Telstra: It's a B-grade slasher movie

Telstra: It's a B-grade slasher movie

Summary: In what the telco likens to a B-grade movie, Telstra says its rivals have forgotten about the goals of the National Broadband Network (NBN) and are instead using it and the government to gain market advantage and tear the incumbent apart.

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In what the telco likens to a B-grade movie, Telstra says its rivals have forgotten about the goals of the National Broadband Network (NBN) and are instead using it and the government to gain market advantage and tear the incumbent apart.

"It's like watching a B-grade slasher movie but, in this film, the knives are out for millions of Telstra customers and shareholders," Telstra group MD, public policy & communications Phil Burgess said in a statement.

The calls for separation are not for the good of the nation, according to Burgess, but a ploy to kill the competition.

"In a case of clear vested interest, they actually want to use separation as a means to reduce the competition they face in their particular markets," he said.

It's Telstra against the world, according to Burgess: "Mobile operators want to see Telstra's mobiles business broken up; ISPs want BigPond broken up; content providers want BigPond and Foxtel broken up; telcos want to put an axe to the lot; and Acacia wants to shield its NBN from all competition, even from wireless. Google, of course, wants everything for free."

"The most likely outcome in all the gaming that is now going on is even more delay in building the NBN — or, even worse, that the NBN may never be built at all."

How open is Telstra's open access?
Telstra itself has copped some flack from the Competitive Carriers' Coalition (CCC), which represents non-dominant Australian carriers.

The Coalition is concerned about Telstra's "open" access, saying the telco is being deliberately vague in its submission around what form of wholesale access it will be providing.

Telstra has stated that open access should apply to "bottlenecks" in the network, an economic term for a piece of infrastructure that is unique — or a monopoly.

The problem with such a definition is that not all parties have the same idea of what comprises a bottleneck, according to Ovum telecommunications analyst David Kennedy.

"They're deliberately vague at the moment because they want to negotiate details with the government," he said.

When asked to clarify exactly what the company meant by "bottleneck", a Telstra spokesperson said: "We can't discuss what is going into our bid. I don't think any of our competitors would be able to offer that sort of detail."

Ovum's Kennedy said the term "bottleneck" could mean only the most basic components of the network would be available to access seekers.

Telstra's argument is, according to Kennedy, that if it is technically and commercially feasible to build competing elements of the network, Telstra shouldn't be forced to provide open access.

It is even possible, he said, that fibre and cabinets not be considered as bottlenecks, with rivals having to build their own.

"What's technically feasible and commercially viable is open to interpretation and changes over time," he said, using DSLAMs as an example. At first there was not much interest in putting DSLAMs into place, but then their price came down, making it commercially viable.

The CCC says such an approach is wasteful and not economically viable, and that if the proponent had to be structurally separated, that there would be no reason to operate that way.

"Under the separated network model proposed by every other telecommunications participant, the network owner/wholesaler would have no reason to withhold some services from any retail competitor," CCC executive director David Forman said in a statement.

"In fact, a separated wholesaler would have an incentive to offer the most options to the most competitors to drive consumer interest and uptake," he said.

Forman says Telstra's model transfers the risk from itself to consumers and competitors.

"It has presented a model of industrial organisation that would have been right at home in the Soviet Union, except that Telstra has assumed the role of the all-powerful State," Forman said.

Telstra says, however, that it is offering an open network. "The commitment we'll be offering is an open access network. People will be able to offer the same sort of retail services that we'll be offering, but there'll also be the opportunity to differentiate themselves," the spokesperson said.

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

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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95 comments
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  • Keep Telstra strong.

    The arguments from Telstra opponents, who desire Telstra broken-up for their own financial gain, are so self-servingly obvious as to be ridiculous and dangerous for Australia.

    Their claim that a non Telstra roll-out will make the product cheaper for the consumer is a deceipt. The fact is that no matter who is granted the NBN build the investor will require a suitable return on that investment. So be it Telstra or others the charges will be similar.

    It is also a fact that should other than Telstra be the NBN builder Australians will suffer from a situation no Government should allow. Telstra opponents demand that no opposition be allowed to them and in fact would be themselves, a monopoly.

