BY ALISON DELLIT
"Barry ... said Sammy looked a little bit blue and he was gasping... [Barry] went to ... use the phone and it didn't work, so then he said 'I'll run [to the farm down the road] and I'll get an ambulance'... Later, Sammy made this terrible groaning noise and then he said to me 'Mummy, I don't want to die' and I said, 'I promise I won't let you die' and then he held my hand and then he just said 'I love you' and he died." — Rose Boulding, speaking on ABC radio's February 12 AM program.
On February 6, 10-year-old Sam Boulding suffered a fatal asthma attack. The phone at his parents' property in Kergunyah, north-eastern Victoria, had not been working properly for 10 days, despite four calls a day to Telstra requesting it be fixed. "I think if we had the phone there that the ambulance would have been able to tell us what to do... and I kind of think even if he had have died, at least Barry would've been with me", Sam's mother Rose also told AM.
In the last decade, Australians' use of different telecommunications media has expanded rapidly. According to the Australian Communication Authority's (ACA) most recent telecommunications performance report, for 2000-2001, 50% of Australians use the internet, and a staggering 65% own a mobile phone. More mobile phones are now connected than fixed phones. About 25% of households have pay TV access.
But for every corporation cruising the "information superhighway", there is a Boulder family struggling to keep basic contact with the rest of Australia, or a pensioner unable to keep up with rising phone costs.
Five years after the sale of the first third of Telstra, and the introduction of "full competition" into the telecommunications industry, the gap between services in rural and regional areas and those in the metropolitan centres has substantially grown. People on low-incomes have also suffered.
The government's claim that privatisation will solve the problem is a lie — it is privatisation and the competition that accompanies it that has caused the problem.
In preparation for competition, Telstra was ordered, by a Labor government, in 1991 to operate in a "commercial way". It has done this with a vengeance. Investors might be "disappointed" with Telstra's latest profit figure of almost $3.7 billion (down 10% on last year's total profit), but the company is still Australia's biggest earner.
In 2000-2001 Telstra's earnings before interest, tax, depreciation and amortisation was 53% of its total revenue, and returns on equity are averaging well over 33%. This makes its rate of profit is the highest of any Australian corporation.
This profit has been made at the expense of its more vulnerable "customers", as the corporation has slowly "rebalanced" in government-speak, i.e., increased the charges to the more unprofitable sections of the business relative to the profitable sections. Under full private ownership, this trend will only get worse.
Submissions to the current Senate inquiry into telecommunications services, set up against the government's wishes, tell the story. Jill White, from Katherine, told the inquiry: "The [telephone] service has an intermittent fault which is worse during the wet weather. Our access to the internet is extremely unreliable due to congestion problems. The mobile service for Telstra network is practically non-existent. I have had to walk around the block with my mobile phone trying to find a place where there is significant bars on the phone to make a call to report that the house phone has no service."
Although Telstra is normally required to fix regional and rural faulty phones within three working days, this does not apply in "extreme weather conditions", meaning flood and cyclone-prone customers are often worst off. Because Telstra does not publish the numbers of exempted areas, the company's data on its repair times underestimate the problem.
In 2000-2001, the ACA recorded a 12.5% increase in faults, based on figures provided by the phone companies. Even before 2000, telephone faults were higher than they were before privatisation in 1996. The time taken to repair a fault outside urban areas also grew and Telstra reported that it had a backlog of 20,000 faults in the copper network. In the March 2002 quarter figures released by Telstra, fault restoration had fallen again, due, Telstra claims, to "adverse weather conditions".
Not surprisingly, 40% of respondents to ACA's 2001 customer satisfaction survey said that they were dissatisfied with the length of time taken to repair faults, up on the 1999 figure.
White's experience with the internet is also not unusual. In 1998, the ACA reported that a staggering 55% of rural and remote Telstra customers connected through the copper wire network cannot get internet access of 14.4 kilobits per second, and 70% can't get 28.8kbs. Rates of 56kbs are standard in metropolitan areas.
At a cost of $4 billion, Telstra deemed it too expensive to upgrade the copper network in the bush. In the lead up to the 2001 federal election, the Howard government committed funding to bring the rate up to 14.4kbs across the spectrum.
