Bbg Communications - Australia Telecommunications History

The telecommunications sector in Australia is predominantly saturated by telecoms provider, Telstra. But despite this, space is also a playing ground for  other telephone carriers which include Optus, AAPT and Powertel, Soul, Vodafone and Hutchison 3G.

According to BBG Communications, the main telephony network in Australia is connected through optical fibre networks, with households tapped to the network through copper lines that are linked in local exchanges. For mobile telephony, Australia runs on the GSM platform, like those in Europe and majority of its neighboring countries in the Asia-Pacific. In 2003, 3G mobile phone services were introduced, adding another plus to the generally considered good domestic and international telecommunications services in the country.

Primarily the Optus satellites C1 D1 and D2, are the domestic satellite systems in use for very remote areas.

Telstra, Optus, Nextgen Networks, PowerTel and AAPT are the main Intercity Networks with a collection of other providers having regional networks or Eastern Coast links.

Telstra is the main user of microwave links in remote areas; WIN Television provides a network of microwave towers for distributions of Television, and provides common carrier services. Other providers such as Agile Communications provide backhaul services in South Australia.

Section 51(v) of the Australian Constitution gave the new national government power over all postal, telegraphic, telephonic and 'other like services'. The last clause embraced future developments in the telecommunications front, which from then meant radio, television and the internet.

The colonial telecommunications network infrastructure (staff, switches, wires, handsets, buildings etc) were handed over to the Commonwealth and became the responsibility of the first Postmaster-General (PMG).  The PMG position is a Federal Ministerial post,  overseeing the Postmaster-General's Department that was in charge of all domestic telephone, telegraph and postal services. With 16,000 staff, it accounted for 90% of the new federal bureaucracy. That figure went up to over 120,000 staff (around 50% of the federal bureaucracy) by the late sixties.

Public phones were then available only in few post offices. Other limited phones installations were made available to major businesses, government agencies, institutions and among propertied residences. There were around 33,000 phones across Australia, with 7,502 telephone subscribers in inner Sydney and 4,800 in the Melbourne central business district. A trunk line ran between Melbourne and Sydney starting 1907, with extension to Adelaide established in 1914, Brisbane in 1923, Perth in 1930 and Hobart in 1935.

Meanwhile, overseas cable links to Australia remained to be privately owned and managed by then, reflecting the dynamics of imperial politics, demands on the new government's resources and the allocation of responsibilities at that time. The PMG department became responsible for some international shortwave services - particularly from the 1920s - and for a new Coastal Radio Service in 1911, with the first of a network of stations operational in February 1912. Australia and New Zealand had ratified the 1906 Berlin Radio-telegraph Convention in 1907.

During the 1930s the PMG became responsible for the Australian Broadcasting Commission (ABC). PMG’s management of the telecommunications network ABC echoed BBC’s own story.

As privatization has been changing the landscape of all service and utility providers, many tend to romanticize and era when enterprises were supposedly ran not for profit but for service.  It has become fashionable for some quarters to praise those times when PMG was supposedly an enlightened technocratic management, moved only for the national interest, and public service, over and above profit.

The image of a benevolent PMG is not without problems, as it is apparent that decisions on location and management of facilities were reflections of local political demands and the 'Australian Settlement' first articulated by Alfred Deakin.  The PMG was, after all, a major employer in rural areas, the Minister generally came from the Country Party and there was an emphasis on in-house development and local manufacturing.

The observation then was that governments of whatever party affiliation benefited from the organisation’s revenue generating nature.  Many would say that PMG was not a discrete statutory body, with no power on its own to retain its revenues, and was captive to national political dynamics.

In 1982, a Davidson Enquiry on Australia’s telecommunications services sector, made a recommendation to end Telecom Australia's monopoly. In the following year, Aussat Pty Ltd, another government agency, had been established to operate domestic satellite telecommunication and broadcasting services.  But  Aussat's charter did not allow it to be a direct competitor to Telecom.  A case in point is its charter’s prohibition on interconnecting public switched traffic with Telecom's network. Aussat's viability as a telecommunications player was greatly undermined by difficulties in raising capital, tepid government support and spiraling operation costs.

