Telstra still only cheers for Telstra

Telstra still only cheers for Telstra

Summary: The men running Telstra have been accused of a lot of things, but lack of conviction is definitely not one of them.

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The men running Telstra have been accused of a lot of things, but lack of conviction is definitely not one of them. I found this out recently after having the chance to hear Phil Burgess, the company's most senior regular spokesperson and an outspoken critic of the government's telecommunications policy, address an AIIA-sponsored business lunch in Melbourne.

Over the course of an hour-and-a-bit presentation (listen to it here), Burgess laid out his case -- as I'm sure he has done a hundred times already -- as to why Telstra is being wronged by the government.

He took numerous opportunities to throw jabs at ACCC head Graeme Samuel, and took the time to explain that the company's active and antagonistic education campaign was following international conventions to raise awareness and stir up dissent amongst the populace -- hoping to foment a sort of broadband-fuelled Bastille Day, I suppose.

In the process, however, Burgess -- who was affectionately described as "Dr Phil" in the AIIA event literature -- also revealed the absolutely intractable mentality of the heads of Australia's largest telco. Contradictions and hypocrisy were flying thick and fast as Burgess clarified one very simple thing: we can all expect very little relief from Telstra in solving the much-discussed broadband drought.

With the type of baby-kissing, emotive rhetoric you'd expect from politicians during an election year, he relayed the story of a remote school that he and Sol Trujillo had visited in 2005, early in their tenure at the company. Moving to demonstrate their School of the Air learning portal, Burgess said, the children clicked to download the module, then walked away to do chores because they knew it would take several minutes to download.

Trujillo was moved to deep introspection, Dr Phil told us, because he couldn't believe the children were suffering the ignominy of having to learn at such a slow pace.

"We should all be ashamed about what we saw," Burgess quoted Trujillo as saying. "Telstra should be ashamed, the government should be ashamed, and regulators should be ashamed, that we have kids in a developed country like Australia, in the 21st century, downloading at kilobits and not megabits."

This sentiment echoes a comment Trujillo made in his maiden speech in Lismore, earlier on in the same road trip. "We decided Sol's first public address would be in Lismore, to send a message that we cared about the entire country," Burgess said. "In that speech, which was very well received, he said we have three priorities: Australia, Australia, and Australia."

Two years on, I suspect the kids in that school are still washing their hands while waiting for their lessons to download. Telstra has not, I gather, gone back and enabled that school to get a faster broadband connection, or Burgess would have told us so. And while the management team can point fingers and argue that others are holding back the children of this country, Burgess later admitted that it is actually Telstra holding the country to ransom.

How so, you ask? Later in the presentation, he showed what have apparently become popular slides documenting the actual footprint of ADSL2+ across several major cities.

Telstra, you see, has already installed ADSL2+ equipment in dozens of exchanges but refuses to turn them on until other companies put their own gear in the same exchanges -- or until it gets a promise from the government that it can keep competitors from accessing the equipment. (Page through this document to see the before-and-after coverage maps.)

"All we've got to do is flick a switch, and we can turn these all on in 24 hours," he said. That may make sense to him, but it's small consolation for the many people who are absolutely fed up with waiting for Telstra to give Australia the bandwidth it needs.

The problem is that a closed, single-provider situation is inherently anti-competitive, which means the government, which has spent considerable time and energy putting teeth behind the very purpose of the ACCC, simply cannot allow this.

Ironically, the ACCC's sole purpose is to protect the interests of the same citizens Telstra is refusing to service.

The result is very clear: ADSL2+ will only be rolled out at the pace that Telstra's competitors move. But Telstra's competitors will be hard-pressed to justify funding DSLAMs in areas where they know Telstra, with its history of cross-subsidies and below-cost market share grabbing, is waiting to pounce.

This is a game of full-contact chicken predicated on the fact that Telstra, as a near monopoly telco, has the luxury of time on its side.

The company has, Burgess said while wrapping up his speech, drawn a line in the sand. And while it defends that line to the death, so it seems, the pace of innovation in Australian telecommunications will be driven not by the innovation of its largest player, but by the scantly funded piecemeal efforts of its much smaller competitors.

This is the true state of broadband in Australia, and it's the reason why so many people still simply cannot access decent data services.

