Sign it, or we'll shout 'sign it!' again

Sign it, or we'll shout 'sign it!' again

Summary: Despite 18 months of "we're working on it", Telstra still has not signed off on the deal that will enable the NBN to proceed — even though nearly everybody recognises it's the right thing to do. Is David Thodey stalling in hopes of torpedoing the whole project? And if so, what exactly should Stephen Conroy do about it?

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Jon Bon Jovi may be known for his big hair and gazillion albums sold, but fewer know about his US charity work and Soul Kitchen, a restaurant where it's entirely possible to eat for free. Such pay-what-you-want ventures have emerged around the world as a way of serving the needy, playing on the law of averages to build a self-sustaining business that lets customers pay what they want for their meals — or nothing at all.

It appears this approach can be made to work in the restaurant business. But it's not always so easy in other settings: witness Tony Abbott's latest shallow and opportunistic attacks on the NBN and flood levy, in which he is appealing to whingers who complain about having given to flood charities and then facing a compulsory levy on top.


In subduing Telstra, should Conroy walk softly or carry a big schtick? (BobbyPalace image by Schlauwiestrumpf, CC BY-SA 3.0)

Get real, folks: Queensland and other flood-affected areas need billions to fix this kind of destruction. Australians are a generous sort and recovery efforts have brought out admirable qualities, but the kind of money needed here is only going to come if everybody chips in. After all, the government really is little more than a way of redistributing wealth to ensure the country benefits from our collective success. And sometimes, hard decisions need to be made even if they're unpalatable to some. You just can't eat for free forever; someone is paying to keep the restaurant's pantry stocked.

The telecommunications market is little different. As we have so painfully seen over and over again, leaving the progress of the industry in the hands of the well-meaning results in less progress and far more stalling. Witness the apparent inertia within Telstra, which is about to blow through its third self-imposed deadline for completion of the company's $11 billion copper-network deal with the government.

I'm not a professional negotiator of contracts, and I certainly recognise that this stuff is very, very complicated. But Telstra and the government had committed to wrap this stuff up by the end of 2010. Then Telstra said it hoped to have completed negotiations by Australia Day. You know, so it could bring the proposal to shareholders for its half-year results announcement on 10 February. If it misses that deadline, it will be months before Telstra can properly take its deal to its shareholders. And that, as we already know, would cause major problems for the NBN's timeline, which is predicated on the deal coming into effect by mid-year.

If Telstra misses its deadline, it will be months before it can properly take the deal to its shareholders ... that would cause major problems for the NBN's timeline.

And we just know David Thodey would never want to cause problems for the NBN, and to delay the sacrifice of Telstra's copper network.

One imagines Conroy and his people sitting at a table with unopened bottles of champagne and ceremonial pens at the ready, tapping fingers on desks and glancing nervously at the clock as January rolls into February; it was only last month, after all, that Conroy confidently declared the deal would be signed in January. And as weeks of delay slip on into months, it's getting harder and harder to believe that this lack of interest on Telstra's part is an accident.

After all, Telstra has a long and storied history of using its market weight to delay progress: remember a decade ago, when it kept doing one trial after another of amazing new ADSL technology but held off deploying it for years as it argued that dial-up internet was a more cost-effective service than ADSL?

Or when it sat on its ADSL2+ equipment, saying it would only roll out the technology in exchanges where its competitors went first? Or when it had to be formally warned back in 2005 not to sabotage competitors' ADSL roll-outs? Or when it flaunted the ACCC's paper-tiger powers — over and over and over and over and over — because the theoretical penalties were less expensive than the revenues to be reaped?

It all seems to be happening again. Heck, back in September 2009, analysts were warning Telstra to move quickly to secure a favourable position in negotiations. Yet the only real progress we've had so far is a Heads of Agreement that last year formalised the terms of the negotiations but, in real terms, committed Telstra to absolutely nothing.

I've previously lauded David Thodey's leadership and vision, if not his execution. But there are a lot of other people sitting at his table; the way Telstra seems to be dragging its feet in finalising the contract, it looks like Thodey is talking out of both sides of his mouth to satisfy both shareholders and the government.

