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Minister Conroy’s announcement that Telstra will be forced to divest some of its parts is the latest chapter in Australian governments’ clumsy engagement with privatisation over the last two decades. When the sale of a government enterprise has been straightforward there have been good results. Chiefly this has been when the resulting enterprise remains pretty much intact with most of its privileged market rights rusted on. Qantas, CSL and the Commonwealth Bank are good examples. But where governments have tinkered with organisational structures and market conditions then both unsuccessful market conditions and unsuccessful enterprise structures have invariably resulted. Telstra is the best example. The privatising of ports and of portions of the states’ electricity industry are other examples.

While there is much that Telstra has done to consumers and competitors that deserves criticism, the corporation’s shareholders are right to feel frustrated with the organisational and market confusions that governments have thrust on the corporation. Now another period of uncertainty looms.

The federal government is right to recognise that the telecommunications infrastructure in Australia needs dramatic overhaul. My fear is that it has now created three monster projects that it has prime responsibility for: the successful creation of the National Broadband Network, the successful dismantling of Telstra, and the successful re-regulation of a telecommunications market that can accommodate both the NBN and the new Telstra entities as well as any new market entrants.

Only the foolishly brave would predict successful outcomes in all three. For me, the feds are taking on too much design risk in a sector where the future seems always to surprise. Most of the exciting parts of the telecommunications sector have evolved from new technologies and new enterprises outside of the control of the government enterprises and their privatised spin-offs. Microwave- and satellite-based enterprises and services are good examples. They have flexibility to intersect with more extensive hard-wired systems and adjust to specific needs and incorporate new products.

My suspicion is that hybridity works in telecommunications because – unlike, say water and electricity – telecommunications needs across the Australian community are so varied, rates of innovation are rapid, and new products queue up for adoption.

Which means the break-up of Telstra alongside a new set of facilitating market regulations might be a good idea if they encouraged diversity in product and enterprise size. But one suspects the measures announced by the minister are motivated by the need to find market space and logic for a super-sized NBN monopolist. Conveniently, the commercial viability of the NBN project will be enhanced. But this might come at the expense of better quality, depth and diversity in the telecommunications sector overall.