history

This profile covers the shape and history of telecommunications in Australia and New Zealand. It supplements discussion in the Network & GII guide, the profile on Communications Revolutions and the page on the internet in Australia.

     contents of this profile

The profile has three parts -

this page provides a broad history of telecommunications in Australia, for the moment concentrating on institutions rather than their impact

markets & configuration [under development] comments on regulatory mechanisms, highlights key legislation, characterises different market sectors and describes major infrastructure

operators [under development] provides a profile of major carriers and service providers in both countries

     colonial period

Telecommunications in Australia began in 1854 with a telegraph line from Melbourne city to Williamstown, publicly funded but privately constructed (like South Australia's first line in 1856 from Port Adelaide to Adelaide city). At that time there were over 23,000 miles of line in the US (up from 12,000 miles in 1850, 2,000 in 1848 and 40 in 1846). By 1856 the length of line in Victoria had grown to 36 miles, with 14,738 messages (increasing to 35,792 messages in 1857). In 1867 there were 1,676 miles of line within the colony, handling 122,138 messages (compared to around 7.92 million in the US and 5.78 million in the UK that year).

Adelaide and Melbourne were linked in 1858, the year in which the first NSW line was activated. A Sydney-Melbourne link was in place by November 1858. The first line in Queensland was activated in April 1861, with a connection to Sydney in November of that year. The first transcontinental line in the US dates from the same year. The first line between Launceston and Hobart dates from 1857, with a (short-lived) cable from Victoria to Tasmania in 1859. The first line in Western Australia - from Perth to Fremantle - came a decade later.

As of 1861 there were 110 telegraph stations across the eastern colonies. Reuters, in competition with local news agencies, operated in Australia from 1860 onwards. New Zealand was slower off the mark, with its first telegraph line (from Christchurch to Lytletton) active from 1862. In that year there were around 32,000 miles of telegraph line and an estimated 5 million messages in the US, with 19,240 miles in the UK. The first telegraph link across New Zealand's Cook Strait was established in 1866.

A link between Adelaide and Perth was established in 1875, with the 2,900 kilometre Adelaide to Port Darwin link (the Overland Telegraph Line or OTL) in 1872 costing £300,000. The OTL met the privately-owned Singapore to Port Darwin cable established in 1870 by the British Australian Telegraph Company. The latter was a predecessor of the current UK Cable & Wireless group. The first Australia to New Zealand telegraph link was achieved in 1876. Ten years later there were over 8,000 miles of line in Queensland alone.

Australia's first telephone service (connecting the Melbourne and South Melbourne offices of Robinson Brothers) was launched in 1879, with the first telephone exchange opened in Melbourne in 1880 shortly before the hanging of bushranger Ned Kelly. Around 7,757 calls were handled in 1884.

New Zealand's first telephone exchange (in Christchurch) was active from 1881, a year marked in the US by the death of Billy the Kid. The first Australian coin-operated public phones appear to have been installed in 1890, two years after their appearance in the US.

The Australian networks were government assets operating under colonial legislation modelled on that of Britain: the UK Telegraph Act 1868 for example empowered the Postmaster General to "acquire, maintain and work electric telegraphs" and foreshadowed the 1870 nationalisation of competing British telegraph companies.

The nature of the networks meant that regulation in Australia was undemanding: network personnel were government employees or agents, legislation was enhanced on an incremental basis (with some recognition of privacy and copyright concerns), and restrictions could be achieved through infrastructure. All the colonies ran their telegraph networks at a deficit through investment in infrastructure and subsidisation of regional access, generally with bipartisan support.

Government-operated post office and telegraph networks - the largest parts of the bureaucracy - were amalgamated into a single department in each colony on the model of the UK Post Office: South Australia in 1869, Victoria in 1870, Queensland in 1880 and New South Wales in 1893.

     federation

Section 51(v) of the 1901 Australian Constitution gave the new national government power over all postal, telegraphic, telephonic and 'other like services'.

