Telstra 'monster' must be wrestled to the ground

Telstra 'monster' must be wrestled to the ground

Summary: It's not too late for the government to break up the "monster" that is Telstra via structural separation, according to leader of the Australian Democrats, Senator Lyn Allison.

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It's not too late for the government to break up the "monster" that is Telstra via structural separation, according to leader of the Australian Democrats, Senator Lyn Allison.

Speaking today at an Australian Computer Society debate in Sydney, Allison called for the structural separation of Telstra and criticised the government, saying it had missed a chance in not splitting up the telco when it was still partially in government hands.

"The Democrats, like most in the industry, have been calling for that for some time," she said. "Structural separation would have been a lot easier if it had been done at the time [Telstra] was 50 percent owned by the government. However, it's not too late."

Allison labelled Telstra a "monster" and said the government's task of "wrestling it to the ground will not be a picnic".

The Democrats' leader added the government should consider making the regulatory regime increasingly uncomfortable so Telstra will accept a split without filing a class action suit.

Although Communications Minister Helen Coonan has shied away from backing structural separation from a government perspective, she has indicated that the expert taskforce monitoring bids to build Australia's fibre-to-the-node network may consider an enforced split as the rollout progresses.

David Kennedy, research director at Ovum, said a move towards structural separation would represent a change in policy direction for the government, but added that mandating structural separation could easily fall within the expert taskforce's remit.

"The terms of reference are so broad as not to rule anything out," he told ZDNet Australia.

Coonan's Labor counterpart has remained equally equivocal over the question of separation.

Labor deputy leader and communications spokesperson Stephen Conroy today also refused to commit on separating the telco in the event Labor wins the upcoming Federal election, adding that the party's planned partially government-owned fibre-to-the-node network should help allay industry fears.

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

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17 comments
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  • Should have split it a decade ago!

    Allowing Telstra to be the only wholesale supplier to the retailers who are its competitors is a completely ludicrous situation. It's like saying anybody can provide courier services, but everybody has to use Mayne trucks and drivers. Of course Telstra will use its ownership of the infrastructure as a weapon against its competitors! They subsidise their retail operation with wholesale profits gouged directly out of competing retailers, network problems often affect customers of other retailers and not Telstra ones, and Telstra customers are the first to have their service returned after faults are rectified. Those who designed the original privatisation of Telstra and de-regulation of the market were stupid and short-sighted. They were clearly completely out of touch with the agony of dealing with Telecom Australia as a private citizen. They are still completely clueless about dealing with this abomination today.
    anonymous
  • Another clueless politition

    What would Lyn Allison know about telecommunications. So you seperate Telstra, then what? Who will invest the capital to grow the network- the government? Lets call it the PMG again. The real issue here is about new investment in new technology. Telstra, Optus, Hutch & Vioda are all big guys with big pockets. Let them invest the capital and let the market decide. If it not profitable to build it in the bush, get the govt to subsidide share the asset, but have it managed by a telco by tender process. Know one has been able to articulate the benifit of selling Telstra, other than the ISP's & Telco's who do not wish to build their own networks. I am a Telstra shareholder & I partly own the infrastructure. Not them or the government!!!!
    anonymous
  • Here we go again.

    We see again the self interested parasites who put forward unconscionable argument to try to further their own financial position.

    Telstra shareholders own ALL of Telstra, signed, sealed and paid for by 1,600,000 Australians and Telstra Management is not about to magnanimously hand part of it to Telstra competitors. Nor should they.

    It the Government (or anybody else) wants competitors to Telstra let them supply the necessary capital to fund this program. I for one will be part of a Class Action through the Australian Courts should any financial damage be done by ugly ubiquitous action.
    anonymous
  • Rightful owner

    This is how I see it

    My parents and grandparents paid for Telstra through their taxes. Then the liberals took over and said I'll have that thank you, ... and sold it back to me.

    No I have to pay for what my parents paid for already.

    I hope this monster is killed not just wrestled, says another rightful owner.
    anonymous
  • im sorry but its time >>>

    When Telstra has superior ADSL technology ( ie ADSL2 ) enabled at my exchange yet chooses not to allow me to use it untill another competitor sets up in competition to them at my exchange , then Im afraid that its time for them to go, along with the Govt that allowed them to get away with this.
    anonymous
  • Telstra Ownership

    Quote from Simon Gatwood "My parents and grandparents paid for Telstra through their taxes".

    A brief history lesson to refute your claims. On 1 July , 1975 the then PMG was split into two commissions, Telecom Australia and Australia Post. From that point on Telcom was responsible for raising funds in the market place not only for capital investment, but also to pay out borrowings from treasury for past capital expenditure. It is simply a myth that "your" parents and grandparents paid for Telstra. Taxes are used for all sorts of services. Your parents and grandparents contribution to Telstra would be next to zilch.

