The king is dead...

So the Rudd government here in Australia has finally ordered the breakup of Telstra: either split into a retail entity and an infrastructure entity, or face being barred from further access to possibly lucrative future wireless and adjacent markets.

For those of you on foreign shores, Telstra is the old AT&T/British Telecom of Australia; the telco that owns practically all the communications infrastructure in Australia due to that legacy position; from the phones in an Australian household, to the copper wires, to the switching equipment, to the transmission lines on down. And as a result, the broadband infrastructure as well as the largest wireless network. Once government owned, it was completely privatised as of 2006.

For my Australian readers, does any of this sound familiar:

• Controls all long-distance lines, thus limiting competitors’ growth simply by denying them connections to the national network
• Cuts rates in competitive markets keeping out other providers
• Charges high local rates or provides poor local service to other telephone service providers
• Implements a public-relations strategy to persuade both customers and the government that the telephone system was a “natural monopoly” – efficient, uniform, and reliable service in exchange for “rational” profits.

Do you think they're talking about Telstra? Nope, this is what they were saying about US telco giant AT&T before its historic breakup by the US Dept of Justice in 1982.And while how current Telstra shareholders do depend on how the shares are apportioned amongst the resultant companies, be ready for the old truism about "the parts being greater than the whole" to result if played correctly.

So stop whinging and relax: there's more choice and lower prices ahead, Australia.

- Farmer Ted