known as Australia’s leading telecommunications and information services company. The Telstra name can be found on two national sporting arenas, one in Sydney and the other in Melbourne. Telstra is a major sponsor of Swimming Australia, Australian Football League, National Rugby League, Surf Life Saving Australia, V8 Supercars, and more.
Providing 9.8 million fixed line services and 9.2 mobile services, Telstra has made a prominent dent in the Australian telecom market. They own and operate approximately 25,000 payphones throughout Australia, 90 percent of which are SMS enabled.
Beyond the historical PSTN line, BigPond is Telstra’s Internet service offering ADSL, cable, fiber, satellite, Wireless and dial-up access. Foxtel is an Australian subscription television provider that is 50% owned by Telstra. Sensis is Telstra’s advertising and directory department, publishing Australia’s White and Yellow Pages as well as many websites. (Telstra.com, 2007)
In recent news, Telstra is battling National ICT Minister Linda Coonan over the $958 million subsidy awarded to OPEL to expand regional broadband infrastructure. Telstra Group General Counsel, Will Irving, said “The ruling allowed the federal government to succeed in keeping secret its reasons for changing the Broadband Connect program without informing all bidders”. He went on to claim “It shouldn’t be this hard to find out why the government spent $1 billion of taxpayers’ money supporting a Singapore-backed proposal that didn’t even achieve the government’s stated aims. They’re either hiding something or didn’t understand the technology choices they were making” (Rossi, 2007).

What This All Means

Telstra’s impact on the growth of Australia is undeniable. Without telecommunications, Australia would be just as isolated today as it was when Captain Cook first landed in 1770. Telstra is a multifaceted telecom company that not only grew with Australia, but also helped Australia grow. Telecommunications continue to shape Australia as well link the land down under to countries across the globe.

References

Yahoo Finance, (2007). Company Profile. Retrieved November 20, 2007, from Yahoo Finance Web site: http://au.finance.yahoo.com/q/apr?s=TLS.AX

Cathcart, M (2005). Lonely Planet: Australia. China: Bookmaker International, Ltd. p 45.

Naughton, R (2000). Connecting a Continent: Early Telecommunications in Australia. Retrieved November 20, 2007, from Adventures in Cybersound Web site: http://www.acmi.net.au/AIC/TELSTRA_CONNECT.html

Australian Heritage Commission, (2003). Linking a Nation: Australia's Transport and Communications 1788 - 1970. Retrieved November 20, 2007, from Australian Government: Australian Heritage Council Web site: http://www.ahc.gov.au/publications/linking-nation/chapter-7.html

DuVé, M (2005, March 4). Telecommunications Act 1975. Retrieved November 20, 2007, from Agreements, Treaties, and negotiated settlements project Web site: http://www.atns.net.au/agreement.asp?EntityID=785

Australian Telecommunications Corporations Act, (1989). Commonwealth of Australia Law. Retrieved November 20, 2007, from Australian Government: Attorney-General's Department Web site: http://www.comlaw.gov.au/ComLaw/Legislation/Act1.nsf/framelodgmentattachments/1954CA170B524357CA256F7200172CBC

Wikipedia, (2007). Telstra. Retrieved November 20, 2007, Web site: http://en.wikipedia.org/wiki/Telstra

Telstra.com, (2007). About Telstra. Retrieved November 20, 2007, from Telstra Corporation Limited Web site: http://www.telstra.com.au/abouttelstra/corp/profile.cfm

Rossi, S. (2006, November, 21). T3 sale ends government control of Telstra. Computerworld, Retrieved November 14, 2007, from http://www.computerworld.com.au/index.php/id;832719517

Hextall, B. (2007, March, 29). Australia's Telstra to delist ADRs from New York Stock Exchange. Forbes.com, Retrieved November 14, 2007, from http://www.forbes.com/markets/feeds/afx/2007/03/28/afx3561997.html

Rossi, S. (2007, October,12). Telstra's OPEL lawsuit dropped. Computerworld, Retrieved November 14, 2007, from http://www.computerworld.com.au/index.php/id;1180298757

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The Tale of Telstra:The impact of a telecom company

Part One:

