Archives For telstra

Blue moon and praise for Conroy

September 15, 2009

Epic Win: Australian Government to force wholesale separation of Telstra

This is so much win. It’s win x 1000.

I don’t believe I’ve been more excited about a Government decision for a very long time.

Did I say win already?

Previous notes

January 2009

Structural separation, as I?¢‚Ǩ‚Ñ¢ve always argued is the only solution. Telstra retail and wholesale must be split for the common good. If we have the capacity to provide 100mbps connections in capital cities now, it SHOULD BE PROVIDED NOW, not in a year or two when Telstra decides to use it to undermine the competition.

June 2006

February 2008

Solution: structural separation of Telstra. Tax breaks to those offering true high speed internet access. Consider making internet access a tax deduction (which I think in part the Government is already doing)

March 2007

If Labor came out and promised this tomorrow (and dropped their ISP level censorship policy) I might even go a spend a couple of hours handing out for them at the polling booth come election day, and that from a 12 year member of the Liberal Party and former Liberal staffer. Here?¢‚Ǩ‚Ñ¢s hoping, certainly the ALP is making all the right noises for the IT vote.

Stilgherrian writes in today’s Crikey (miraculously available for free online here) about Telstra playing silly buggers with high speed internet, in particular the sit back and wait for the opposition to deploy before launching services that are already there trick.

Stilgherrian mentions Telstra vs iiNet over ADSL 2, but the tactic goes back further. I mentioned it in passing in September, but here’s a better explanation.

Back in my days in Government, we had a lot to do with rural broadband, or more precisely the lack there of. Even into mid sized towns or suburbs of sometimes as many as 10-20,000, there was no ADSL. Telstra would constantly suggest that it wasn’t economically viable to provide the service.

The Howard Government launched Broadband Connect, one of their better policies that saw providers subsidised per user for each ADSL connection they place. I don’t remember the figures off the top of my head, but depending on the locality it may have been $2k-$4k per user, possibly less for outer suburban areas; for memory it also changed at least once over the life of the program. Under the scheme I had for a time a free cable internet connection for 3 months, with free cable modem…and no lock in contract. The scheme not only bought ADSL to bigger towns, it saw small communities for the first time getting access. I remember one location with around 200-300 people getting ADSL, and a couple of places under 1,000. As long as you got enough people to sign up, the Government subsidy covered your startup costs, and you might walk away with a profit.

It was a great program, and even in the South West of Western Australia there were maybe 3 or 4 different companies playing for a cut.

But this is what Telstra would do.

They’d get wind that XYZ ADSL was coming to a particular town, then out of the blue they’d announce they’d made ADSL available themselves, usually 2-3 weeks before the smaller company had their service available. They’d back it up with an intensive mail campaign that told people that ADSL was now available in their town. It may have included a phone campaign, although I don’t specifically recall.

The thing with Broadband Connect is that it was open slather; you weren’t awarded a Government contract to provide an area, instead who ever got in and signed people up got their cut.

So you’d have these usually small companies, investing decent money providing ADSL for the first time to communities that Telstra claimed weren’t economically viable to service, finding themselves beat weeks from launch by a mass campaign from Telstra.

Whether the capacity was in or not before as Stilgherrian suggests in the case of ADSL 2 and Cable I don’t know, but the speed to which Tesltra would magically make available these services would suggest just that; that Telstra has the tech in place, and that it would only provide it when a competitor was going to open.

That they’re still doing this in 2009 is a disgrace. It is unbelievably anti-competitive, and for Telstra to sue over the National Broadband Network if it can already be providing, at least to capital cities the SAME service in beyond all belief.

Structural separation, as I’ve always argued is the only solution. Telstra retail and wholesale must be split for the common good. If we have the capacity to provide 100mbps connections in capital cities now, it SHOULD BE PROVIDED NOW, not in a year or two when Telstra decides to use it to undermine the competition.

Besides, we’ll need these speeds to counter some of Conroy’s Great Firewall of Australia 🙂

Interesting piece in The Oz today on the Terria consortium bidding for the $4.7b in Government largese for the regularly delayed and sent to committee National Broadband Network.

Anyone but Telstra should be the mantra of all fair minded people, and yet they’re asking for more than money, they want a monopoly as well:

“Our proposition to the Government is that no party be allowed to expand the network and operate in competition to the national broadband network,” Terria bid manager Michael Simmons said.

Because of Australia’s size and population this network must be a monopoly and must be structurally separated. If you don’t have a structurally separated monopoly network where access prices are regulated, it will not be viable.

“So you must preclude any alternative broadband network.”

So they want to be another Telstra of sorts, and preclude competition. Mmmmm…..

The positives: structural separation is a must no matter who wins. Access prices regulated by Government authority makes the NBN an essential service, and there’s positives in taking the pricing away from the operator.

In terms of Telstra, the we won’t build it without Government support is rubbish. Telstra have an appalling track record of using its market position and power to bully the competition, even where that competition steps in where Telstra has had no interest. What would happen when Broadband Connect 1 was in place was that a small telco would set up shop in the small country town, offering ADSL where Tesltra had no interest previously. The moment Telstra got wind that the telco was coming to town, often before they launched they would enable ADSL in the exchange and write to every person in the town encouraging them to sign up. When it wasn’t before the fact, it was shortly after, but without fail Telstra would only appear in country towns when a small competitor appeared first. And when I say country towns, I mean seriously small towns 2-3k, one town had less than 1,000 people on the list I remember.

It would be fair to presume that Telstra would cherry pick the most profitable areas of the NBN rollout for itself, making it a harder ask for Terria to make a quid.

And yet, a locked in monopoly creates new issues. What if, in the next 3-5 years, new technology comes along that is better than provided in the NBN. Will not creating a monopoly stifle innovation and slow progression in data speeds, which despite the Government talking about 12mbps, should be looking at 100mbps and beyond?

Protection from Telstra should be looked at, but not at the cost of preventing future players offering better technology that improves the overall good.