Is Telstra vs Optus a war of words or a war on truth?

Is Telstra vs Optus a war of words or a war on truth?

Summary: Facts are facts, right? Not when Telstra, Optus and the communications regulator are involved. With temperatures rising across the board over the contentious issue of broadband, mud-slinging and half-truths have become the order of the day.

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commentary Facts are facts, right? Not when Telstra, Optus and the communications regulator are involved. With temperatures rising across the board over the contentious issue of broadband, mud-slinging and half-truths have become the order of the day.

As Communications Minister Helen Coonan noted this week broadband has gone from being geek speak to barbeque stopper. Coonan was speaking to delegates at this year's Australian Financial Review Broadband Australia conference when reflecting on the state of broadband.

And as telcos, political parties and regulators seek to make capital from the country's need for higher speeds, it seems interested parties are getting more and more flexible with their definition of the truth.

At the same conference, Phil Burgess, Telstra's head of communications and public policy, said that unbundled local loop (ULL) access price cuts mandated by the regulator have forced fees to such low levels, it is now cheaper for rival Optus to use Telstra's HFC (hybrid fibre coaxial) network than to use its own.

It's a charge Warren Hardy, MD of Optus's consumer division, rebutted, saying the telco had made a decision to stop reselling Telstra's services and is spending AU$1 billion each year on building its own infrastructure.

Telstra's Burgess also said the ACCC's choice of ULL access pricing -- AU$17.70 -- was dreamt up by the regulator after looking at UK watchdog Ofcom's local loop charges and converting the amount to Australian dollars.

Once again, the charge is flatly denied -- this time by the regulator. Michael Cosgrave, head of the communications division at the ACCC, says it arrived at the figure after looking at market conditions in Australia, not by looking to its UK counterparts.

Telstra's rivals, including Internode and Optus, queued up to slate the incumbent over ADSL2+. Telstra, the rivals say, has a very large ADSL2+ network, a large proportion of which remains dark.

Dark, that is, until another provider enters that particular area to offer ADSL2+ too, at which point Telstra flicks the switch and begins to offer its own service in that selfsame region.

Even the regulator queried Telstra's thinking, with the ACCC's Cosgrave noting: "The ACCC sees no compelling case for adopting this approach in Australia."

And guess what? Telstra denied the move was without logic. Burgess said its decision to launch ADSL2+ in some areas only once a competitor was active there was a defensive move after the ACCC warned the telco that, should it launch ADSL2+ in areas where there was no competition, the watchdog could not guarantee its infrastructure would not be "taken from [it]", in Telstra's words.

And my personal favourite example of spin: Telstra's favourite old chestnut, Next G. The network's capable of 14.4Mbps downlink, they say -- faster than anyone else's 3G network. What the company fails to mention is that the devices which are compatible with Next G -- data cards and mobiles alike -- can only offer speeds of 3.6Mbps. And 3.6Mbps is precisely the speed Optus, 3 and Vodafone's networks provide too.

So, in summary:

  • Optus uses Telstra's HFC network. Optus does not use Telstra's HFC network.
  • The ACCC chooses access prices based on Ofcom's. The ACCC does not choose access prices based on Ofcom's.
  • There is no reason for Telstra to keep some of its ADSL2+ network dark. There is a reason for Telstra to keep some of its ADSL2+ network dark.

I hope all this information (spin-formation?) has been useful in the ongoing debate on broadband. No? Thought not.

Broadband is an election issue but that doesn't mean that those in the industry have to mimic the politicians by spreading rumours, and throwing stones while putting their feet up in nice glass houses.

If industry figures carry on mimicking political motormouths in this way, the public will come to regard them in the same way as they do those politicians: with cynicism and mistrust.

And telcos really don't need any more of either directed at them right now.

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

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21 comments
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  • Crazy

    Good to see someone tell the truth: The truth is dead.
    I for one, back Optus, not because their CEO is Robin Hood or because I'm deluded enough to think they care about little old me.
    I just figure that if I'm in a room with two pitbulls, I have a better chance than when I'm in a room with one.
    anonymous
  • Agree but...

    I agree with the vast majority of this but there is one point I would like to correct and one to disagree with.

    Correction ... I have a Next G modem that I just upgraded the firmware to 7.2Mbps and I am getting well over 4.5Mbps on many occasions.

