Rural Aussies Fear Being Unlinked

"Distance is as characteristic of Australia as mountains are of Switzerland." Thus begins Geoffrey Blainey's famous 1966 opus, "The Tyranny of Distance." In it he argues that distance - from Australia to other continents, and from point to point within Australia - was a central factor in shaping this country's history.

Were he writing today, he might have spoken of the paradox of distance: Rural areas that stand to benefit most from new communications services are the hardest to serve. Rural residents have been among those most worried should Prime Minister John Howard be reelected tomorrow and proceed with plans to privatize Telstra, the national phone company.

"We've been told we should hitch our rural businesses to the global network and sell on the Internet," says Margaret Smith, national president of the Country Women's Association, from her office outside Canberra. "But when it takes 23 goes to get a one-page fax across 100 kilometers ..." Her voice trails off in despair.

If adequate customer-service guarantees aren't in place, further privatization of Telstra "could be a disaster for rural and remote people," Ms. Smith says. She fears a repeat of what happened after banks were fully deregulated: They pulled out in droves.

Debbie Strachan of Wantabadgery, New South Wales, says "life just doesn't work anymore" without these electronic appurtenances. She's not that far outback, either. She's less than 30 miles from Wagga Wagga, which she proudly describes as "the largest inland city in Australia."

The issues here are familiar in other countries selling off their phone companies, such as Germany, France, or Spain. But they have an especially sharp profile in this island-continent nation, where 8 percent of the population is spread across 80 percent of the land area. Market forces simply don't work as well in rural areas, many people say. Australia has a long tradition of rural subsidies to compensate for this.

Ms. Strachan, a member of the telecommunications committee of the New South Wales Farmers' Association, says that she appreciates the costs involved. But nowadays, telecommunications are "a basic service - a right, like health care or roads." To fail to deliver adequate services, she adds, would be "like condemning people to no running water or electricity."

The government sold off a third of Telstra last year and had hoped to sell the rest this year, using some of the proceeds for a voter-pleasing tax cut. That plan went bust when the privatization bill lost by one vote in the Senate.

A spokesman for Sen. Richard Alston, the communications minister, acknowledges, "Telstra has not been meeting [service] requirements in sufficiently high percentages." The Howard government plans, if reelected, to privatize an additional 16 percent of Telstra - bringing it to 49 percent private ownership - with further selloffs, after a public inquiry determines that service standards are being met. Moreover, the privatization bill now includes "a power of ministerial direction" over telecommunications. If service is deemed inadequate, "the minister could act, regardless of ownership," the spokesman says. "That's a new safeguard."

Full privatization would bring a market-pleasing clarity of status to Telstra and make it easier to finance the kind of major infrastructure projects necessary to serve rural Australia better.

"The Catch 22 is that it would be far better if we had private carriers" in real competition with one another to serve remote areas, says Ms. Smith.

Telstra spokesman Steve Nason maintains that "competition . . . not privatization" has caused some of the changes at Telstra troubling rural customers, such as staff cuts.