Should Telstra eat humble pie?

Should Telstra eat humble pie?

Summary: What would you do if you were Telstra? Switch on ADSL2+ or complain to the government?


commentary The plainly spoken chairman of the Australian Competition and Consumer Commission sent Telstra a black and white message last week.

Renai LeMay, ZDNet Australia If the telco was just prepared to ask for it, Graeme Samuel told a Sydney conference, he would drop a letter in the post containing certainty that competitors would not gain access to Telstra's ADSL2+ broadband network as it was enabled. "You can't get much more certainty than that," Samuel said.

You can watch Samuel's speech online here.

At first listening, Samuel's speech was extremely convincing. All Telstra needed to do, he suggested, was eat a little humble pie and apply for a regulatory exemption like everyone else.

It's also a message the ACCC supremo has delivered before -- back in October he said the regulator then saw no compelling case to regulate a wholesale DSL service.

It's likely that Telstra saw some sense in Samuel's comments at that point. Soon after, the telco uncapped the speeds of its ADSL1 service and switched on ADSL2+ services in areas where competitors were already providing the higher-speed service.

But this time the ACCC boss's argument didn't impress the telco.

"That process would take about two years," Telstra's spokesperson Rod Bruem told your writer this morning, referring to Samuel's invitation to Telstra. "And even if we were to do it, the ACCC still has the power to vary the terms and conditions of any exemptions as it pleases," he added.

Bruem pointed out that Telstra had tried Samuel's advice before -- when it applied for an exemption relating to the digitisation of its Foxtel pay TV joint venture. "That was eventually rejected, on the basis that Telstra had already started making the investment," he said. "The same would apply here. In a lot of cases the ADSL2+ is sitting in the exchanges and not turned on."

"There needs to be a change in the law that stops the ACCC handing over investments like that to our competitors at below cost," Bruem said. "Because here we have Graeme Samuel saying he wouldn't do it."

"But under the law, if someone came to him and applied, he would have to go through the process of considering that, and history shows what the outcome would be. I mean that is the law, he would have to follow the law as it stands."

Now Bruem has a point -- the ACCC does have to consider pleas put before it by rivals. And if the telco has been burnt once with regulatory exemptions, it might make sense to try to level the playing field through a legislative amendment, rather than obeying the current rules.

However, it's also true that there are now a substantial number of telcos rolling out their own ADSL2+ infrastructure. Optus, iiNet, Internode, Adam Internet, Soul, Amcom and PowerTel -- to name a few.

From the ACCC's viewpoint, if Telstra upgraded the rest of its network to ADSL2+, there would be nothing to stop those telcos putting in their own infrastructure and simply competing. Particularly those like SingTel subsidiary Optus, which have parents with deep pockets. This would avoid the need to force Telstra to offer a wholesale ADSL2+ service.

Your writer doesn't think it's likely that Telstra will in the near future switch on ADSL2+ in the rest of its network. But the telco probably should -- the move would generate immense public good will, give it an immediate advantage over competitors, and force those same rivals to be the ones crawling to the ACCC.

What would you do if you were Telstra? Write a humble letter to the ACCC, switch on ADSL2+, or just complain bitterly to the government? Drop me a line directly at or post your comments below this article.

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

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  • Only if its kosher

    Perhaps Telstra can be run from Dubai and operate in the same building as Haliburton.

    Afterall, what is it that big money corporations only care about?
  • telstra adsl

    Just another blast of hot wind from Telstra, whose American XO's seem to think they can bully the Regulator. The exhorbitant price of Bigpond seems to be invisible to Telstra
  • Dear Mr UCCC

    Dear Mr Unfair,

    I am considering activating a service that has cost me hundreds of millions to roll out and as with any investment the final decision to proceed is based around planning and contingencies. My business case is dependant on certain operational and uptake assumptions although one factor that is holding up the decision to proceed is around the whimsical nature of your organisation.

    As such can I have your assurance that I will not be forced to sell this at a retail or wholesale price outside of what I consider fair and reasonable based on investment return and available competitive forces and that you will not flip flop in your ruling for an agreed period of time.

    If competitors find this unreasonable they would be permitted to build their own network in same environment that we have built ours by funding their own rollout and using their own technical abilities.

    If consumers find this unreasonable they can choose to obtain their services from any other available source or wait until a competitor finds their location worthy of obtaining some funding to build competitive infrastructure.

    It is important to note that this is an offer to extend high speed broadband from the current 55% of the Australian population across fewer than 400 exchanges to over 91% of the Australian population across over 2500 exchanges.

    The cost of adding infrastructure is not based on a simple 1% = $x but on an exchange by exchange basis. The top 100 exchange nation wide covers around 25% of the population (or 50,000 people per exchange), the next 250 covers the next 25% (or 20,000 people per exchange).