Introduction

Telstra Corporation Limited provides telecommunication and information products and services throughout Australia. The majority of Australia’s telecommunication infrastructure relies on Telstra. Their main activities are “provision of telephone lines; national local and long distance, and international telephone calls, mobile communications, data, internet and on-line, wholesale, telephone directories and pay TV” (Yahoo Finance, 2007)
Telstra’s origins come from a department created by the Australian Commonwealth government dating back to 1901. Before 1901, some people feared that the un-federated nation was going to resort to a revolution. However, the broad liberal consensus in Australia took democracy and fairness for granted. Thus, Australia became a federation on January 1, 1901 (Cathcart, 2005, p 45). The following essay discusses the history of Telstra as it relates to the growth of Australia.

The Land Down Where?

Without modern telecommunications, Australia was nothing more than an isolated continent full of British convicts. Relying on ships to deliver messages, Australia’s communication was far behind most of the world. In the mid 19th century, Australia’s first telegraph line had been constructed, eventually connecting Australia to the rest of the world in 1872 (Naughton, 2000).
The first telephone service was installed in Melbourne in 1878. Networks began developing rapidly under the management of the colonial post offices. At an Australian Federation Conference in 1890, colonial statesman Sir Henry Parkes began his address by stating “the means of communication carried in all directions constituted one of the major reasons for the union of all colonies.” In 1901, the Commonwealth Postmaster General’s Office was given all power over postal, telegraph, and telephonic services from the Australian Constitution (Australian Heritage Commission, 2003)
The Postmaster General’s Office, or the PMG, was the Commonwealth’s largest department with nearly 10,000 permanent staff and another 6,000 contractors of various types. The use of civil aviation helped build faster postal services, however the telegraph system remained the main means of long-distant communication. Australia held one of the highest numbers of users of the public telegram system in the world. The rate of usage peaked in 1945 at 35 million telegrams. The high cost and small number of telephones restricted its usage compared to the ubiquitous telegraph service. As telephone services became cheaper, the usage was down to 18 million by 1975 Australian Heritage Commission, 2003)
A quote from Sydney’s Daily Telegraph on July 11, 1907, read:

"The successful opening of telephonic communication between Sydney and Melbourne yesterday affords another remarkable example of how the world is moving. There are many men in both cities who recollect the time when the transmission of a message from one capital to the other was a matter of days, or perhaps weeks. It is now reduced to seconds. People can converse directly with the words as they fall from their lips picked up and instantly transmitted the whole six hundred miles on the wings of harnessed lightning.”

This quote demonstrates the impact that telephone services had on a growing country. Telephone services continued to grow in Australia’s cities as their usefulness became more apparent. Similar to a spider’s web, the network began to spread across Australia, connecting several cities. Commerce and trade grew with long distance communication made available by telephone (Naughton, 2000).
The Automatic telephone exchange made telephone communication quicker and more efficient. The conversion from manual to automatic exchange took several years, even decades in some areas of Australia. Some smaller country towns were still using manual exchanges into the early 1990’s! Other innovations assisted in the growth of Australian telephone services such as thermionic repeaters, multiplexing, coaxial cable, and national trunk services (Australian Heritage Commission, 2003).
Thermionic valves and repeaters were invented to “accept weak incoming signals and automatically boost them” according to the Australian Heritage Commission. This invention allowed for the opening of the Sydney to Brisbane telephone line in 1923.
In 1925, multiplexing was introduced on the carrier system between Sydney and Melbourne. Multiplexing allowed simultaneous telephone conversations to be held on the same pair of wires. This led to the growth of telephone services and eventually overseas phone calls to be made.
Coaxial cable permitted increasing channel capacity. The first coaxial cable was laid across the Bass Straight in 1935, linking Tasmania to the mainland.
The late 1950’s were a time of revolutionary change in the Australian national trunk network. Microwaves links were installed carrying 600 channels between Melbourne and Bendigo (Refer to Appendix Map). The first broadband network was opened for all telecommunications traffic in 1962 from Sydney to Canberra to Melbourne. This expanded rapidly, followed by operator-assisted international calls to Canada, USA and Britain in 1963 (.Australian Heritage Commission, 2003).

Continue on to Part Two: http://www.cicsworld.org/blogs/jeflinn/2007/12/the_tale_of_telstrathe_impact.html