Competition guided by Telstra's heavy hand

Competition guided by Telstra's heavy hand

Summary: What if Shell, Caltex, Mobil and all the other petroleum giants decided tomorrow to stop selling unleaded, and announced that they would only manufacture and sell LPG from now on? Telstra's decision to introduce RIM equipment in its Deakin, ACT exchange will have the same effect for its competitors.

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What if Shell, Caltex, Mobil and all the other petroleum giants decided tomorrow to stop selling unleaded, and announced that they would only manufacture and sell LPG from now on?

Chaos would, of course, ensue — as would the anger of millions of livid motorists demanding the companies retract the decision or cover the cost of converting vehicles purchased on the assumption that the appropriate petrol would always be available.

This is pretty much what happened with Telstra this week, as the telco's decision to introduce Remote Integrated Multiplexer (RIM) equipment — which increases the number of services an exchange can deliver over existing lines — into its Deakin, ACT exchange brought into sharp focus the dangers of Telstra's continuing monopoly over the country's local loop.

RIMs, aka digital loop carriers, are useful for increasing the density of services that can be delivered from an exchange (in this case, the politician-heavy area immediately west of Parliament House). However, the configuration changes they introduce — essentially, moving the analog-to-digital conversion point closer to the customer so a higher volume of digital data can be bundled over existing copper lines — will apparently render obsolete existing DSLAMs installed at that exchange.

Telstra, of course, won't make the change without ensuring continuity of service for its own customers. Though, other ISPs won't be so lucky: the move is an inconvenience for Internode, TPG, iiNet and Optus, all of which have installed their own ADSL2+ gear in the Deakin exchange. Customers connected to those nodes will have to either wait until their ISPs reconfigure or replace their equipment, start reselling Telstra's ADSL2+, or switch to Telstra's uncompetitive ASDL2+ services simply so they can stay online.

Telstra can return its competitors back to square one, picking off customers while the competing ISPs scramble to regain their footing.

The experience in Deakin has ominous implications for the state of play in the local exchange. Simply put, installing RIMs in any exchange means Telstra can return its competitors in any such exchange back to square one, picking off customers while the competing ISPs scramble to regain their footing in those exchanges.

This result is a punishing blow for choice in Australian broadband and — although we are only talking about one exchange at the moment — a harbinger of worrying times ahead. Little wonder that the chronically anti-Telstra Competitive Carriers Coalition was all over the announcement, branding the whole fiasco an "anti-competitive situation" and calling for immediate ACCC intervention.

While the ACCC can intervene in cases of anti-competitive behaviour, the troubling thought here is that the current situation is occasioned by Telstra simply upgrading its local loop to cope with increased demand — or, at least, that's what Telstra is sure to argue. An ACCC intervention, or at least one blocking the RIM move, could simply disadvantage customers another way.

This incident highlights the ongoing risks of placing the entire future of ADSL2+ in Telstra's hands, but things being as they are there seem to be few viable alternatives for competitors. Fibre would seem to be one way of shifting the bottleneck out of the exchanges, yet with Telstra out of the running for the NBN there is little incentive for the carrier to move in this direction at anything but its own pace.

The NBN would resolve the situation by shifting the bottleneck away from the local exchanges — just as cars that run on solar power alone would be a solution for the suddenly unleaded-deprived automobiles I mentioned above. However, like mass-market solar-powered vehicles, an actual, real, working NBN is still so far away that it's irrelevant to the discussion at hand. All this event does is reinforce the argument that Australian broadband is better off without Telstra's involvement.

With Telstra out of the running for the NBN there is little incentive for the carrier to boost exchange fibre at anything but its own pace.

Those of you with intimate technical knowledge of the systems at hand may have ideas about how this impasse could be resolved — if so, please share them below. At face value, however, it appears that Telstra has once again shown that competition in Australian broadband will only happen as, when and how it allows.

