Could they all just kiss and make up already?

Could they all just kiss and make up already?

Summary: Australian telecoms is increasingly resembling the US during Prohibition, with Telstra as Al Capone and the ACCC as Eliot Ness.


Prohibition, which began in 1919 after the United States government actually passed a constitutional amendment banning the sale and use of alcohol, was a ridiculous act during a time of post-war nation rebuilding. Among the many products of Prohibition was the now-legendary story of Eliot Ness, the government agent charged with catching alcohol smuggler and serial murderer Al Capone.

Despite years of investigation into Capone's mob-related activities, the charge that Ness eventually nailed him on was income tax evasion -- 22 counts of it -- which lined Capone up for 11 years in Alcatraz beginning in 1931. This would have been incredibly gratifying yet frustrating, because several years of investigation hadn't produced any way to hold Capone accountable for his actions.

Fast-forward 76 years, and we're in something of a similar situation. In one corner, of course, is Telstra, which is running roughshod around and over the careful controls of telecommunications deregulation in an effort to show the government how privatised telcos actually work.

In the other is the government, trying desperately to redeem itself -- and regain some measure of control -- after throwing out the proverbial baby with the bathwater.

The war of words between them brings some spice to an industry not known for its colourful characters and in-your-face confrontation.

Telstra, which has made a mantra out of its claim that the government is compromising the interests of Telstra's shareholders, showed just how ready the industry is for change after last week announcing it would sue the government for the second time -- this time over what is effectively a procedural issue related to the government's fight to stop Telstra shutting off its CDMA network prematurely.

With what was once described to me as "hundreds of lawyers" ready to obstruct any effort to control its activities, Telstra is clearly ready to deplete its precious war chest in its efforts to sue the government into complacency. The first, you may recall, was Telstra's decision to sue the government over allegations it was disadvantaged during the process that ultimately gave Optus and Elders the AU$1 billion-plus contract for broadband-ing most of the country.

More recently, the government -- through the ACCC, which has apparently become the Eliot Ness to Sol Trujillo's gang -- announced it would pursue Telstra in court for misleading advertising related to its Next-G network. A Telstra spokesperson, speaking in that quite eloquent manner that now characterises Telstra's official discourse these days, dismissed the action as -anti-consumer, anti-investment, petty, regulatory garbage."

It has been easy to criticise Telstra's management for its petulant, unconstructive and obstructionist business strategy -- heck, I've done it on several occasions, as regular readers would be all too aware.

It has also been easy to point out Telstra's hypocrisy, by which it regularly criticises the government for spending AU$1 billion of taxpayer money on WiMax but is happy to waste taxpayer money forcing the government to defend itself against sour-grapes lawsuits.

But with the government now seeking to tie up Telstra with pointless lawsuits -- after all, Telstra did change its Next-G advertising last month after concerns were first raised about it. So what does the government hope to gain by prosecuting it further?

I can't help but feel that ACCC head Graeme Samuel, frustrated by the government's complete inability to make Telstra change its spots, has become a Ness-esque (for lack of a better word) character who is determined to get Telstra any way he can.

Honestly, compared to the things for which the government could take Telstra to task, is a slogan like "everywhere you need it" really such a grievous sin? Even I can appreciate why Telstra would choose such a phrase; after all, "in 77 percent of the places you need it" just doesn't have the same ring to it.

What has become clear is that the dialogue between Telstra and the government has simply broken down to the point where nothing constructive is going to come of it. After hearing the latest verbal sparring -- which is increasingly spilling into the media pages and courtrooms in Jerry Springer-style discourse -- one has to ask whether it isn't time for a completely different approach.

Fighting out minor points of law and procedure in court is not going to help Telstra's shareholders or the government's ratepayers -- who in many cases include many of the same people.

In the political world, disputes like this are settled by arbitrators who gather all concerned parties in a room, lock the doors, ban toilet access, and argue until they're so tired they grudgingly concede some points in the name of the greater good. In the real world, this type of argument is often settled by throwing the two concerned parties into the alley so they can pummel each other senseless.

The latter option might be interesting to watch, but it's unlikely, especially since Senator Helen Coonan this week stepped back from the CDMA squabble in what can only be interpreted as a protest vote. That may make sense for her, but it's really an abdication of what should rightfully be ministerial responsibilities.

What Australia really needs is someone that both Telstra and the government can trust to make a rational decision about the best way forward. This needs to be someone with some real power, as opposed to the expert taskforce which, sure as night follows day, will produce some half-baked and ultimately ineffective plan that Telstra will protest and the government will drop. So who's to resolve this issue once and for all? Will all of these concerns become moot if Labor is elected and replicates the OPEL network by embracing Telstra's own exclusive-access FTTN network? Can common sense and decent discourse ever prevail?

What do you think it would take to get Telstra and the government to stop their sparring? How do you think they should settle their differences? We'd like to hear your thoughts.

Topics: Telcos, Government, Government AU, Legal, Networking, Telstra, Wi-Fi


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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  • My thoughts?

    Split Telstra into 3, Wholesale, retail and infrastructure.

    Infrastructure would own, maintain and manage the services that are considered to exclusive to Telstra, in other words the copper network.

    Wholesale would sell non-exclusive products that may also be available from other companies.

    Retail who would sell the product and who would be forced to buy copper from wholesale and infrastructure.

    Any investment for new technologies could be made by:

    retail, owned by retail and not sold wholesale
    wholesale, would be sold at wholesale rates
    infrastructure, as the old copper needs replacing.

    Infrastructure would be regulated as it could be considered a monopoly, wholesale & retail will be in an open market and will not need regulation.

    From a reporting perspective they could function as 3 completely different companies. Profits from each will be published in annual reports and if they want in the future the company could be split into 3.
  • Split agreed

    I think a 3-way split is a good idea too, but I would split it into Wholesale, Retail and Mobile.

    Wholesale owns the network (possibly in a monopoly, or government owned) and sells broadband, phone etc to retail telcos, so doesn't care who buys the service (not like now).

    Retail sells direct to the customer and has to buy services from Wholesale, just like all the other competitors.

    Mobile who own, sell and wholesale the mobile network. This way there is less unfairness due to termination rates subsidising price cuts. At the moment, Telstra owns the landlines, so Optus and Vodafone have to pay more termination rates to Telstra.

    In a perfect world, these would all be separate businesses - not business units but businesses, all with different ASX codes.
  • A Better Solution...

    How about the Government actually creates a Telecommunications company that is 100% a government service. Bet Telstra will have a winge about it's competition then. I live in a metropolitan area, everywhere around me has broadband internet, but I am stuck on ISDN because Telstra decided they would like to make more money and split my line with others in my area. Even though I have offered to pay the price of transposing my line to a broadband line, Telstra has refused to help me get broadband.

    Personally, I feel disappointed in the fact that Telstra is complaining about others using "its" infrastructure when it was "my" tax money that helped to pay for it. Shouldnt we at least get what we pay for?