The more things change...

Summary:With all the excitement over the iPhone, few people have noticed that 1 July was the 11th anniversary of the deregulation of Australia's telecommunications market.

With all the excitement over the iPhone, few people have noticed that 1 July was the 11th anniversary of the deregulation of Australia's telecommunications market.

A lot has changed in the intervening years but lots more have stayed the same. I was reminded of this as my annual end-of-financial-year clearance — which is when I don gloves and mask and sort through the piles on my desk and around my office — when I uncovered a story I wrote for the July 1998 issue of the now-defunct LAN Magazine.

That story canvassed the changes that had occurred during the first year of deregulation, and I was struck by how much — and how little — things have changed since then. The story isn't available online, but let me summarise:

  • Then: The deregulation land rush had pushed the number of licensed carriers from 8 to 21.
  • Now: ACMA's list of registered carriers shows 251 current companies, although some of these have been revoked.

  • Then: Carriers were competing to win customers with reduced calling rates: AAPT, for one, offered STD calls for 25¢ per minute during the day and 9¢ per minute at night (an average of 17¢ per minute across a 24-hour day).
  • Now: AAPT customers pay 20¢ per minute, at any time, although bundling deals reduce this.

  • Then: "The lack of available, affordable bandwidth to the emerging internet community is a key issue for the Australian environment," said Steve Liddell, WorldCom's president for South East Asia.
  • Now: WorldCom bought MCI in 1998, suffered a catastrophic accounting scandal in 2003, and is now a forgotten unit of Verizon Business. Many Australians still lack available, affordable bandwidth.

  • Then: "Telstra is believed to be testing the commercial viability of its own Voice over IP ... [and] is testing Virtual Second Line, an integrated voice and data service that lets Web surfers receive incoming phone calls by transferring the call to the user's desktop."
  • Now: Virtual Second Line never happened. And, despite an explosion in third-party and carrier VoIP services, Telstra remains the only carrier in Australia that is not offering VoIP to its customers.

  • Then: "Complaints about drawn-out and unproductive negotiations with Telstra, criticisms that the ACCC has been slow to exercise its pro-regulatory powers to encourage competition, and frustration with the structure of deregulation legislation all guaranteed that the first year of deregulation was rife with controversy."
  • Now: Complaints about drawn-out and unproductive negotiations with Telstra, criticisms that the ACCC has been slow to exercise its pro-regulatory powers to encourage competition, and frustration with the structure of deregulation legislation all guarantee that the telecommunications industry remains rife with controversy.

  • Then: The [ACCC] issued just one Competition Notice in the first year of deregulation, an edict against Telstra addressing ... Telstra's policy of charging other backbone providers 19¢ per megabyte of traffic they sent over its backbone, but paying nothing when they carried traffic from Telstra's network.
  • Now: The ACCC has issued just two other competition notices (in 2004 and 2006 to 2007) in the subsequent 10 years. Both were directed at Telstra, and produced little long-term change.

  • Then: "Despite a long tradition of Australians being early adopters of technology, we're falling behind," said Optus chief executive officer Chris Anderson in his ATUG keynote speech. "Australia has one of the most lightly regulated former monopolies in the world, leaving Telstra free to use its control to leverage itself into the [deregulated] communications market. If change continues to occur at Telstra's traditional snail's pace, Australia will be left behind the world in terms of competition."
  • Now: Change continues to occur at Telstra's traditional snail's pace.

  • Then: "It's impossible to negotiate something that makes sense in the long term when you're dealing with people that don't want you to have those services," said Larry Williams, then CEO of AAPT.
  • Now: Telstra's efforts to prevent access to its ADSL2+ infrastructure remain a major sticking point, although its recent turnaround finally made wholesale ADSL2+ a reality after more than a year of stonewalling.

  • Then: "We want to be the carrier of choice for our competitors, but in the past wholesale has been a poor relation in the Telstra family. The challenge of competition is to make that mind frame a relic of the past; only by delivering value can we help prevent uneconomic overbuilding of Australia's carrier infrastructure. Of course, mutual trust can't be introduced by legislation; it must be earned by a track record of fair and open competition," said Douglas Campbell, group managing director of Telstra's Carrier Services Group.
  • Now: Telstra used the overbuilding argument to lobby now-senator Stephen Conroy to sink the Opel WiMAX network. The company's "track record of fair and open competition" is evident to Telstra but continues to be questioned by most other carriers in the market as they do their own lobbying for change.

  • Then: "We're worried that some uneconomic definitions of standard services may be proposed. We believe having to provide 128Kbps ISDN to anywhere in Australia would be an uneconomic burden," said Douglas Campbell.
  • Now: Telstra's Next G network will jump to 21Mbps by the end of this year and 42Mbps by 2010; Optus and Vodafone aren't far behind. 128Kbps ISDN is available nearly anywhere and will be discontinued on 30 June, 2009.

  • Then: "The wireless assault on the local loop will reach fever pitch when Iridium [satellites] come online in September, offering wireless voice and data communications from anywhere ... at rates that are competitive with existing mobile services."
  • Now: Iridium was launched in 1998, filed for bankruptcy in 1999, was sold for just US$25m in 2001, and now has around 250,000 subscribers paying high rates to get phone and data service from anywhere in the world. Mobile roaming accomplishes the same thing, using existing handsets, for ordinary consumers.

What does this all mean? A year after deregulation was introduced, the main problem that most of the new breed of competing telcos had was in their dealings with Telstra. These days? Well ... the technologies have changed, but the issues haven't.

Our market is more competitive than ever, prices for normal voice calling have dropped significantly, and wireless broadband technologies are providing an ease of data access unimaginable back in 1998. But when it comes to wholesale change on the ground, most carriers are still finding that the road to effective competition, in fixed communications at least, still leads through Telstra. The NBN could change all that — but at the core, the whole industry is still wrestling with the details of how.

What do you think? Have the goals of deregulation been met? Is Telstra still the obstacle to competition that it used to be? Are competitors still right in complaining?

Topics: Telcos, AAPT, Broadband, Government, Government : AU, NBN, Optus, 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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