Australia's Telstra gets issued with licensing conditions

The Australian government issued telecommunications giant Telstra with a new licensing condition yesterday requiring the partly state-owned company to maintain staff and services in remote rural areas as a condition for its full privatization.

Communications Helen Coonan gave Telstra and its new American boss Solomon Trujillo six weeks to develop a detailed plan for maintaining adequate telephone and Internet services in the country's vast outback.

"This is about giving rural and regional Australia certainty and confidence that regardless of who owns Telstra, there will be a visible and effective Telstra presence in rural and regional Australia," Coonan said.

The issuing of the license condition follows pressure on Telstra to give undertakings that it will continue to provide services and a physical presence in rural areas if it becomes fully privatized.

Prime Minister John Howard strongly supports the full Telstra sell-off and has said a decision on its timing would be taken in coming weeks.

The sale of the state's 51.8 percent stake in the company is expected to take place late next year and earn about A$32 billion (US$24 billion).

However, the coalition government's junior partner, the National Party led by Deputy Prime Minister Mark Vaile, has threatened to block legislation enabling the sale without guarantees on rural services.

Issuing new license condition in a joint appearance with Coonan, Vaile said the onus was now on Telstra to prepare and maintain a plan that "clearly articulates the company's plans for continuing to serve rural, regional and remote Australia."

"The government wants more than a marketing document from Telstra, we want a real and quantifiable plan for Telstra's presence in rural and regional Australia," he said.

Since taking over Telstra on July 1, Trujillo has repeatedly clashed with the government over tight regulations imposed on his company, which held a monopoly on telecommunications services in Australia until 1997 and still dominates the market.

Earlier week Trujillo said the regulations, including requirements to provide services in Australia's outback, "belong to the last century."

He also demanded that Telstra's competitors, led by Singapore Telecom's fully-owned subsidiary Optus, share the burden of guaranteeing services to the "bush."

"One of the reasons that Telstra is highly regulated is a desire of governments to see that the bush gets a fair crack of the whip," Howard said on Wednesday.

"You can't have it both ways -- you can't run around saying we want to reduce the regulations or we want to improve circumstances in the bush," he said.

Telstra calmly to the new licensing condition unveiled yesterday. "Telstra has, and will always, comply with its legal obligations and obligations attached to its license to operate," a company spokesman said.