Telstra — with the support of opposition figures who lamented Labor's "gun to the head" approach — was happy to complain, loudly and angrily, against the possibility that it might be excluded from 4G spectrum auctions and forced to divest its Foxtel holdings. It's acting like the loudmouth charity-restaurant patron that gorges itself on lasagne, then complains about the quality of the food and goes back for sixth helpings.

Without some concrete good-faith action on the telco's part, Conroy may well need to put some force behind those threats. Right now, he's changing Telstra with all the success of someone trying to convince a sleeping 40kg St Bernard to get up and go for a walk with him: he can pull and pull on the lead, but if that dog doesn't want to get up, it's not going to get up.

Suggestions that removing the threat of onerous restrictions will get Telstra to become a willing accomplice in the NBN transition are optimistic.

Suggestions that removing the threat of onerous restrictions will get Telstra to become a willing accomplice in the NBN transition are, how do they say, optimistic. In the end, a gun to the head — or a kick to the behind — may be exactly what's necessary to get Telstra playing ball. But with the Opposition crying out on Telstra's behalf and Thodey continuing to conveniently miss key deadlines, Telstra can continue building out its own network while squeezing every last dollar out of its copper network. One almost imagines Liberal policymakers cheering Telstra's policy of civil disobedience from the sidelines — or, possibly, even the front lines; who knows what goes on behind closed doors?

Many people may see Telstra's inertia as payback for Conroy's heavy-handed behaviour in the past. However, just as the flood damage won't be repaired simply through people's generosity, this sort of major industry change doesn't come without a bit of heavy-handedness. The key is figuring out what form of heavy-handedness will get Thodey to sign on the dotted line — and mustering the political will to ensure Telstra doesn't keep spoiling the meal for everybody else.

Raise your hand if you think the Telstra-government deal will be finalised by 10 February. And if not, what should be done about it? Or will Telstra end up torpedoing the NBN simply through its foot-dragging?

Topics: NBN, Broadband, Legal, Telcos, 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

16 comments
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  • From what I know about negotiation, it looks like Telstra is playing hardball. But the good news is that the louder they shout "we can walk away at any time, we've got other options", the closer the parties are to inking the deal itself.

    It all makes perfect sense. It's Telstra trying to get the best deal they can. And it helps their case to put pressure on the negotiating party (NBN Co) from the political angle - making the Government nervous, and therefore push NBN Co to make the deal. That then gives Telstra the leverage to press for a better deal in exchange for a quick resolution.

    For NBN Co to even the score, they would have to play on the major Telstra shareholders, reminding them of the cost of no deal happening soon (or ever). That gives them leverage in turn over the Telstra negotiating team.

    And that all this is happening right up against the deadline? Perfect sense, really. This is how the big boys and girls do it.
    Gwyntaglaw
  • As I mentioned elsewhere, the TLS shareholders keep saying "we own Telstra - hands off"...

    So unless Telstra sign, they should be forced to pay for the repairs to all those flooded/damaged, "Telstra shareholder owned - hands off exchanges" themselves...imo!
    RS-ef540
  • David Braue, wow, what a fool, what clear testimony of an infant immature mind.

    The NBN2.0 will be an under-utilised extravagance, that will be cancelled ("re orientated").

    Before its even rolled out passed 1.6 million premises. Of which only 80,000 premises will actually pay to subscribe to it !! (Just like the Tassy NBN trial which has 262 subscribers from the 4500 premises which have access to it.
    Which is ironic as 2.5 million premises TODAY have access to 100 mb/s.
    Reality Check-cb54c
  • Wow indeed, I was thinking the exact same thing about you (refer to your first line)!
    RS-ef540
  • Reality Check: People probably said the same thing about rolling out electricity lines to the house.

    "What do we need this for? We've still got access to gasoline lamps!"

    Innovation is bounded by the resources it has available. You seen what they've done with a copper line over the last 60 years, now imagine what they'll be doing with fibre in 60 years.