Burgess can slam the speeds at the school they visited two years ago, but by refusing to improve the situation, he's confirming that Telstra prefers to remain part of the problem.

Which takes me back to Trujillo's comments in his maiden speech.

If his priority truly is Australia, Australia, Australia, what in the world is going on here? I can't help but think of the analogy of a doctor withholding treatment for a chronic condition until the patient has paid up, or teachers refusing to teach their students until they get better staff parking.

If Telstra is really concerned about Australia, it should do something to help Australia's future, rather than fighting the regulator that has been put in place to protect every Australian.

Or, perhaps, a more honest move would simply be to say that Telstra's management team has three priorities: Telstra, Telstra, and Telstra.

Topics: Telcos, Government AU, 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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9 comments
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  • That is what they are paid to do

    As a Telstra shareholder, and there are many of us that belong in this category. I would say that at least the current management cared for Telstra, Telstra, Telstra. Whether that is because they care for their remuneration packages or shareholders more, is not for me to comment. But at least they are trying to do something, unlike the government, regulators and Ziggy.
    It makes no economic sense for a PRIVATE company to provide services/goods at a loss. At the end of the day, if ACCC keeps forcing prices lower and lower in the name of competition. Telstra nor any competitors will want to build any infrastructure that will not get a reasonable rate of return. Nor shall they be, why investors be forced to bear the losses for the good of Australia. We all pay our taxes just like everyone else, why should we be force to pay for building the telephony infrastructure as well.
    Step back, and think for a minute, if it was indeed so profitable to build the infrastructure, we will have no problems attracting a company to build the infrastructure. For all I see, the problem lies with the government and regulators. Singtel (Optus), Vodaphone are huge multinationals with pockets deeper than Telstra, why have no one asked why they are not interested in building the infrastructure without handouts from the governments. They will have no need to co-operate in G9.
    There lies the problem, corporate profits.
    anonymous
  • Its not the ACCC

    It’s not ACCC pushing prices lower and lower it is Telstra. Telstra would rather loose money in short term to win overall market share because they know that most people even if they receive terrible service will give their current provider at least two or 3 chances before they switch across.
    Also it is sad to see that you believe shareholder returns are above everything else. I would bet that there would be plenty of Telstra investors who would disagree and believe that a win for Australia....not ripping people off.......fair competition..........investment in technology is a win for them as well.
    All Telstra do is whinge and whine I am sure a large part of their own shareholders are sick of them.
    anonymous
  • Telstra 4 Telstra

    This is so true, every chance Telstra get lately they bleat about these issues while everyone sighs in frustration - yes they are a business, but who were the greedy ones who let it get to this point in the first place?
    anonymous
  • Chinese Walls?

    So much for the supposed separation between the wholesale arm of Telstra and the retail arm. Remember Telstra was effectively gifted a national infrastructure that it is supposed to wholesale for everyone's use at fair market rates. Instead the wholesale arm withholds products to protect the interests of the retail arm or sells them below cost to the retail arm (refer earlier ACCC rulings). Split the company and force the wholesaler to sell to everyone.
    How short the corporate memory is when you import a couple of half baked American salesmen.
    anonymous
  • The earth is not flat, stop pretending it is

    Looking at your blogs there is one common theme, you are a one eyed Telstra hater and no matter what facts are before you a positive Telstra comment will never come out of your mouth. Sounds a bit like zdnet in general.

    Lets look at Mobiles for a second, one of the few fully competitive environments in Oz.
    Who has the best network? Telstra.
    Why? Because they are investing in research and taking a commercial risk.
    Why? Because there is a dollar to be made.
    How? By offering services superior to their competitors.
    What are the competitors doing about it? Playing catch up by building competing services and offering cheaper prices?

    Net result ... Consumers win.

    Now lets look at the fixed space.
    Why don't we have national high speed data? Because there is no money for Telstra in reselling expensive infrastructure at or close to a loss.
    Why don't other companies simply roll out their own infrastructure? Because there is no money to be made when they can buy wholesale cheaper.
    What is the ACCC doing about it? Making it worse!!!

    At the end of the day if Telstra had a guarantee that they would not be forced to wholesale their ADSL2+ I am sure they would turn it on nationally. The first thing that would happen is many other so called telcos would start to lose business in the regional areas and the only way to combat this would be to roll out their own infrastructure as quickly as possible.