Telstra supporters often chide competitors for under-investing in their own solutions — but how can one blame them? Competitors simply do not have the infrastructure control — or, it is now clear, the infrastructure certainty — to justify broad alternative investments that can be nixed at Telstra's whim. In Deakin, they find themselves at an impasse and reliant on the historically slow, minimally effective intervention of regulators.

One imagines the architects of competition policy, now most of a decade and a half ago, would be rolling in their graves — or their armchairs, as the case may be. Is this really how broadband competition is supposed to work?

Topics: Telcos, Government AU, Microsoft, Optus, Telstra

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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Talkback

68 comments
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  • Poor analogy

    The oil company example is very poor.

    Telstra is not announcing "no more ULL" nationally - just one outlet, with about 40 customers, loses it's ULL capacity (built on technology about to go the way of the dodo anyway).

    So it is more akin to Caltex announcing it won't sell diesel at just one of its 5000 service stations, so 40 customers will have to buy their fuel elsewhere.

    I think I read that this move by Telstra affects .0005% of ULL services, so keep it in context please ot just jump on the hysteria bandwagon
    anonymous
  • mobile broadband

    "so 40 customers will have to buy their fuel elsewhere. "
    but can they buy it elsewhere? Telstra says NO!

    Optus/Virgin and Vf/ 3 mobile broadband here we come. open up the backhaul.
    anonymous
  • Maybe..

    but it sure sets up a nice precedent for smelstra doesn't it.

    guessin we will find out one way or another soon enough.
    anonymous
  • "Buy their fuel elsewhere"

    Yeah, sure, they'll just drive over to the next exchange and fill up there... wait... oh yes, I forgot... we're talking about buildings, not cars...

    Those 40 customers are indeed being given a choice. Their choice ammounts to "buy our -extremely- overpriced and significantly under-value product, or go without."
    anonymous
  • RIMs have not been installed for years

    Some facts would be nice - Telstra has not used RIMs for years, and the reason is a building is being sold and so Telstra has to move out. There is nothing stopping the competitors building their own building next door to the exchange and running a tie cable to the MDF, except that would mean spending money
    anonymous
  • All too common...

    Unfortunately this is far too common. Ignoring the Deakin exchange "upgrade" for a moment - but RIMs are being installed all over the place.

    Right now I'm looking at building a new home in a new estate. Telstra, it seems, is fitting most new estates (right across Australia) with RIM technology.

    In other words, even if the local exchange supports ADSL2+ through a different provider, you won't be able to access it. I'm facing this scenario at the moment.

    This is backwards thinking. We should be enabling faster broadband in the new estates, not limiting them via RIMs. This is a cost cutting measure by Telstra and I feel this is really holding back Australia's broadband.

    And to make matters worse, the RIMs can generally support ADSL1, but they are limited to a small number of ports (which won't cover all the houses in the new estate).

    People who have the money to build often have the money to spend on broadband, but they are being knocked back because there aren't enough ports to go around.

    This is absolutely ridiculous in 2009, and why I have a have a complete distrust of Telstra.
    anonymous
  • Options for Carriers

    If that's the case and they will be re-terminating the copper for this DA somewhere else why not maintain copper back to the main exchange? The question is are Telstra replacing this "subexchange" with a CMUX or with an actual exchange where EIC is even possible.
    anonymous
  • Lets have it both ways

    I am not an expert on communications technology - but this seems to be the usual lets bag Telstra line. After all they always provide poor service, don't do what is necessary to upgrade services for their customers.

    But hang on they are trying to upgrade their services for the customer. But they aren't alowed to do that if it inconveniences their competitors.

    Exactly what are Telstra supposed to do? Is it reasonable to expect them to run duplicate services, which may mean duplicating the cables run, just to make their competitors life easier? Maybe the competitors would like to foot the bill for maintaining the duplicate services?

    While I am sure Telstra are not without fault, it does seem that there is no response that won't have somebody attacking them.

