Robbing Joe the Shearer to pay Paul

Summary:Joe the Shearer can wait. Telstra is clearly going to roll out its NBN in capital cities first, where the most customers live and, despite Telstra's assertions, many residents already have access to decent broadband.

Sol Trujillo looked downwards for most of the time that Charles Macek, chairman of Telstra's executive remuneration committee, stood in front of 2,000 shareholders and spoke for 10 minutes before announcing that Trujillo was paid over $13 million for his services during the past financial year.

Telstra CEO Sol Trujillo
(Credit: Telstra)

It was the kind of posture that suggested Trujillo wanted to just disappear under the table, at which Telstra executives sat while facing the shareholders at the company's annual general meeting held — and picketed by unions — in Melbourne recently.

With the submission deadline just five days away, the NBN was on everybody's lips as chairman Don McGauchie launched the expected tirade against the government while Trujillo — an experienced operator in whose mouth butter would seem not to melt — spruiked Telstra's success at making money for its shareholders.

McGauchie has been doing this a lot lately, picking up the mantle for departed "human megaphone" Phil Burgess in spearheading the company's relentless attempts to discredit the government, its competitors and, most recently, the NBN itself.

Yet as I think of Trujillo sitting there, trying to will himself invisible as Macek methodically built the case for Trujillo's compensation, I now wonder whether he will lift his head to meet the eyes of the person I might call Joe the Shearer — our equivalent of the Obama-McCain battle's infamous Joe the Plumber — and explain why Joe wouldn't see any benefits from a Telstra-run NBN for years now.

For a company that plays the card of rural responsibility as hard as Telstra does — the "Corporate Responsibility Key achievements 2007/2008" brochure handed out at the AGM features a heartstrings-tugging father-and-son-talking-on-mobile-with-rolling-hills backdrop — the company has shafted the two million rural Australians it purports to love. The Kombi crew's 90 per cent bid (technically, Telstra says it's 80 to 90 per cent, but let's give the benefit of the doubt here), is a fish-slap to the face of Joe the Shearer and everybody else who lives in rural Australia.

Last week, I mentioned Telstra's strange maths in estimating the total cost of its proposal at $9.7 billion, even though it had spent most of this year telling everybody the NBN would cost anywhere from $15 to $25 billion. Taking an average figure of $20 billion, we can only conclude that Telstra has pegged the cost of servicing the 10 per cent of the population not served by its network at around $10.3 billion.

That's $9.7 billion to deliver FttN to 18 million city dwellers, and $10.3 billion ($5,150 each) to service the remaining two million or so that make up the other 10 per cent. By these maths — and yes, these are rough figures — city dwellers will cost $539 each to connect, while rural residents will cost $5,150 each. No wonder Telstra decided they weren't worth servicing in the end; those rural customers sure are darned expensive!

It's a good thing they don't, apparently, need it anyway. If Telstra's proposal document is to be believed, rural customers on the whole are getting better broadband than those in cities. These aren't my words; they're Telstra's:

"The majority of those currently without fast broadband are located in the major cities, where homes and businesses located more than 1.5km from their local telephone exchange cannot currently get fast fixed broadband using Telstra's existing telephony network.

For this reason, Telstra considers that the roll out should start in multiple locations, with a roll-out priority based not on geography for its own sake, but on bringing benefits to as many Australians as rapidly as possible."

In other words, Joe the Shearer can wait. Telstra is clearly going to roll out its NBN in capital cities first, where the most customers live and, despite Telstra's assertions, many residents already have access to decent broadband. Better still, it's ready to "self-fund the NBN ... without a government funding commitment at this stage".

Correct me if I'm reading this wrong, but Telstra is basically arguing that regional Australia doesn't need fast broadband as much as city dwellers, and that Telstra can service those city dwellers with its own cash — but just doesn't feel like it yet, unless the government decides to come to the table with other concessions.

Telstra could, the document continues, push towards the 98 per cent level with "a much larger Commonwealth contribution" that Telstra chief operating officer Greg Winn this week said should be "at least double plus" the $4.7 billion on offer.

The size of that contribution has been set in stone since the bid was announced, but Telstra's proposal is suggesting that none of the $4.7 billion it would get from the government would actually go towards delivering broadband to rural and regional areas. Never mind, of course, that $2.4 billion of this comes from the draining of the Communications Fund, whose very purpose was to support telecommunications upgrades in rural and regional areas.

In other words, Joe the Shearer can wait. Telstra is clearly going to roll out its NBN in capital cities first, where the most customers live

The expression "robbing Peter to pay Paul" comes to mind, and with many worried the Rudd government will enter into back-door negotiations with Telstra, it's little wonder the upper house has frozen those assets.

While the structure of Telstra's proposals shows its executives are clearly living on another planet, I must also take Optus to task as well. After months of lobbying and bald-faced declaration of its commitment to the Terria cause, the group evaporated at the eleventh hour and instead offered nothing more than moral support to the Optus bid that was eventually lodged. Terria made much noise about its commitment to start its roll out in the country areas and move in to the city — but with Terria now a paper tiger, will Optus keep that commitment?

If not, who is Joe the Shearer to go to when he wants ADSL2+? Telstra's NBN proposal excludes the bush, and Optus presumably will support rural Australia but needs to distance itself from the fiasco that is Terria. And then there's Acacia, whose bid apparently covers 100 per cent of the Australian population — presumably within the parameters of the government's original offer — and Axia NetMedia, which isn't talking specifics but presumably is doing much the same.

One of the main objectives of the NBN was to bring decent broadband to regional areas where dial-up internet is still the order of the day. I'm not on the evaluation panel, but if I were, I would be factoring each bid's provisions to service "the other 10 per cent" quite heavily into my assessments. Joe the Shearer wouldn't expect anything less.

Topics: Broadband, NBN, Optus, Telcos, Telstra

About

As large as the US mainland but with a smaller population than Texas, Australia relies on ICT innovation to maintain its position as a first-world democracy and a role model for the developing Asia-Pacific region. Award-winning journalist David Braue has covered Australia’s IT and telecoms sectors since 1995 – and he’s as quick to draw le... Full Bio

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