Australian government to mull a $3b telecommunications plan

CANBERRA - Australia's government will consider a multi-billion dollar telecommunications investment and regulatory reform package aimed at winning support for the sale of its stake in Telstra Corp Ltd, media today.

Communications Minister Helen Coonan will present cabinet with a plan to spend A$1 billion ($1.1 billion) on a rural broadband network and create a A$2 billion "future fund" to keep phone services and prices in rural areas are on par with cities.

The plan was reported in both the Australian Financial Review and the Australian newspapers.

The rural-based Nationals party, the junior partner in the Liberal/National coalition government, demanded the creation of a rural telecommunications "future fund" in return for its support of the government's planned A$30 billion-plus sale of Telstra.

The conservative government hopes to pass legislation approving the sale of its 51.8 per cent stake in the country's largest telco company before the end of the year, with the full privatisation of Telstra likely before the end of 2006.

"The cabinet submission (also) calls for a deep split of the company into separate wholesale and retail arms, allowing rivals to match Telstra's products and prices on equal terms," the Australian Financial Review reported.

The newspaper described the A$1 billion for a rural broadband network as an "adequacy fund", which would be bid for openly by all network operators.

The government is also considering a proposal by Telstra chief executive Sol Trujillo, who travelled to Canberra last Thursday, for both the company and the federal government to jointly invest in improving telecommunications services.

The Australian Financial Review said the plan involves Telstra spending A$3.1 billion and the government A$2.6 billion on ensuring all Australians have access to a minimum broadband service of 1.5 megabytes per second.

- REUTERS