The colonial networks (staff, switches, wires, buildings etc) were transferred to the Commonwealth and became the responsibility of the first Postmaster-General (PMG), a Commonwealth Minister overseeing the Postmaster-General's Department that managed all domestic telephone, telegraph and postal services. With 16,000 staff (and assets of over £6 million) it accounted for 90% of the new federal bureaucracy. That figure climbed to over 120,000 staff (around 50% of the federal bureaucracy) by the late sixties.

At the time of federation it would have been appropriate to speak of a 'telephone divide': public phones were available in a handful of post offices and otherwise restricted to major businesses, government agencies, institutions and wealthier residences. Eight million telegrams were sent that year over 43,000 miles of line. (In the UK there were around 89 million messages.)

There were around 33,000 phones across Australia, with 7,502 telephone subscribers in inner Sydney and 4,800 in the Melbourne central business district. A trunk line between Melbourne (headquarters of the PMG Department) and Sydney was established in 1907, with extension to Adelaide in 1914, Brisbane in 1923, Perth in 1930 and Hobart in 1935.

Overseas cable links to Australia remained in private hands, reflecting the realities of imperial politics, demands on the new government's resources and perceptions of its responsibilities. The PMG department became responsible for some international shortwave services - particularly from the 1920s - and for a new Coastal Radio Service in 1911, with the first of a network of stations operational in February 1912. During the 1930s the PMG became responsible for the Australian Broadcasting Commission (ABC), profiled here.

By 1939 Australia was 7th in the world teledensity ranking, with all capital cities except Darwin connected through a national network of 'voice grade' lines and 50% of services through automatic exchanges (significantly better than the UK and most of continental Europe). It has remained in the top ten and as the figures in our Metrics guide suggest currently has a greater per capita number of mobile phones than the UK and US.

In 1946 the federal government acquired the shortwave broadcasting assets of Amalgamated Wireless Australasia (AWA), a public company. Those assets formed the basis of the Overseas Telecommunications Commission (OTC), a new statutory body with responsibility for the nation's international telecommunications services. Establishment of OTC preceded nationalisation of Cable & Wireless in the UK during 1947 but reflected action by Canada, New Zealand and other dominion countries to take control of their non-domestic networks. OTC came to have responsibility for satellite links, commencing with INTELSAT II in 1966. A public telex (teleprinter) service was available from 1954.

In 1975 telecommunication regulation and delivery was restructured, with PMG handling all postal services, OTC retaining responsibility for international telecommunications and the Australian Telecommunication Commission (trading as Telecom Australia) being established to provide public telecommunication services within Australia.

     deregulation in New Zealand

In 1987 Telecom Corporation of New Zealand Limited (Telecom NZ) was formed from the telecommunications arm of the NZ Post Office as a 'state owned enterprise' (ie a government business with a commercial focus).

Full deregulation of the New Zealand telecommunications market was introduced in April 1989 and Telecom NZ was fully privatised in 1990 through sale to to wholly owned subsidiaries of Bell Atlantic and Ameritech for NZ$4.25 billion. Those companies sold down their stake (by NZ$1,449) in 1991 and further reduced their shareholding in 1993 to a combined 49.6% before exiting in 1998.

In 1990 Clear Communications became the first network to compete with Telecom NZ, with BellSouth New Zealand launching the the first competing mobile network in 1993. Vodafone New Zealand acquired BellSouth NZ in 1998.

Telecom NZ launched the XTRA ISP in 1996: Xtra signed up its 300,000th customer in 2000. In 1999, facing stagnant markets and competition concerns at home it expanded across the Tasman by acquiring 78% of AAPT, Australia's third largest telco. It increased that holding to 100% the following year. During 2001 it took a 19.9% stake in Hutchison 3G Australia, set up to develop 3G services in Australia.