    Since the ownership by your parents and grandparents seems to be an issue, perhaps you would care to enlighten us as to how much they actually contributed directly to the ownership of Telstra, opps, that would be the PMG, since taxes were no longer used to finance Telecom/Telstra.

    In fact I would have as a guess that the federal government has probably given more to other carriers ISPs in recent years then what it ever spent on communications pre 1975. Vodaphone won a contract worth millions to provide mobile coverage along major remote highways. Elders/Optus are about to get a billion dollars, I suppose you now believe you own this infrastructure now as well since this money is derived from taxes.

    Governments around Australia own huge vehicle fleets as well, I suppose you feel you are entitled to use these at your leisure as well, since taxes pay for them.

    Since the ownership by your parents and grandparents seems to be an issue, perhaps you would care to enlighten us as to how much they actually contributed directly to the ownership of Telstra, opps, that would be the PMG, since taxes were no longer used to finance Telecom/Telstra.

    It really is time to move on. Telstra has been sold, it is no longer in majority government ownership!
    anonymous
  • Smell the coffee

    How many times does Telstra have to invest in infrastructure that could be replicated by any carrier only to have the ACCC step in and demand they supply at a price that only generates a return to the companies not willing to actually do it themselves. The ADSL infrastructure installed at over 2000 exchanges can have ADSL2+ but as soon as Telstra switch it on they are forced to sell it at a near loss to competitors who do not need to send out technicians to maintain the copper or pay for the costly exchange maintenance.

    I am glad Telstra has stood up to the ACCC and are only switching it on when they have another company competing, if the ACCC stepped back and allowed them to be the only supplier of ADSL2+ in 1800 or more exchanges I am sure other companies will start to install their own exchange infrastructure when they realise they are losing a large client base due to lack of investment.

    I agree with operational separation but to take away the ownership of a service owned by me and other shareholders is not right. Telstra has not done anything that could be truly considered monopolistic in many years and the sooner the government puppets wake up and smell the coffee the better.

    I do have sympathy for people such as you who are the innocent victims of this government generated problem.
    anonymous
  • ADSL2+ not a regulated service.

    Carlos the ACCC has said they will not force Telstra to wholesale ADSL2 but Telstra with their track record of conflict with the ACCC doesn't want to take there word.

    Either that or they don't want to increase speed as it affects other high profit services but enable exchanges to avoid losing customers to other ADSL2+ providers.
    anonymous
  • Trust v's Commitment

    The ACCC has not guaranteed that they will not "declare" ADSL2+.

    Considering they have previously stated that they will not declare a service only to change their mind in the past I can understand Telstra's reluctance to trust the ACCC's lack of commitment.

    If the ACCC put it in writing that they will not declare ADSL2+ I am sure we would wake up Monday morning with it available at every exachange.
    anonymous
  • bad for the country

    It is not good for the broader australian economy to have telecomunications infrastructure in the hands of a private company. The reason the network was initially built by the government is that it is in a lot of cases (such as regional areas) there is no chance of seeing a return on you investment and that is further reduced where there is already competing services in place. To expect competitors to telstra to duplicate it's network it unrealistic, hence the reason the government does have to intervene to provide access to its network.

    If you take the argument of the 'telstra shareholders' here to its full conclusion it would mean telstra should be allowed to charge what it likes for access to its network not based on what it costs to maintain but on what it would cost to duplicate. Going further telstra should be able to abandon its service obligation and either stop prodiding services where they do not make money or charge significantly more.

    I don't dispute telstra shareholders have purchased and now own its network, but it was purchased on the premise it would be heavily regulated and open access was to be provided. Since majority government ownership ceased it has aggressivly been trying to change the rules so i think there is no other choice but the split the infrastructure from the retail business. Where the company loses compensation will have to be paid just like if the govern\ment compulsorily aquires you house it has to compensate, but ultimately this will be in the longer term interest of the country if it improves the current situation.
    anonymous
  • re: bad for the country

    You do have a couple of valid points but you have missed the mark.

    Telstra was privatised under the knowledge that the copper access network would be regulated but this is the copper from the exchange to the client and other then the first couple of years after deregulation while new carriers emerged it should have had nothing to do with the value added services that are overlaid on this copper. There are additional services other then simply phone calls that have been developed since deregulation and Telstra's privatisation, such as ADSL1 and ADSL2+.

    For many years any licensed carrier has been able to request space in an exchange and connect their own equipment meaning they only need to rent the copper, at a regulated price, from Telstra known as ULL. In an uneven practice the ACCC started to step in and regulate these new technology services installed by Telstra after deregulation not because they held a monopoly but because of lack of desire to invest in infrastructure by other carriers. Any carrier could have replicated what Telstra has done in relation to connecting ADSL at a large number of exchanges at the same costs Telstra paid (possibly cheaper because we all know Telstra is inefficient ;-).