Lorraine Boyd, who lives halfway between Melbourne and Daylesford, told the Senate inquiry: "We have never had a mobile phone service here and our mobile phones are only used when we are away from home... Recently Telstra opted to remove the nearest public phone which was 6km from our home and we now have to travel to Creswick 17kms away to use a public phone to report any faults with our home phone. A fairly frequent occurrence in this area."
Since regulated competition, Australians are "guaranteed" a certain level of service under the Universal Service Obligation. As the USO provider, Telstra is responsible for maintaining basic phone lines where there is not sufficient competition to guarantee it, and is also responsible for maintaining public pay phones (For this, Telstra is granted funding which is obtained by an industry-wide levy).
Before privatisation, in 1996, Australia had 4.49 pay phones per 1000 inhabitants. By 2001, that had fallen to 3.87 per 1000 inhabitants. Most of these phones are private pay phones, operated at a profit by businesses such as clubs and pubs.
This decline in service is partly attributable to the slow elimination of cross-subsidisation. The old Telecom, before 1991, aimed to recoup the costs of the unprofitable sections of the network through the revenue of the more profitable bits. So STD calls between metropolitan centres were charged above costs, which subsidised STD calls across the rural network, which were charged well before costs.
The theory behind cross-subsidisation is that the primary purpose of a telecommunications company is to provide an essential utility to the population, ensuring a coherent national network. It is, of course, not only those who live in rural or regional areas that benefit from a fully national telecommunications system — it is anyone who needs to contact them as well.
Since 1991, cross-subsidisation has been slowly eliminated. Thus, just as telecommunications are becoming more all pervasive than ever before, the gap in access is getting wider than ever before.
A good example is the sky-rocketing cost of line access. In the last decade, the monthly service charge imposed by Telstra has doubled. Then, in October last year, the government extended the price cap on these charges to enable Telstra to increase them by 4% until they hit $32 a month, an increase of around 40%. This increase was accompanied by a corresponding tightening of the cap on call costs, but this means that the cost of a phone for those who use their phones least, the poor, will increase.
On August 1, Telstra increased a range of call costs, including: a 25% increase in call connection fees for calls to mobile phones, a 20% increase in call costs between mobiles, and a 13% increase in text messaging charges.
This is most clearly shown through the ACA's 2001 report, which measures the "benefits" to customers arising out of competition. While the ACA claims a modest price benefit for basic telephone access in 1996-1998, in 1999-2001 it records a larger negative price benefit.
The Australian Telecommunications Users Group and the ACA have both pointed out in the last year that, as the mobile market is now saturated, telcos are developing strategies focused on getting more revenue out of each customer, rather than increasing their customer base. This will certainly push up prices.
The average Australian household spends twice as much on telecommunications, $1380 per year, as it did in 1991, making them more vulnerable to price increases.
At the same time, customer service has deteriorated to appalling levels. Between June 1996 and June 2001, Telstra shed 31,648 full time jobs — 41.4% of its work force. When the 16,000 job cuts carried out under the Labor government between 1991 and 1996 are added, Telstra has reduced its work force by more than 50% under competition.
Many of the missing jobs were in directory assistance or other customer service areas, which have become increasingly impersonal and frustratingly limited in scope. Complaints about customer assistance are the fastest growing area of complaints to the Telecommunications Industry Ombudsman, who has recorded an increase in complaints across almost all areas since 1996.
Competition and privatisation have already cost Australians enormously. The loss is not just in a reliable phone system in the bush, it is in lost opportunities for expansion. Had the money paid out by Telstra every year to its private shareholders been plowed back into the system, we could have broadband access throughout much of the country, ensuring everyone was connected to vast amounts of information and communication networks. We could have had thousands more trained telecommunications staff and researchers, and customers could have a reasonable, 24-hour information service.
Australia's telecommunications system, on which Sam Boulder's life depended, is too precious to hand over to a profit-mad mega-monopolistic beast. Telstra should not only be bought back under 100% public ownership, it should be run under public control.
From Green Left Weekly, September 4, 2002.
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