    As for Wireless, technologies like WiMax are already having medium saturation issues with only a fraction of the bandwidth passing over copper wires.
    JamesMcCutcheon
  • After David throws himself to the floor in a tantrum to get Telstra management to capitulate (and would'nt it be funny if TLS shareholders vote down the deal).

    David can throw another tantrum and get another company to give us all Helicopters, because clearly were not in the dark ages and clearly we all want and need one. Walking and bus travel is inhumane.

    Or maybe we blackmail Qantas to stop holding off on the overdue investment we demand they make. You know the one, The planes that will get us to Europe or America in under an hour. The technology has been proven and available for decades!

    Yep, with those Eqyptians now rioting, the Italians cant be far behind demanding Ferrari's be produced in quantity's and price thats satisfy's the mass's.

    p.s The fools lamely attempting to rebut my first comment cant seem to handle the point that is 2.5 million premises have access to 100Mb/s TODAY !! And less than a few hundred are subscribing to it !!! . . . . . . Less than 0.000000000000001 % ;-)
    like I said, immature sad stupid fools.

    Yep I cant wait till this NBN utopia vs evil Telstra matter is put to bed so we can move onto other evil company's denying us
    Reality Check-cb54c
  • Well we all know how 'you' are going to vote anyway... good for you.

    I hope they do vote it down... then say hello to $2.00 shares.

    While you're at it, you may as put up a vote of no confidence in the board too and sack them and then offer the job to Sol..!
    RS-ef540
  • If David Braun did his research, he would realize the reason why the deal is taking so long is that the HOA has to go through the ACCC and an independent inquiry, which is what is holding it up

    Wouldn't put it past him to be impartial and come up with realistic assertions though
    deteego
  • Are you blind or just missing a few too many brain cells (LOL)... it's Braue not Braun...!
    RS-ef540
  • For it to got through the ACCC and an independent inquiry, wouldn't Telstra have to finalise the agreement for the ACCC and an independent inquiry to be able to go through it?

    Chicken. Egg.
    Egg. Chicken.
    mwyres
  • Dear God - you support wealth redistribution??? Are you aware that will include YOUR hard earned money?? Or do really mean - other peoples wealth?

    Anyway, a good lefty can always be relied upon to miss the point.. and in this instance you've done well...

    NO ONE has any issues with supporting Queensland, the issue is how the Government chooses to support them... We don't trust this government based on it's terrible fiscal record. There are 100 other ways to achieve the same goal without a levy and without further hurting out economy. Oh and by the way - the rorts have already begun.. which comes as no surprise. TAX should never be the first option, unless your a socialist. And NEVER in a weak economy!

    In an economy of $350 Billion, surely we can raise $1.8 billion without having to set up a levy - doing so only highlights the new heights of incompetence this Government seems to be achieving. To put it into perspective, if you had $350 in your pocket and i asked to borrow $1.80 - do you think you'd be able to find it for me??? or would you need to take it to your collective to raise the $1.80?? cummon!

    Anyway - as a conservative, I must be an evil rich mogul who's only interest is to starve my already underpaid employees... better move on - nothing to see here.
    hewisond-5bed8
  • Typical Telstra, they held back the progress of the internet in Australia for the last 15 years no reason why they shouldn't for another 15.
    Hubert Cumberdale
  • Its already going through that process, even Quigley commented. The papers have already been submitted
    deteego
  • Hey David...

    What about a struggling single mum living in West Sydney who earns $50,001 a year, and who donated $50 to the flood appeal as she wanted to help, but then finds out she is going to be slugged another $50 - $50 she will struggle to muster... is she a ‘whinger’? What a simple-minded fool you are!!!
    Stavros-074da
  • Struggling mum should claim the $50 as a tax deduction, which will take her taxable income below $50k, but she might be happy to pay the levy, she might have been happy to pay the $1.8billion milk levy, or the sugar levey and lets not forget the Ansett levy.
    calos-ac7c5
  • Struggling mum on $50,001 taxable income will only pay the levy on that $1 excess, not the full $50,001. I hope she could find that extra half a cent each week... Plus what calos said - the deduction would also drop her below the threshold for the levy anyway.
    Gav70