CommsDay’s revelation today that Australia Post will be making a full tilt into the telco market is likely to put a chill into many competitors, but more importantly will serve to accelerate massive changes in how value is created in the telecommunications business.

Australia Post brings assets to the market that most telcos lack and that only Telstra can really match. For a start it has a daily or weekly point of contact with almost every household and business premises in Australia—11m in total with nearly 100m items delivered per week. It has 4,500 retail outlets across the country, over half outside of metro areas. It plays an integral role in the fulfilment of e-commerce-generated physical deliveries as well as identity verification and secure payments. In short, it is the ultimate logistics and transactions business.

If one looks at the last decade and a half of the dot com world, it is clear that the companies who have created the most value are the ones who understand transactions and logistics. Witness Amazon, eBay and latterly, the Apple Apps Store. Indeed the slowest growing area of the digital economy has been the access services game, with prices regulated to cost, competition at a fever pitch and governments across the world forced to intervene to subsidise or stage manage network upgrades to fibre because there are few incentives for private capital to take on the task.

The future is now about handling transactions and horizontally integrated bundling. The sale of broadband access per se will likely become a loss leader, with real value coming from bundled services and a cut on transactions. It’s the McDonalds’ model: use break-even hamburgers to get them into the store, make the margin on the upsell to fries and Coke.

Australia Post ticks more boxes than most when it comes to an ability to realise value in this changed environment.

The entry of Australia Post into telco will not be without controversy. Its horizontal integration already steps on toes. Newsagencies, for example, resent the way that Australia Post can leverage its national monopoly in mail and small parcel services to “line extend” into personal gifts, stationery and mobile pre-paid recharge. There has also been talk of Australia Post becoming a bank.

Given the propensity of Australia’s vocal telco community to complain about any perceived advantage enjoyed by the former government monopoly Telstra it is only a matter of time before Australia Post is pinged with the same rhetoric if it achieves any degree of success.

Indeed there is a supreme irony in all of this. The Postmasters General Department was formed some 110 years ago to administer Australia’s postal, telegram and telecommunications services.

In 1975, the department was split into postal and telecom divisions. International services were excluded from the latter in the form of OTC. In 1992, OTC and Telecom Australia were united and eventually corporatised and privatised for around A$60 billion.

Australia Post remained the under-developed and unglamorous sibling, corporatised but never privatised and as of this year, recording a fraction of the profits of Telstra on about one quarter or less of the revenue.

Now Australia Post, under one of Australia’s most seasoned competitive telecommunications leaders with one of the best contact books in the business, is to take on Telstra in a new market environment where Telstra is effectively emasculated from fixed network operation and compelled to separate its operations. How the worm turns!

Grahame Lynch

CORRECTION: An earlier version of this article may have implied that OTC was spun out of the PMG. Thanks to correspondent David Havyatt we have clarified this misconception.