    Fitting out over 2100 exchanges to cover 8,000,000 people, around 3900 people per exchange or around 1300 premises per exchange requires a lot of investment including more copper required per service for a much lower per exchange return.

    I am sure even you know how to use a calculator and work this out for yourself but I thought I would make it easier for you.

    We are willing to offer a profitable service, even if in some areas are not, but we will not proceed if we are going to lose money across the entire project.

    Thankyou for your time
    Mr Tall Poppy

    p.s. I know a good optometrist if you need help to see what's happening in the real world.
  • Only solves half the problem

    If Telstra did enable ADSL2 for all areas with suitable hardware it only solves half the problem. This is due to upgraded RIMs having under-rated fibre switching to handle full ADSL2 speeds. The end result is ADSL2 speeds of 3mb/s which is below what normal ADSL is capable of. And there is no way to access alternative ADSL2 on many of these RIMs.

    This another case where pair gain victims get screwed by Telstra all over again, and leaves people waiting for G9 FTTN or paying Telstra prices.
  • Now that sounds like a quarter of the truth

    The exchange switching has ample back end capacity, working in the industry and designing the network I have heard this comment repeatedly come from anti Telstra parties (which I assume you are one). I agree that FTTN by Telstra or G9 will fix much of it as the real issue is the last mile copper cable distance from the premises to the exchange or RIM and not as you comment about the fibre switching.

    ADSL is limited by distance; ADSL2+ does not avoid this issue and at much higher speeds is even more susceptible to it.

    In metro areas most exchanges are designed to cover fewer 36 square kms but in rural areas exchanges covering under 200 square kms is uncommon. In a land where 20 million people live in around 3 million square kms (let's ignore desert areas) meaning each exchange big or small will average hundreds of square kms.
  • Sounds like a Share Holder?

    What a load of old codswollop. Telstra only has to throw the switch. The exchanges are already equipped with ADSL2+. The copper is in the ground.
    The only place Tel$tra has to make any investments is where they have installed RIM's and Pair Gain. If they'd laid copper in the first place instead of trying to rip their customers off, they wouldn't have to lift a finger to provide ADSL2+ from every exchange.

    Wake up you Ding Dong.
  • Takes one to know one

    So tell me do you have super, if you do then you are a shareholder as well.

    How would you like to be told that your wonderful house you own and live with the spare bedroom needs to allow your enemy to live in at $5 per month?

    You have already paid for it right? So you won't mind letting them use it at lower then market rate.

    Wake up to reality, the owner should be able to choose at white price their goods are sold for regardless of what it cost them.

    Would you be happy to change this country's name to USSR, I think the old owners of that name no longer use it.
  • suck it dry

    I guess like most Telstra employees you like wearing the suit but don't like doing the work.

    By modern western consumer standards our telecommunications suck big time. It required a blast from Rupert Murdoch to shake up Telstra into modernisation, in the meantime what was their executive board doing? Comparing ties?
  • Pair-Gain & ADSL availability

    I started on cable when it was first rolled out. 5 years ago I moved house, and checked multiple times that ADSL would be available. Tested and confirmed again by telstra after the physical phones were installed by telstra at lockup stage. Paid for ADSL moden self install. THEN had to wait 3 years for telstra to switch on the equipment while living off dial-up. Now the ADSL works ok, and I'm still on pair-gain according to telstra. Almost everyone I've spoken to have had similar issues (though usually months - not years) when trying to get telstra broadband in built-up areas.

    Are we going to see customers messed around for months or years when everyone signs up to ADSL2+ ??
  • Should Telstra eat humble pie?

    If the Government had sold the Retail Arm through the Sale and not sold off the Wholesale asset ,
    that every Australian has paid for through Taxes, we would be looking at a very different situation.
    If that was the case Telstra would have to compete with the marketplace, should they not be good enough they would fail ( Market Forces) . Tesltra then would not be in a situation that they could dictate what they would or would not do or accept.
    The Labor announcement today sounds like a commensense approach but lacks substance.
  • National communications interest

    Time to split Telstra up.

    Comms infrastructure is expensive but just like roads - must not be privatised. Its ok to pay shareholders to by back network but priviate interests are being put ahead of national interest.

    T as a marketing company with the fat in 242 would be comical.

    I'm not a T shareholder. I've all my super in cash. All super members should move money to cash. Lets see what T is worth then.

    Profit before national interest is treason.
  • About creit on my mobile phone???

    Yes am in a nursing home and to keep in touch with my mother. From mobile to mobile. I had over 1.thounsand 6 hundred dollars on my phone. And telstra taken all my money .off my mobile phone this is not fair to me.and iam thinking to chaning to another phone company and taking telstra to court as well.