As in Australia, there's widespread disagreement about privatisation and deregulation processes and outcomes. In 2000 for example a report (PDF) for a Telecom NZ competitor commented that

After 10 years of deregulation, Telecom continues to dominate the telecommunications sector. In particular Telecom accounts for 75% by revenue of the total market for telecommunications services, and over 90% of the local voice, interconnection and directories sectors. Telecom's profitability has improved steadily since 1989, the company achieving a return on equity of 77% in 1999. Telecom enjoys significantly higher margins than any other major company in New Zealand.

     and in Australia

In Australia the 1982 Davidson Enquiry regarding private sector involvement in delivery of existing/proposed telecommunications services recommended ending Telecom's monopoly. In the preceding year Aussat Pty Ltd, another government agency, had been established established to operate domestic satellite telecommunication and broadcasting services.

In practice Aussat's charter restricted it from acting as a competitor to Telecom, including a prohibition on interconnecting public switched traffic with Telecom's network. Aussat's viability was undermined through restrictions on raising capital, of critical importance given tepid government support and increasing costs. It wasn't until 1985 that Australia's first geostationary communications satellite was operational; by late 1990 it had debts of about $400 million.

The Australian Telecommunications Commission was restructured as the Australian Telecommunications Corporation, trading as Telecom Australia, in 1989. That year saw the last domestic telegram handled by Telecom, with responsibility for telegram operations handed over to Australia Post.

Proposals for a merger of Aussat and OTC (thereby permitting national delivery of telecommunication services in competition with Telecom) were rejected in favour of disposal of the satellite operator to a nongovernment entity that would be allowed to compete with Telecom.

OTC and Telecom were accordingly merged as Australian & Overseas Telecommunications Corporation Limited (AOTC) in 1992, immediately following the decision that Optus Communications - a private sector entity owned by a consortium that included BellSouth - would be given Australia's second general carrier licence. Cable & Wireless, privatised after several decades of UK government ownership, took a controlling stake in Optus in 1998 (under the banner Cable & Wireless Optus) before control passed to SingTel in 2001.

Optus was initially allowed to enter the Australian telecommunications marketplace for national long distance and international telephone calls, with other players prevented from entering the general telephone market until 1997 and 'pro-competition' mechanisms - such as guaranteed access to Telecom's existing infrastructure on reasonable terms - meant to ensure its viability.

Telstra also faced competition in market niches such as long distance corporate voice and data services, with AAPT (a spinoff of the local AAP financial data/news service) active from 1991. MCI Communications, later absorbed by the ill-fated WorldCom, was an early major shareholder of AAPT but departed in 1994. New Zealand’s Todd Corporation took a 24.5% stake in AAPT in 1992. In 1995 AAPT launched a mobile phone service, using Vodafone as its network supplier, acquired a 50% of Australian ISP connect.com.au Pty Ltd and bought NewsNet ITN. In the same year SingTel acquired a 24.5% shareholding in AAPT.

In 1996 AAPT bought 40% of Cellular One Communications, followed by QNET Communications. In that year it gained a carrier licence, offering long distance services to the residential market and building communications networks for the South Australian and Victorian governments. It subsequently moved to 100% of CorpTEL Communications, its AAPT Sat-Tel satellite joint venture, connect.com.au and Cellular One. In 1999 Telecom New Zealand became the major shareholder (subsequently moving to full ownership); a year later it acquired an Australian national high bandwidth network from Optus and sold AAPT Sat-Tel.

Optus began using its own infrastructure in 1993. On the recommendation of industry regulator Austel UK-based Vodafone was permitted to enter the mobile phone market with an exclusively digital licence in 1992, competing with Optus and Telecom (offering mobile services from 1987). By the end of 1999 Telecom's share of the GSM mobile market had declined to around 50%.

     Pay-tv

Australian legislation for the introduction of pay-television had passed in 1992. Over 1,300 licences had been issued to pay-tv operators such as Galaxy and Australis by 1997 but underwhelming financial performance had seen the industry consolidate around two majors Optus Vision (a consortium of Optus and various media interests) and Foxtel (a consortium of Telstra, Murdoch's News and Packer interests).