    As a business owner I know that if you don't service your entire client base you will lose the neglected ones ... Optus and the likes will know if they don't service their entire client base they will shrink and die. Who would benefit if this happens? No One.

    This is not a Microsoft / Linux fight, this is a Qantas / Virgin fight. The players are massive (Who ownes Optus, AAPT, Vodafone, iiNet? Major global & overseas companies / governments) and have money to invest but they are not investing it here because the returns are not as good as other places. If they were risking losing money they would come running in with lots of money to defend their market.

    Solution? Free and open competition everywhere and stop wasting taxpayer’s money by clawing back the ACCC's power, never eliminate them as we still need them to monitor the market.
    anonymous
  • History is History

    "refer to earlier ACCC rulings" If they were still doing it wouldn't there be current activity by the ACCC?

    I agree they should split the company but Wholesale should only own the copper in the ground and the exchange buildings. The switching equipment, mobile network, data networks, HFC and anything that could be easily built by anyone should remain a closed and unregulated asset of Telstra.
    anonymous
  • Telstra and "competition"

    Telstra is right to hold back ADSL2. I worked there when Optus first came in, and what happened was that Telstra was forced by legislation to sell capacity to its competitor below cost price. Things haven't changed all that much, except the public has been conned into buying shares in something we already owned, and Optus sold out to Singtel. Profits that used to be churned back into infrastructure and employment are now "dividends" and jobs have been shed like there's no tomorrow. Service levels are down and product knowledge is dismal among the staff. And Solo gets paid the cost of two hospitals per annum. And the "competitors" are still unwilling to build their own infrastructure, as far as I can see. The best Optus could do was to string aerial cable on power poles when they wanted fibre penetration in Sydney. Yeah, I think it's all broken beyond repair, we shouldn't have sold out for the illusion of competition. It's just that - smoke and mirrors. Try getting decent mobile coverage in the country from a "competitor" !!
    anonymous
  • I would be happy to say good things about Telstra

    but every time I sit down to consider why the Australian market is how it is, and why such a large proportion of our population is still struggling to get decent broadband, the finger points back at Telstra.

    They are a great engineering company with considerable technical capabilities, but have a very one-sided view of how things should work from a strategy and marketing perspective. Their official policy seems to be to talk out of both sides of their mouths, and to simply attack anyone that questions them. I know Telstra has issues with the ACCC but Burgess' contempt of Graeme Samuel, whose legislated responsibility is to protect the people of Australia from monopolistic behaviour, was eye-opening. So too was his recounting of the "Australia, Australia, Australia" line contrasted with his confession that the company is stifling progress until it gets the conditions it wants. Telstra's basic stance is to say 'Australia, we care about you and know what you need and want -- in fact, we have it installed already -- but you can't have it until we're guaranteed the right to charge you through the nose for it. It's for your own good.'

    (equally contradictory, I might add, was the revelation this week that Telstra is moving up to 500 jobs to the Philippines as part of its ongoing 12,000-ish staff reductions; this from the same company that a week earlier bragged in national papers about how it's keeping jobs in Australia, and has made a party line out of bashing the government for giving funding to foreign-owned SingTel Optus. At least that money will provide jobs for hundreds or thousands of Australians.)

    (equally contradictory, I would also add, is Telstra's recent decision to sue the government after it dared award money to Opel. Sol Trujillo is on the record saying Telstra will happily build its networks without government money, but the company is still taking the government to task when it didn't get that money).

    If Telstra could stand on its own instead of hiding behind its monopoly fixed-line position, and was happy to compete on its merits, it would simply set up a wholesale business in which its extensive infrastructure could be leveraged into massive competitive advantage. The grounds for competition in Australia would thus be who could provide the best prices, value-add and customer service -- and not who owns the biggest network and can menace regulators and kneecap competitors the best. Would Telstra still do as well then?

    Basically, Telstra has a hundred-year head start on its competitors when it comes to building infrastructure, and it's doing everything it can to keep the lead that was handed to it. Show me a Telstra that competes on a fair and level playing field within the letter and the objectives of the law, and I'll have plenty of positive things to say.
    anonymous
  • Half baked?

    Try a couple of completely baked American salesmen. For the things that he has allowed Telstra to do since his takeover, Mr Trujillo must be smoking some really strong stuff.
    anonymous