It wasn't until 1985 that Australia's first geostationary communications satellite was operational; by late 1990, however, it was saddled with debts amounting to about $400 million.

The Australian Telecommunications Commission was restructured, giving way to the Australian Telecommunications Corporation.  The new entity traded as Telecom Australia, in 1989. It was also the same year which saw the last domestic telegram handled by Telecom, as responsibility for telegram operations was handed over to Australia Post.

There were proposals floating for a merger of Aussat and OTC, but all were rejected in favor of the disposal of the satellite operator to a non-government entity that would be allowed to compete with Telecom.

Immediately after, Optus Communications - a private sector entity owned by a consortium that included BellSouth - was given Australia's second general carrier licence.  Optus proceeded to purchase the Satellite assets with many of the Non Satellite Assets remaining with the Government as part of Telstra.  Cable & Wireless, privatized after several decades of UK government ownership, took a controlling stake in Optus in 1998 before control passed to SingTel in 2001.

Optus was initially allowed to cater the national long distance and international telephone calls service in the Australian telecommunications market. The restrictions on  players that can enter the general telephone market until 1997 and 'pro-competition' mechanisms under the Trade Practices Act 1974, among which guaranteed access to Telecom's existing infrastructure on reasonable terms, meant to ensure Optus’ viability.

Competition in long distance corporate voice and data service operations was so steep. It was also felt by Telstra versus AAPT which was active from 1991, MCI Communications, later absorbed by the ill-fated WorldCom, was an early major shareholder of AAPT but got out in 1994. New Zealand's Todd Corporation took a 24.5% stake in AAPT in 1992. In 1995 AAPT launched a mobile phone service, using Vodafone as its network supplier, acquired a 50%  share of the Australian ISP connect.com.au Pty Ltd and bought NewsNet ITN. In the same year SingTel acquired a 24.5% shareholding in AAPT.

AAPT went on to muscle up. In 1996, it bought 40% of Cellular One Communications, followed by QNET Communications. In the same year it gained a carrier licence, offering long distance services to the residential market and building communications networks for the South Australian and Victorian governments.  Subsequently, it moved to 100% of CorpTEL Communications, its AAPT Sat-Tel satellite joint venture, connect.com.au and Cellular One. US-operator Primus acquired Axicorp in 1997, gaining a carriers license and expanding into internet services.

AOTC had a brand makeover as Telstra Corporation in 1993, trading internationally as Telstra starting the same year and domestically from 1995. Its attempts for expansion to Indonesia and other Asian markets did not live up to the company’s expectations, with the group winding back overseas involvements in 1997-98. In 1996 Telstra recorded the largest profit in Australian corporate history, some $3.8 billion and was partly privatised in November 1997 through sale by the Commonwealth of around 33.3% of its shareholding.

After Australia's telecommunications market was fully opened up to full competition in July 1997, privatization followed. A further 16.6% was sold by the Commonwealth in September 1999 bringing the shares sold to a total of 49.9%.  This figure is safely below 50.1%, at which rate, any sale of government-owned properties involves legislation. With the new regime came the adoption of a single national phone numbering scheme and any-to-any connectivity requirements.  Mobile phones, fixed-line phones and other devices was designed to communicate with each other irrespective of whether the service was provided by Telstra or one of its competitors. In November 2006, an additional 33% was sold by the government. The remaining 17% was placed in a Future Fund to provide full separation from government and regulations. This followed to avoid many possible conflicts of interest with the government being primary shareholder and competition regulator.

By July of 1997 the Australian telecommunications sector was fully liberalized for full competition with removal of restrictions on the number of licensed operators and anti-competition mechanisms.

By the end of 1998, there were over 20 licensed telecommunications carriers in Australia, with several hundred other entities using those carriers’ facilities to provide services. By May 2002, this figure climbed to 99 licensed telecommunications carriers.  The Australian Communications Authority estimated that the benefits to consumers of telecommunications services from competition in 2000/1 were between $5.5 billion and $12 billion.