During 1996 Telecom NZ began rollout of a fibre-coax cable network in parts of Auckland and Wellington under its First Media pay television plan. First Media was abandoned in 1998, the year in which the company claimed 500,000 mobile customers connected to its network (climbing to one million in 2000).

     Telstra

AOTC was rebadged as Telstra Corporation in 1993, trading internationally as Telstra from that year and domestically as Telstra from 1995. Expansion into Indonesia and other Asian markets wasn't strikingly successful, with the group winding back overseas involvements in 1997-98. In 1996 Telstra recorded the largest profit in Australian corporate history, some $3.8 billion and was partly privatised in November 1997 through sale by the Commonwealth of around 33.3% of its shareholding.

Privatisation followed formal opening of Australia's telecommunications markets to full competition in July 1997. A further 16.6% was sold by the Commonwealth in September 1999; sale of the government's 50.1% stake involves legislation.

In 1996 Telstra moved across the Tasman by offering services in the New Zealand business market. In 1999 it merged its New Zealand operations with those of Saturn Communications (offering residential connectivity in competition with Telecom NZ since 1997) to form TelstraSaturn. In 2001 TelstraSaturn in turn acquired Clear to form TelstraClear NZ.

In July 1997 the Australian telecommunications sector was opened for full competition with removal of restrictions on the number of licensed operators and anti-competition mechanisms (replaced by general competition law under the oversight of the Australian Competition & Consumer Commission.

By the end of 1998 there were over 20 licensed telecommunications carriers controlling facilities in Australia; several hundred other entities used those facilities to provide services. In 2001 Australia had around 21.29 million fixed-line phones (ie 1.09 handsets per capita) and 11.17 million mobile phones (0.57 per capita). New Zealand had 4.11 million fixed phones (1.07 per capita) and 2.28 million mobiles. Internet connectivity is discussed here.

     studies

Unlike the extensive literature on privatisation and deregulation there are surprisingly few studies of the impact of telecommunications on Australian society, the role of the telephone/telegraph in Australian and New Zealand history and the operation of communication agencies. That contrasts with Canada, US and UK.

The outstanding history of Australian telecommunications remains Ann Moyal's Clear Across Australia: A History of Telecommunications (Melbourne: Nelson 84). Edgar Harcourt's Taming The Tyrant: The First 100 Years of Australia's International Telecommunications Service (Sydney, Allen & Unwin 87) and Kevin Livingstone's The Wired Nation Continent: The Communication Revolution & Federating Australia (Melbourne:, Oxford Uni Press 96) are drier. 

There have been a number of more jounalistic treatments of individual developments, for example Alice Thomson's popular but resolutely undocumented The Singing Line: Tracking the Australian Adventures of My Intrepid Victorian Ancestors (New York: Vintage 00) on construction of the OTL.

For New Zealand Alex Wilson's Wire & Wireless: A History of Telecommunications in New Zealand 1860-1987 (Palmerston: Dunmore Press 94) is serviceable.

Perspectives are provided by works highlighted in the Communications Revolutions profile on this site. These include Global Communications Since 1844: Geopolitics & Technology (Baltimore: Johns Hopkins Uni Press 99) by Peter Hughill, The Carrier Wave: New Information Technology & the Geography of Innovation, 1846-2003 (London: Unwin Hyman 88) by Peter Hall & Paschal Preston, Media Technology & Society: A History from the Telegraph to the Internet (London: Routledge 99) by Brian Winston and The Invisible Weapon: Telecommunications & International Politics 1851-1945 (Oxford: Oxford Uni Press 91) by Daniel Headrick.

The Ketupa.net site features detailed profiles on the ABC, Reuters and major broadcasting/publishing groups such as Murdoch's News and Packer's PBL. It includes pointers to the literature on pay-tv developments, such as Mark Westfield's The Gatekeepers: The Global Media Battle to control Australia's Pay TV (Annandale: Pluto Press 00).




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