Ethical considerations move beyond the narrow confines of segment or business level strategies. For the players in Australia’s broadband industry, there are potential ethical dilemmas that therefore need to be addressed with a corporate-level ethical code and system. This paper will explore two of the firms involved in the broadband industry in Australia — Telstra and Optus — with respect to their ethical programs and attempt to make some connection between these and their respective broadband strategies.
Telstra is in a unique position in the Australian telecommunications company, as the incumbent player. This position has made it a target for government agencies that have taken a decidedly anti-Telstra stand (Datamonitor, 2010). Arguably, by contriving to bar Telstra from entering competition the government is the player in broadband with the biggest ethical dilemma, as in their misguided zeal to protect consumers they are reducing competition. That said, Telstra needs to develop an ethical framework for its pursuit of a broadband strategy.
Telstra aims to be a dominant player in broadband in Australia. In regular hardwire telecommunications, Telstra owns the line and is obligated to rent space on this line and provide means to competitors to enter into the market. Because the physical infrastructure is a form of competitive advantage, it does not make business sense to rent out this infrastructure to competitors. Government resolves this dilemma by way of setting laws compelling Telstra to sell these lines. With respect to broadband, the Australian government has excluded Telstra from building the national broadband network (NBN) which removes this particular ethical dilemma (Datamonitor, 2010). However, Telstra does have control over the cable that will carry broadband information to Hawaii, from which it connects to North America (Datamonitor, 2010).
Telstra also has the largest network for wireless broadband, the Next G. network, with coverage of 99% of Australia (Datamonitor, 2010). Wireless broadband, however, can be replicated by other competitors so there is limited risk of Telstra encountering an ethical dilemma as the result of withholding access — other firms will simply build their own networks.
In fixed line, Telstra’s old network is aging and it is struggling to cut a deal with the government to gain access to the NBN. The government is further threatening to split Telstra, which would be devastating to the company’s business (Taylor, 2010). As a result, the ethical dilemma presents itself with respect to protecting Telstra’s shareholders. Management would be right to perceive a petty spiteful attitude on the part of the government with regards to the company but it must counter its desire to combat that with its obligation to protect the shareholders.
For Optus, the ethics are perhaps more straightforward. The company has little infrastructure that would it would be compelled to rent out to competitors and is not at odds with a truculent government. The company merely has its ethical obligations to the shareholders to consider. Optus management owes a duty to shareholders to maximize profit and it also owes a duty of care not to harm other stakeholders in the process of pursuing that profit.
Both firms are subject to the typical ethical issues involving internal fraud, bribery, and accounting irregularity. That these issues can occur at an organization at any point in its operations and in any division indicates that a standalone ethics policy for the broadband business would not be sufficient — the ethics program and policy must cover the entire company.
Optus is shifting its broadband strategy towards wireless, in which it has its own network. Fixed-line broadband growth has stalled, and wireless broadband has begun to increase in volume rapidly. Optus’ current broadband strategy for broadband is to take customers that it has on Telstra’s wholesale network and convert them to the proprietary DSLAMs. This is because fixed line broadband has become saturated so Optus wants to maximize its own network capacity. To increase market share, Optus has lowered its prices in an attempt to reduce customer losses to smaller ISPs and bring them back to Optus (Winterford, 2010).
Design of an Ethics Program
There are many means by which an ethics program can be designed. The philosophical underpinnings of such a program can be derived from a number of different schools of thought, but the most prevalent are those of Kant and Mills. Reynolds and Bowie (2004) show that the three most important criteria of a Kant-based ethics system are to “act as though the maxim of your action were toâ€¦become a universal law of nature,” to “act so that you treat humanityâ€¦always as an end and never as a means only” and “act as if your maxims should serve at the same time as universal law for all rational beings.” These imperatives therefore should form the basis of any ethics program.
This implies a few things about ethics plans in the broadband business. The first is that employees should be a stakeholder of equal importance to any other, including the shareholders. All rational stakeholders must be given equal treatment in the ethic plan. The second implication is that the company should behave as though its behaviors are to be applied to it. This is of particular relevance to Telstra, which may find that it is a challenge to design an ethical program that prescribes such treatment for the government and for competitors, both of whom are actively battling the company to take market share away from Telstra.
Colle and Werhane (2008) point out that another component of an ethics plan must be a strategy for moral motivation. For example, even when legal protections exist for whistleblowers, there are cultural imperatives that prevent people from coming forward with such information (Allard, 2006). Programs that are strictly compliance-focused, such as may be expected to be found at highly bureaucratic firms, tend to emphasize the formal components but often ignore the informal ones (Colle & Werhane, 2008). Yet it is those informal components, such as corporate culture, that can drive the motivation for ethical behavior. Indeed, when formal extrinsic awards are granted, they are often disproportionate to the amount of damage the whistleblower has saved (Allard, 2006). Therefore, it is critical that any company installing an ethics program should place some focus on intrinsic ethics motivational systems as well.
Ethical culture is related to varying degrees to the different components of an ethics plan. Those components — the code of ethics, an ethics officer, formal ethics training, a dedicated ethics hotline, disciplinary processes, response policies for investigations and incentives and rewards for ethical conduct — need to be analyzed for their impact on the softer aspects of ethical culture (Kaptein, 2009).
Ethical programs will help to guide both Telstra and Optus in their broadband strategies. These programs will help to guide not only the everyday employees’ actions but the actions of leadership as well. A properly designed ethics program will also include emphasis on the informal, cultural aspects of ethics. For the two companies, although their plans should likely look similar to one another, there are different operating circumstances that may impact the implementation of these plans.
Optus operates with only minimal government intervention, with the result being that it can pursue a basic ethics program that helps to guide it to fraud-free behavior. The ethics program for Optus, then, is a component of risk management. For Telstra, the ethics program may guide actions in such a manner as to protect key stakeholders such as shareholders and employees from the actions of government. The federal government has worked first to dismantle the company’s profitability and now seeks to dismantle the company altogether. Setting aside the ethics of this behavior, it is important for Telstra to understand that its role at present may be to demonstrate ethics to its stakeholders rather than to behave in an ethical manner in the broad sense that a company like Optus is able to.
Datamonitor. (2010). Company profile: Telstra. In possession of the author
Reynolds, S. & Bowie, N. (2004). A Kantian perspective on the characteristics of ethical programs. Business Ethics Quarterly. Vol. 14 (2) 275-292.
Colle, S. & Werhane, P. (2008). Moral motivation across ethical theories: What can we learn for designing corporate ethics programs? Journal of Business Ethics. Vol. 81 (4) 751-764.
Allard, J. (2006). Ethics at work. CA Magazine. Vol. 139 (6) 30-35.
Kaptein, M. (2009). Ethics programs and ethical culture: A next step in unraveling their multi-faceted relationship. Journal of Business Ethics. Vol. 89 (2) 261-281.
Winteford, B. (2010). Optus gets mobile data boost as fixed broadband stalls. It News. Retrieved May 14, 2010 from http://www.itnews.com.au/News/174656,optus-gets-mobile-data-boost-as-fixed-broadband-stalls.aspx
Taylor, R. (2010). Australia’s Telstra far from broadband deal: report. Reuters. Retrieved May 14, 2010 from http://www.reuters.com/article/idUSTRE61622D20100207
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