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Telstra privatization plans get opposition from rural outback

The Australian government's plan to fully privatize telecoms giant Telstra ran into trouble yesterday when politicians in a ruling coalition party set tough conditions for their support.

The Queensland state branch of the National Party voted unanimously to oppose the sale unless future communications services in the country's vast outback were guaranteed through five conditions, including a multi-billion-dollar trust fund, national radio reported.

State senator Barnaby Joyce said the party's decision would guide his stance on the issue, opening the way for the privatization deal to be derailed as Prime Minister John Howard's Liberal-National coalition has a majority of just one in the senate.

Fearful

The Nationals draw their strength from Australia's vast but sparsely-populated rural areas, where people fear they will lose out in the telecoms deal to the cities and population concentrations along the east coast.

Deputy Prime Minister Mark Vaile, who leads the Nationals in the coalition, last week proposed the setting up of a A$2 billion (US$1.5 billion) fund designed to produce A$100 million in dividends each year to pay for rural services.

But Joyce said he believed far more money was needed, and Queensland Nationals have previously suggested the fund would need A$5 billion.

Expectations

The government is expected to reap about A$30 billion from the sale of its 51.8 percent stake in Telstra, the country's biggest telecommunications firm.

Earlier this week a senior Telstra executive sparked an uproar by saying legal requirements that the company provide full services in lightly-populated rural areas were "unsustainable."

Telstra's new American chief executive, Sol Trujillo, has also criticized strict regulations imposed on the company, saying they hindered its ability to compete with up-and-coming rivals.

Pledge

The prime minister pledged on Friday that his government would not water down rules, called the Universal Service Obligation, that require Telstra to maintain services in "the bush."

But the Queensland Nationals demanded a separate body under the Australian Communications and Media Authority to monitor and review services in rural areas on a regular basis.

It also called for Telstra Corp to maintain a physical presence in the outback as part of its license conditions and for price parity between rural and urban areas for all services.
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