    And before the usual attacks start - I don't work for them, have only worked for them for 12 weeks in a 20 year career, and don't own shares either.
    anonymous
  • Estate developers have a choice

    Estate developers have the choice of which technology and provider installs into their estate. They can choose Telstra CMUX, Telstra Velocity fibre or a competitive fibre provider to install.

    While Telstra is generally backwards-thinking, the estate developers can actually choose to be forward-thinking themselves if they choose to think at all.
    anonymous
  • Some facts would be nice

    Competitiors have tried building their own buildings before and intercoonnecting, and Telstra would not let them. On top of that do you know if there is even land available to build on, etc.
    RIMs are old technology and Telstra has shown once again its anti-competitive streak in disconnecting competitors instead of competiting with them. This sets a very dangerous precendent for the future if Telstra is allowed to keep a strangehold of Australias telco sector.
    anonymous
  • Yeah sure...and I have a bridge to sell

    Umm as a consumer I am now unable to upgrade to ADSL2+ with my provider of choice due to a Telstra RIM, so as you said in your opening statement, some facts would be nice.
    anonymous
  • Update the owners of Hardware

    Telstra should of given notice in advance to the owners of hardware in their exchange that they will no longer be able to run a service that they are paying for, and to work togeather to be able to work out a solution to keep people connected at the time of the cutover.
    anonymous
  • But they aren't!

    Telstra are NOT trying to upgrade their services for even their own customers in this case. All they are doing is relocating an exchange they already had into a new building.... Only they've chosen to relocate it somewhere too small to allow 3rd party gear. Which is a purely selfish, childish move designed just to inconvenience their "competitors"

    (note: competitor tends to be wholesale customer, so Telstra is really inconveniencing their own customers.)
    anonymous
  • RIMS are just a form of FTTN

    It's been said before and I'll say it again. If the government is going to invest $4.7B in the NBN, then why would we use yesterday's technology? We should be rolling out FTTH, not FTTN.

    The the NBN is delivered using FTTN, then why is it going to be any different to the issues raised in this article? It will just be a different monopoly.

    The only sensible solution is for the NBN to be FTTH. Then we have a technology that will be useful well into the future. We also will no longer rely on the Telstra copper wires. It would even allow Telstra to compete if they wanted to using their existing infrastructure.

    In the mean time, RIMS aren't as bad as people are making out. Newer ones are ADSL2 capable. They also have the advantage of reducing the length of copper resulting in increased speeds to customers compared to copper all the way back to the exchange (for both ADSl and ADSL2). If you are 3km from your exchange (like me) then ADSL on a RIM will be faster than ADSL2 back to the exchange anyway.

    The only down side of RIMS is that competitors can't put equipment in them. This is not a problem with RIMS, but a problem with our network ownership model. And, if the NBN rolls out FTTN, we will be in exactly the same situation.
    anonymous
  • Same situation here

    RIM with limited ports, no ADSL2+ & I'm the only lucky one in this street able to get ADSL1.
    Both my neighbours have declined to accept Smelstra's generous wireless offeings & are stuck on the only affordable alternative...dial-up.
    anonymous
  • Facts

    The building that was housing this exchange is scheduled to be torn down and Telstra are required by law to provide people with a phone line for voice. Hence why they are installing a RIM. I am sure they would prefer not to install/upgrade anything right before the NBN decision.

    There is nothing stopping any competitor from providing their own infrastructure for their customers.
    anonymous
  • update of the exchange

    Telstra has given notice. as per current new's has reported. the other suppilers have to fix there own problem and not rely on telstra for an easy fix.
    anonymous
  • Great analogy

    But if the price of diesel at other servos was 50c more per litre...
    anonymous
  • Great

    A moot point since only Telstra has expensive ADSL.
    anonymous
  • What can Telstra do?

    Telstra has plenty of alternates to RIM technology, they choose to use RIM as it stops their competitors in their tracks. That it disadvantages their own customers by turning back the technology clock is their problem.
    anonymous