    I do not dispute that the copper access network does need a level of regulation but the current over regulation can not be sustained as the end result will be that Telstra will allocate funds to maintaining the copper access network based on return and the low level of returns mandated by the ACCC means it will not be likely to upgrade, instead it is likely to just maintain to the minimum standards set by regulation.
    anonymous
  • You all Miss The Point

    So reading through the (sometimes bizarre) comments, I see everyone has pretty much missed the point of "Structural Seperation".... The issue at hand is that Telstra will quite happily *retail* (eg Bigpond) connections for *less than it charges wholesale* and THEN the wholesaler still needs to bill (ie additional) for (a) itnernet data use (b) additional services (c) margin for support (d) margin for protif. Despite this ongoing blatantly *screw the industry* attitude, Telstra still claim (loudly and incessantly) the wholesale prices are too low to cover costs. But seriously, how can it be too low to cover costs when you charge LESS for RETAIL on the same connection AND that includes internet access (data usage) and services and support costs. Structural Seperation is one way to stop the incumbent telco from leveraging the naturally INTIMATELY CLOSE relationship between network-ownership/wholesale/retail to SCREW THE INDUSTRY.... So hear me out, I'm not claiming the pricing the ACCC is setting is fair to Telstra (nor am I claiming it it fair to the wholesaler). But this whole "but she started it" whining like a 2 yr-old would never have been an issue if Telstra wasn't doing their best to leverage its monopoly position (Telstra owns ALL the exchanges and ALL the in-ground copper-to-the-home) position to SCREW THE BROADBAND MARKET IN AUSTRALIA (er, I mean, ensure 50% gross profit margins for its shareholders).
    anonymous
  • Selling ADSL2+ at a "near losss".

    Who says that Telstra would be forced to sell ADSL2+ to competitors at a near loss ? Telstra? On whose figures? Telstra's? - The same company that ramped its line rental charges up between 2000 and 2005 by 174.25% or 30.3% per annum?

    Believe Telstra's figures? Give us a break!
    anonymous
  • You all Miss The Point

    I thoroughly agree. As a shareholder I'm dismayed at the long term market disaffection which is going to come back and haunt Telstra long after the Three Amigos have departed with large golden handshakes.

    What's wrong with the Commonwealth Bank's new system where Executive bonuses will be subject to Customer Satisfaction ratings.

    Why can't Telstra do that?

    Surely that's the long term future.
    anonymous
  • Incorrect Thinking, corrected

    "In an uneven practice the ACCC started to step in and regulate.... not because they held a monopoly but because of lack of desire to invest' ---- Blatant Speculation - you have stated a hypothesis, not a fact.

    "Any carrier could have replicated what Telstra has done in relation to connecting ADSL at a large number of exchanges at the same costs Telstra paid ...." Again, Yet More Absolute Rubbish.

    FACT: Telstra Owns The Exchanges and Controls Access.

    FACT: They charge (significant, non-trivial, non-refundable) fees just to ASK for access to the exchanges("is there any room left in this exchange, I wanna put in a DSLAM").

    FACT: Telstra have shown and continue to show they are not afraid to trump up pretty much *any excuse imaginable* to block a wholesaler from gaining access to an exchange.

    Your claim that "Any carrier could have replicated ... at the same costs Telstra paid" is quite-frankly just a figment of your goody-two-shoes imagination.

    Next time you want to comment on the broadband industry in Australia you should check your facts and maybe actually speak to people who work there.
    anonymous
  • Ramped up line rental

    Did you look at the previous 20 years of line rental?

    There was actually a decline in line rental over the previous 2 decades, if you adjust for inflation the real increase over this time was nil.

    If you also factor in income generated from call charges you will also note that the lines are generating less income today then they were over the same time periods.

    You are probably one of those people who complain about having to buy bananas by weight when you don't eat the peel.

    Do you also remember that every one of these increases was approved by the ACCC?
    anonymous
  • Correction commented on

    Stating a hypothesis, this is stating the bleeding obvious.

    Yes the exchanges are owned by Telstra, the access to these is controlled as anyone would control access to their own buildings and services.

    Yes they do charge a fee, the fee is the same type of charge anyone can request for time and resources invested in responding and considering the potential return for the incoming provider this would be trivial.

    Name one instance where a licensed carrier has requested reasonable access to an exchange that is not full and been rejected. You fail to mention that providing access is not simply a few square meters of space but tens of kilowatts of additional power and this has become a major issue across many exchanges across the country.

    Yes I do have an imagination, right know I am trying to imagine which telco you work for.

    I can comment on this because I have worked as an independent contractor to Telstra for many years, I have seen the inside of more exchanges then you could count and understand the workings of exchanges as well as the wireline and wireless networks better then you could imagine.
    anonymous