    Not only that but Australian's would be the victims of a system that must remain unchanged for twenty years despite technology advances in other countries. No, this Telstra breakup is not about fairness it is about advantage for Telstra opponents.
    anonymous
  • Love the trash talk

    Sydney, almost your entire argument holds ZERO substance to it. Going above and beyond your argument and this article, you only need to look at Telstras immediate history (past 5 years) to see what they're capable of in terms of anti-compedativeness. ANyone remember when they tried to sell ADSL services cheaper than their wholesale service to other ISPs? It was one of many such incidents.

    Based on Telstras history alone i would be VERY hesitant to even look at allowing Telstra access to the australian tax payer money, let alone handing them the role of our future telecommunications.
    anonymous
  • Yes too cheap, how dare they!

    Yes... got to hate it when Telstra are too cheap! Most consumer unfriendly!

    So what you guys want is our NBN to be as cheap as possible - as long as Telstra aren't the cheapest, then you're willing to pay a bit more!

    That's the competitive (compedative?) spirit!
    anonymous
  • Think of the children

    Sydney, it is true that whoever builds the network expect a return on investment but you fail to realize that Telstra are seeking a much higher ROI compared to others.

    What this means for the consumer is higher broadband prices.

    People should also realize that organizations such as Optus and Terria don't mind if Telstra build the network, in fact they suggested a joint venture but Telstra refused.

    The whole issue is equal access and this is why people want Telstra separated.

    If Telstra build the network and continue to operate as they do. Do you think they will provide access to other ISP's at the same price as they would to BigPond? I didn't think so.

    History shows what Telstra does and is capable of, they don't care about the Customer, only how much money they can make, like any other business.

    But the consumer cares, allowing Telstra to build the NBN is suicide for the consumer and consumers need to be informed to make the right choice.
    anonymous
  • Predatory behaviour, how dare they!

    SJT,

    There's a difference between being cheap and anti-competitive. i.e. providing the same retail service at a lower rate than the going wholesale rate is anti-competitive

    That's only one example however. What if we look at all the other times the ACCC has had to step in. One could not be blamed for believing Telstra strategically take these actions knowing perfectly well they'll only end up with the ACCC, and when the ACCC doesn't rule in their favour (over 95% of the time) what does Telstra do? They take it to court.. and it's been proven before that they've taken things to court even when knowing they weren't going to win, but the fact that they have the ability to delay these outcomes by abusing our legal system allows Telstra to maintain their monopoly for longer, create uncertainty in the industry and screw smaller competitors to the ground... not to mention the Australian public.

    Telstra currently have 47 ongoing legal actions against the ACCC; that's 47 legal actions against the very independent body that's sole purpose of existence is to protect the rights of consumers.

    This is the reason why I, and the majority of others would rather see the NBN be provided by an entity that is not allowed to compete at a retail level, or at the very minimum be functionally separated to remove these conflicts of interest. Telstra is a perfect example today of why we can't allow the same vertically integrated, monopoly exist through the NBN.

    Oh btw I read your two part thesis on why you believe competitors in your words are "leeching" off Telstra's equipment . Thanks for the laugh. I particularly found your analysis on iiNet's costs very amusing. Were you by any chance one of the Telstra legal team using this rationale when trying to justify why Telstra should increase their ULL rates by over 300% to the ACCC and ACT? lol
    anonymous
  • Yes like any other business! The penny is finally starting to drop!

    They (Telstra) don't care about the customer, only how much money thay can make, "like any other business". Too right Anon and TERRiA is no different at all (just x 8 - lol). That's reality and now that this stark realization has finally hit home, perhaps the rest of the TERRiA folly will also become apparent!

    If TERRiA wins, what's the bet the $4.7b subsidy, will soon need to become $5b, $7b, $10b or? And unfortunately, to save face, the government who want this delivered come whay may for political advantage, will throw money at them and that is what TERRiA are banking on (pun intended). That is, if they actually win, which all non-dreamers know they don't really want to - they are just in there to attempt to force separation of Telstra!

    Regardless, no matter who wins, the opposition should keep the gov. and winner accountable and restrict the subsidy to $4.7b. "Which surely we can all agree on". Yes/No?

    Thing is, no matter who wins, we will pay. However, (think OPEL now), Telstra will get it done, done in a timely fashion and possibly within budget. But if they blow the budget, they'll still have the capacity to fulfill their obligations.

    Conversely, there are (again think OPEL) just too many ifs with TERRiA, to chance our technological future on. And why, because they have said they will save us a few dollars "initially" but have given no guarantees afterwards?

    So let's stop dreaming and just let Telstra get on with it!
    anonymous
  • #6 - weasel!