    Disagree ... If I made a product that had no competition I should be able to sell it at any rate I wanted and to whom I wanted, If my rate is too high someone else will see a market and compete. If the ACCC steps in and forces me to sell my product at a price that ignores the true cost to produce, maintain as well as adding a reasonable profit margin I would simply stop selling the item completely.

    Why can you only get high speed in the major cities, because that is where there is a high profit margin for a low cost, people will never get ADSL2+ in the bush until the ACCC guarantees Telstra's commercial rights.

    I live in the city and I use Optus so unlike the author above there is no bias for or against Telstra.
    anonymous
  • Agree but but...

    Yes, any company should be able to sell at whatever price they want, but Telstra have a long history of monopolistic behaviour designed to drive their compeditors out of business. This makes plenty of financial sense, but there happen to be laws in Australia that prohibit this type of behaviour. Bottleneck infrastructure is covered by these laws.

    Furthermore, if you do a bit of digging into the financial reports of Telstra's competitors (eg. iiNet) you can get an indication of what adsl actually does cost. Don't for a minute beleive Telstra is not making plenty money from wholesale adsl.
    anonymous
  • Optus uses Telstra's HFC??!?

    It makes no sense at all to say
    "ULL access price cuts mandated by the regulator have forced fees to such low levels, it is now cheaper for rival Optus to use Telstra's HFC network than to use its own."
    Did Phil Burgess confuse his 2 networks, or did the reporter?

    It's like saying "price cuts to KFC's burgers have forced chicken fillets to such low levels, that it's cheaper for McDonalds to resell Pizza than to sell its own burgers"
    (bad analogy... it's late :)

    What I'm saying is that Telstra doesn't wholesale it's HFC network at all, so how could Optus be reselling it in any way?

    And this all goes to show that the problem isn't just that truth is lost - the problem is that most people don't understand or see the full picture.
    anonymous
  • yawn fest

    I find it hilarious this article is written.

    Are we all that dumb? Telstra was a government controlled monopoly. They sold it with all the goodies still in tact. Why would one think it sane to blame a telco for the state of the market or that the govt has any credibility when they pushed the sale in the current climate without any meaningful structural alteration. Now that its sold, the govt is just vote chasing though they could have done it in a meaningful way before the sale....but that would make sense right?

    Besides Optus is just as bad. As are ii. As are Internode. As are the rest of them. They are in possession of their own DSLAMs but have prices dropped? Not one bit. Its hip to knock Telstra at the moment, albeit in the form of a disjointed article at best.

    Its just business people. I wish other things got a bit more attention in australian net related sites. I'm so over reading about telstra v optus without any significant changes by either of them in real life.

    Focus on something interesting for a change, ie the virgin offering, or how bad vista still is...
    anonymous
  • price drop

    actually the prices dropped hugely with competition.

    Compare similar speeds and quota between bigpond, ADSL1 resale, and ADSL2+, and I think you'll find some great changes brought about by the competitors.
    anonymous
  • prices

    i think you will find that although price points have remained the same, the product being offered and the value for money has increased by providers installing their own hardware and bypassing telstra.

    in 2001 $85 a month bought me a 256/64 connection with 500mb of quota.

    in 2007 $69.95 a month buys me a connection up to 24000/1000 and 60000mb of quota.
    anonymous
  • Competition

    Yes and I find that instead of Telstra trying to be more competitive they put Dr Phil out on the lecture circuit to slander everyone from competitors to the ACCC and of course lets not forget Phil's favourite punching bag, the Government
    anonymous
  • Competition.

    Let the truth start with Senator Coonan. Her recent statement the Labour plan for broadband will slug the Australian public is untrue. What does she call her 1billion to Opel?

    Can people not understand that the ACCC creates a false competition which is opposed to a true capitalistic, democratic system that is supposed to operate in Australia.

    Competition works when one company charges customers a price so excessive, as to allow a competing company to start a service, in opposition and at a lower price price, thereby attracting customers.

    Australian interests are not served by encouraging companies who are not truly competitive to survive with Government handout.
    It is my hope that Senator Conroy will negotiate a deal with Telstra (the only company ready to go) to start a FTTN roll-out the day after the election and Labor becomes Government.

