Telstra’s fight against the Federal Government has been ramped up to new and interesting extremes with the news that the telco will take Federal Court action against Communications Minister Helen Coonan over the awarding of funding to Telstra’s rivals to lift rural and regional broadband speeds.

The court action is bad for the Government. When the history of Senator Coonan’s time as communications minister is written, what will be chalked up against her name? Unforseen outcomes from her media ownership reforms, including the gutting of media by private equity interests. Labor having seized the agenda with its admittedly vague Broadband fibre plans. And now possibly being forced by the courts to reveal what may well have been a bodgy decision making process.

When did Australia last have a good communications minister? Darryl Williams did little or nothing. Alston was an ideologue, and responsible for some of the worst policy of the Howard Government. Coonan is not an idealogue, but tries for nice negotiated lawyers’ solutions, and gets nowhere or to the wrong place.

We found out what Telstra Chairman Donald McGauchie thought of the decision now in dispute a few days ago: “It is the most appalling example of bad policy … Governments making irrational decisions about public money is always bad.”

McGauchie also thought the decision was really about subsidising Telstra’s competitors to take on Telstra’s 3G network in the bush: “We have been assured (by Government) that is not the case and we don’t believe those assurances,” he said.

But there is another question: this action also suggests a failure by Telstra. If McGauchie is right in thinking the Government is so against Telstra that it will subsidise its competitors out of spite, then why is that so?

The answer can only be that the telco’s crash or crash-through approach hasn’t worked. Legal action is always in one way or another an admission of failure by both sides.

Who can doubt that whatever the outcome of the various legal actions, this dispute will in the long term be counter-productive for Telstra – unless of course there is a change of Government and Telstra and Labor have done deals they shouldn’t have done. There are grounds for suspicion in this respect.

Underlying all this the big idea, or the big question. When something is a natural monopoly, should it be in government or private hands?

The ideology of the last eleven years says private hands are always better – but is it so? A natural monopoly in private hands means that you must have a beefed up and interventionist regulator, and a whole raft of clumsy regulations, if competition is to be assured. The conflicts and even the legal action become, to a certain extent, inevitable.

Telstra’s infrastructure – the wires and the cables – should have remained in public hands and only the business of selling services flogged off.

And underlying the politics is an aspect of this big idea – the potential for a rearguard victory by Labor on the issue of the sale of Telstra, which all thought lost.

If Labor really does build a national fibre-to-the-node network in partnership with private industry, then the communications infrastructure of the future will again be partly in public hands.