    My we are conveniently evasive, aren't we James?

    #6 - Put up or shut up in relation to your libelous comments in relation to Mr. Morgan.

    It must be terrible being too gutless to back your own big mouth?
    anonymous
  • When will people wake up?

    People talk about Telstra's high prices and their business but there appears to be little consideration of several factors:

    1. Most companies have nothing else to compete with except price, they tend to have inferior mobile coverage, inferior data networks that are engineered for cost not quality. If they do not use the "look at the cost" argument they will normally not win business.

    2. Telstra is the market focal point. Anything that Telstra does everyone else needs to act as if they are better or cheaper. If Telstra starts slashing prices everyone else will do the same just to make sure point 1 stays active. Given enough cycles either the ACCC will step in and demand Telstra drops wholesale rates / they stop acting predatory or we have another OneTel on our hands with some of these smaller players pricing themselves out of business.

    The fact that Telstra announced they profit goals prior to the tender closure date simply enabled the G9 to play the game of saying 18% is a rip off and Tierra will be cheaper. This simply reinforces the fact there will need to be compromises somewhere (and it will not be the investors in Tierra).

    3. Publicity, the Australian population has become accustomed to hearing and believing negative comments about Telstra. We are at a point where many people will believe anything and many companies prey on the gullibility of the masses. Optus and Internode are classic examples of this.

    4. Political fortitude, governments have no courage when it comes to doing what is right, they will normally follow what will help their reelection chances. Due to point 3, they have traditionally applied rules that will be detrimental to Telstra.

    5. Corporate meddling, Telstra owns several companies and they openly publicise these. There is a massive web of financial agreements between many Telstra competitors which are never disclosed, yes we all know Singtel owns Optus but they also have financial relationships with over 2 dozen so called competitors. Telecom NZ owns AAPT & Powertel which has business interests in Macquarie Telecom. The list is so convoluted that even professionals in the industry find it hard to keep track off. These 'competitors' have been known to bid against each other for business while covertly sharing details about their bids to ensure one of the wins instead of Telstra or one of their true competitors.

    5. Buying business, these companies have often bought business to improve their client bases or to simply snag a few high profile clients. If you are unaware of what I mean, buying business is the act of supplying a service at an unsustainable price to selected clients so other orginisations want to become your client (albeit at a much higher price). If Telstra was to do this the ACCC would be all over Telstra so quickly we would all hear a sonic boom.

    This industry is a tough industry, some companies have advantages that others may not but do not fall for the hype that Telstra has all of the advantages and the market is skewed in their favor. If anything Telstra is burdened by so much red tape and political / competitive policies that the playing field has been shifted in everyone else's favor except theirs.
    anonymous
  • Amazing Mr Bell

    You have used the 47 argument so many times over such a long period of time that I would have expected the number to have changed slightly.

    As soon as your employer changed their tone and started pushing the separation line you have also changed you tone to suit.

    When will you stand up and admit to the world who you work for.
    anonymous
  • ...

    Why should I let Telstra control such a big and important aspect of Australians?

    Telstra are asking $80/month for a basic subscription where as others are quoting $40/month.

    There's no need to doubt Telstra competitors and not being able to complete the project within budge and time frame. If one starts doubting one organization, you can equality have doubts in another organization.

    Should also be noted that Telstras majority of hardware related work is contracted and 3rd party companies do the work for them.

    I personally do not care who builds it or owns it, but customers like myself expect a decent service at realistic prices.

    We can all agree that Telstra is not a company which provides such a service. Just look at their current pricing structure.
    anonymous
  • The penny still needs to drop for some!

    As always you seem to miss the key argument or you merely divert from it. Yes nobody denies businesses want to make money, but there are different models here which will affect what we receive as consumers. As the previous poster has stated, the reason why TERRiA want to have a role is to ensure all players, regardless who they are will have access to the network on equal terms. This is not something that exists today in our current environment. How difficult is this to comprehend SJT?

    And then you dedicate two paragraphs to OPEL, somehow insinuating that they were responsible for the delays when we all know perfectly well that no business (Telstra included) is going to expose itself to potential losses until they have a rock-solid contract in place, which was what OPEL was waiting for.

    Let's keep our dreams alive and hope for the wellbeing of this country and our future generations. Let's not fall into a false sense of accepting the status quo and "just let Telstra get on with it". Let's hope whoever does win the tender (not just Telstra) that at the very minimum functional separation is a requirement of the network's delivery, and structural separation is looked upon favourably.
    anonymous
  • Do you mean Terria?

