Telecommunication Services

Telecommunication services in Australia were provided by government-owned monopolies. In the 1990s, however, the Australian Government sought to deregulate the market to increase competition as a means to improve services and cut prices. There were close parallels between the Australian experiences in telecommunications and those in other countries, including the UK.

The former telecommunications monopoly, now known as Telstra, was a large, bureaucratic organization operating like a government department. Several reforms were introduced to increase competition, including the awarding of a long-distance and international telecommunications licence to Optus in 1991; and the sale of Ausset (formerly a public-sector enterprise that operated the Government's communications satellite) to Optus.

In contrast to Telstra, Optus was more or less a start-up company with a much smaller workforce and without a history of unionization (except in the former Ausset section). Optus aimed at taking market share from Telstra by competing in terms of price and customer service. To this end Optus directors sought to develop a company that was efficient, customer focused and dynamic. As it was mainly a greenfield enterprise, Optus management paid close attention to the recruitment and selection of employees in an effort to mould an enterprise culture that would engender high employee commitment in a union-free environment. In the words of the human resources (HR) director of Optus, 'the mainstay of developing the culture that we want is recruiting the right people'.

Optus is owned by a consortium. The Australian share is 51 per cent and comprises two insurance companies: the Australian Mutual Provident Society and National Mutual; and a transport company, Mayne Nickless. Bell South (USA) and Cable and Wireless (UK) together own the other 49 per cent.

Since deregulation in 1991 the Government has maintained control of Telstra; however, further deregulation, culminating in the privatization of Telstra by the and of the 1990s, is expected for several reasons, including political pressure and the opportunity to raise funds from the sale. The Telstra-Optus duopoly will remain only until June 1997, with the Government committed to open competition from then. An independent industry watchdog, AUSTEL, attempts to monitor the market. However, it appears to have less influence on the industry than its U S or UK counterparts.

Some businesses favoured Optus as they had an impression that Optus would offer lower prices and better customer service. The unions assumed that Telstra's reductions in its employment would he correlated with the success of Optus in winning market share. One senior union official commented that the competition 'was fabricated', with the playing field 'sloping' to provide 'obvious advantages for the new player'.

By the mid 1990s Optus had won approximately 14 per cent of the long-distance market and a third of the mobile phone market. Optus had spent more than A$ 1,000 million establishing its fixed and mobile networks; however, due to the start-up costs, Optus had not yet realized a profit but was expected to do so by early 1996.

Industrial Relations and Union Involvement in the Industry

Unions have had a strong presence in Telstra and have had an important role in the industry. There are currently two major unions in the industry: the Communications, Electrical and Plumbers Union (CEPU) and the Community and Public Sector Union (CPSU). The CEPU generally covered technicians while the CPSU covered office personnel.

Australian industrial relations (IR) is in a period of reform. There is an increasing decentralization of collective bargaining, although there is still a centralized framework (see Davis and Lansbury, 1993, pp. 100-26). The Australian Industrial Relations Commission (AIRC) is encouraging the adoption of enterprise-based agreements to supplement the centralized framework, while the national framework provides a safety net of minimum entitlements. Unions have sought to use enterprise bargaining to their advantage, by increasing union participation at the workplace while maintaining the protection of the safety net. Many employers have attempted to increase the flexibility of their employment relations and to distance themselves from the centralized award system. Telstra and Optus have each adopted enterprise agreements. However, the experience of both companies was very different. Telstra maintained extensive union involvement, with agreements in 1994 between Telstra and the unions which provided for increased management-union consultation.

Optus chose another path. Legislation provided for a new type of agreement: the Enterprise Flexibility Agreement (EFA). EFAs can be negotiated with employees without direct union involvement (for example, through a ratification process in which employees vote on the agreement). Optus management won the consent of its employees