Trujillo slams govt in fibre tirade

Summary:Telstra CEO Sol Trujillo has slammed the federal government's decision to award funding to Telstra competitor OPEL for a new national broadband network, decrying Australia as a nation that lacks any incentive for investment in telecommunications.

Telstra CEO Sol Trujillo has slammed the federal government's decision to award funding to Telstra competitor OPEL for a new national broadband network, decrying Australia as a nation that lacks any incentive for investment in telecommunications.

In a plaintive cry to a conference room of AIIA members in Sydney, Trujillo also railed against competition regulator ACCC over its insistence on placing market controls on the wholesale prices Telstra charges for competitors to access its network.

In his speech, Trujillo accused successive Australian governments of spending billions of "taxpayer" dollars "in the wrong places" and "adopting the wrong policies" toward ICT growth.

It was the "other inconvenient truth", he said, that government inaction and incompetency was behind Australia's poor ICT record.

"Giving away a billion dollars to the Singtel/Elders OPEL joint venture won't deliver Australia a fixed high-speed broadband network for consumers," he said.

The OPEL proposal, he said, is based on technologies (ADSL, WiMAX) that have limited capacity for scaling up to meet future needs. "Its old stuff", he said.

Trujillo emphasised, repeatedly, that Telstra is an Australian company, with Australian shareholders and employees (himself the exception that proves the rule), while going to equal pains to describe Singtel/Optus as a foreign competitor that invests more in places like Pakistan and India than Australia.

"What I have a problem with is when the Australian Government takes your taxpayer money and sends it to [Optus/Singtel] and says now come and compete," he said. "Your taxpayer money is going to Singapore. It doesn't help."

Trujillo blamed "political considerations" for Australia's poor rankings when it comes to price and performance of fixed line broadband, and even decried the lack of Australian companies listed on the NASDAQ.

Over-regulation, he said, is to blame.

"It is in fixed line residential services that government regulation is at its most constrictive and Australia lags behind the rest of the world," he said.

"Governments don't operate like markets. They can't, and they shouldn't try. It is the role of the government to make the policy settings favourable to investment. Investment will only be made when there is a competitive rate of return to be earned. That's how free markets work."

Trujillo said that Singtel/Optus has until recently had little incentive to fully utilise the network infrastructure it has built in Australia, nor the incentive to build a better one, as access to Telstra's Unbundled Local Loop (ULL) has been regulated at such a low price.

"Thanks to the ACCC's pricing model, it is literally cheaper for Singtel/Optus to resell Telstra's network rather than using their own cable network which they built themselves," he complained. "Why would you invest when the regulator allows you to get access to the same service for below cost?"

Trujillo used international comparisons to justify why Telstra should charge more to competitors for wholesale access. Canada's wholesale prices are 75 percent higher than Australia, he said, despite having as equally harsh barriers in terms of low population density and great distances.

"It's not logical," he said. "When we look at this issue of pricing versus costing and the way the regulatory framework has worked here, it is a bit perverse."

Price shouldn't be a consideration, he said, as much as a carrier's ability to deliver services. "It is nice to have debates about prices," he said. "But if you have no services to price, it doesn't matter."

Trujillo championed Telstra's Next G wireless network, built in 10 months without any government incentive.

"We built this network not by platitudes, not by press releases, not by committee, and clearly not with government money," he said, having a stab at the G9 group that continually rallies against the carrier.

"We don't look for government hand-outs and government subsidies, because we don't need them," he said. "We believe in letting the market work. We don't need bureaucratic interference. We just need a simple thing -- the freedom to operate in a true market environment."

During question time, a member of the Competitive Carriers Coalition pointed out to Trujillo that Telstra has in fact received something in the order of 80 percent of government telecommunications handouts between 1996 and 2006.

The question: "Are you then accepting that it was wasted money to give that to Telstra?"

Trujillo excused himself as not being on the scene during this period, and said that none of this money was spent with long-term vision in mind.

Broadband: Like Sydney's traffic woes
Trujillo's analogy during his entire speech attempted to play on his Sydney audiences' frustrations over the state of their local public transport and roads.

If the government had taken a smarter approach to public transport infrastructure 10 years ago, he said, Sydney wouldn't have so many traffic jams or such atrocious public transport. It would be like it was during the 2000 Olympics (when Sydneysiders decided not to drive and public transport services were increased), or like Tokyo's high-speed rail network.

Australia has the same challenge now, he said, in terms of building a national broadband infrastructure that can underpin future economic growth.

"It is crucial that individuals like you speak out," he pleaded with the audience. "It is decision time. Every day of the lag and inaction on a broadband policy starts building a millstone around the neck of Australia's future."

Topics: Broadband, NBN, Networking, Optus, Telcos, Telstra

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