    Can't spell
    anonymous
  • Nice try

    SJT,

    There's nothing to "put up or shut up" about. As I'm sure you've picked up from some of your google searches many believe your friend Mr. Morgan to be heavily biased towards Telstra. This bias in my opinion is simply illogical without some form of financial insentive. What more do you want me to say? I'm not taking anything back and I'm not putting anything else forward. My opinion is my opinion and unless you've got something you believe can change it then this point of discussion really has nowhere else to go. I don't "weasel" out of anything, and I certianly don't divert or use arugments out of context like others; however unfortunately I am not always privileged with time to respond.

    So instead of changing the argument again, like you so often do and focusing on my opinion of a so called independent consultant (who may well be independent, but just heavily biased.. although I'm not quite sure how that works) why not actually argue about the points that matter?
    anonymous
  • Not expose itself to potential losses?

    Other then spending about $500 in registering a company name what else did they do?

    There was a contract and that contract was signed by Opel and the former government. The contract was eventually ripped up because Opel did not meet a single one of the milestones required of them before they would start receiving payments.

    You would expect a company that has the potential to go from $0 to $ billions to at least invest in a web site to publicise itself, possible an office on a monthly lease arrangement and even produce a company logo.

    You have no idea James, they never intended for this project to proceed and no matter how hard you try to re-write history it will not happen.
    anonymous
  • #7 - lol!

    #7 and counting, James!

    No one will think any less of you James, if rather than formally accusing Mr. Morgan (and Mr. Lynch) of impropriety (as you snidely inferred) you simply say - in the heat of the moment, I wrote things I know regret and apologise. That's what I would do!

    Or of course if you so desire, you could also bite the bullet and formally accuse him/them.

    Either way, it's time to grow some cocunuts my friend.
    anonymous
  • Tierra!

    It is a 20 year old computer simulation that modifies and self replicates itself. Depending on who you talk to it was classified as a form of artificial life whereas it could also be classified as a virus.

    That reminds me of them, well chosen name!!!
    anonymous
  • Telstra apparently

    Anonymous apparently I work for Telstra.

    Yes I've highlighted the fact that Telstra has 47 legal actions against the ACCC a handful of times over the last couple of months. While it emphasizes the incumbent's disdain for consumers and competition it's also tangeable, unlike the SJT's and Sydney's of this world who love to accuse competitors of "leeching" off Telstra in every second post without a scrap of evidence to back their claims.

    If I recall our legal system unfortunately isn't the fastest (to Telstra's benefit) and I don't believe this number (47) has changed.
    anonymous
  • Smarty pants Anonymous.

    Live and learn Mr No Name it is TERRiA.
    anonymous
  • James yes or no please.

    James Bell two questions for you.

    1. If other than Telstra are chosen for the NBN build do you agree with their request that no competition to be allowed thereby making them a monopoly and denying the Australian people any new technology that may be developed in future years.

    2. If other than Telstra are chosen to build the NBN and Telstra, in the spirit of true competition, decide to build an opposing system to give the Australian public a choice of supplier, would you support Telstra's right to do this?

    I have asked these questions before but have never received a "yes or "no" answer.
    anonymous
  • When will people wake up?

    The problem in the hands of Telstra is that people are waking up.

    As a tax payer I don't want to see a blurring of the lines between what I paid for and what a private corporation paid for.

    Telstra is tasked with building and maintaining the Australian network infrastructure for us and to allow fair and equitable access to that infrastructure. That meant no favours, even to their own retail arm.

    Telstra have proven time and again that they cannot be trusted to do this. Under the newer infrastructure builds on their Fibre networks they lock out all competition. If the money to build any components of these networks comes from the public purse then where are they upholding my interests as a consumer and an investor (as a taxpayer). This behaviour is upholding the interests of private investors.

    Not fair, not equitable.

    If Telstra wish to privately build networks, with their own money and lock out competition, then that is their business.

    Telstra is not longer the innovator of years ago, the investment dollar that used to go into R&D is gone for the sakes of profits. Every innovation we see from Telstra in this day and age comes from someone else, somewhere else. I no longer see the value of Telstra as our national infrastructure manager in the wholesale space as they no longer care about what the infrastructure was put there for. That would be the people of this country.
    anonymous