    After noting that most communicators on this site remain anonymous, please, no comments that I may or may not be a Telstra shareholder.
    anonymous
  • Competition

    Lets get this correct people, who's money actually built the initial infrastructure? the tax payers money, so telstra yelling and screaming its our network, is a load of bulldust. Also in response to 'Sydney Lawrence's quote' -

    Competition works when one company charges customers a price so excessive, as to allow a competing company to start a service, in opposition and at a lower price price, thereby attracting customers. ' - yeah thats all true but the problem lies with the fact that Telstra is charging excessive prices for competitors to get on there kills any competition.
    anonymous
  • competition

    "Competition works when one company charges customers a price so excessive, as to allow a competing company to start a service, in opposition and at a lower price price, thereby attracting customers"

    Fair enough, but Telstra own the basic infrastructure. There is no way for a competitor to gain access to the customer (for DSL options) apart from through the Telstra CAN. So no competitor can undercut Telstra greatly because Telstra is charging them a wholesale access fee (and backhaul as well if applicable).

    As for Telstra's demonstrated anti competitive urges, remember when Bigpond was offering plans cheaper than the Telstra wholesale price for the ports? It makes business sense to try and gain a monopolistic position, purely to benefit the shareholders (+ bonuses for senior management), but this comes at a cost to consumers in terms of gouging. That's what the ACCC is regulating for, the competition and hence the consumer.
    anonymous
  • Competition.

    The tax payers money built the infrastructure?

    When Telecom was formed in 1975, all budget appropriations for telecommunications right back to 1901 were accumulated and treated as debt owed to the Commonwealth. By 1996 all such debt (and accumulated interest) had been repaid at commercial interest rates, except for $2 billion which was converted to equity (Telstra shares then owned by the Government).

    Source: http://www.nowwearetalking.com.au/Home/PageBlogComments.aspx?mid=321&pid=553
    anonymous
  • Optus has dropped prices

    Who said that Optus has not dropped prices ???

    Just look at the Optus Fusion product - far cheaper than anything else I have seen.

    p.s. Virgin is owned in Austrlaia by Optus !!!!
    anonymous
  • optus dropped prices?

    i wouldnt call a bundled piece of crap good news

    $99 per month – telephony package + $0 wireless modem and 20GB broadband data

    oh wow, what great value.... not

    the only value that is worthwhile mentioning aside from ii/internodes adsl2+ pioneering is tpgs new 150gb plan, and naked dsl in the future
    anonymous
  • Maybe someone should start a new anti-Telstra website...

    Because the lies are all generated by the market dominating Telstra.

    Maybe www.nowtheyarelying.com.au to counteract their spin-formation site www.nowwearetalking.com.au
    anonymous
  • Yes, Optus dropped prices!

    $99 per month: line rental, all local and national land line calls, calls to Optus mobile network (which includes Virgin), $20GB data allowance. For anyone who makes a lot of local and national land line calls, it is good value.

    It's over $50 per month cheaper than what my wife and I are currently paying, and the only reason that we haven't switched is that we will be moving in less than 7 weeks, so it will be easier to cancel our existing service, and start completely new with Optus if we can still connect to their DSLAM after the move.
    anonymous
  • It's already up and running...

    and can be accessed at www.tellthetruthtelstra.com also called T4. It's been around for a while now.
    anonymous
  • If we quote lets quote in context

    Anonuymass! you quote Sydney but you have no idea as to what his point is.

    The purpose of charging a high price is to get companies off your own infrastructure and to build their own. If wholesale rates are too high then it would make commercial sense to build new infrastructure and save these companies paying such high prices.

    In reality the ACCC is stopping competition by making wholesale rates too attractive for new companies to come in and build competing infrastructure.

    There are 7 sides to this story, Telstra, Optus & Co, Labour Opposition, Liberal Government, Media, ACCC & Co and of course the TRUTH.
    anonymous
  • What a load of B%$^ S#@&

    If we only had the ability to see what IP addresses these comments come from, just like the wiki service. I wouldn't be surprised if most of these comments come from telco staff.
    anonymous
  • hmmmm

    Mr Lawrence,

    I thought one of Telstra's main arguments against the Opel agreement was that it duplicates existing infrastructure? How can Telstra cry foul when competitors access its network (for a price), and then cry foul when they do build infrastructure of their own?

    It sounds like Telstra is slightly confused.

    I would also like to point out that Telstra does not invest in regional and rural areas without a Government handout either. It's only the USO holding them to many areas in Australia.
    anonymous