The more things change...

The more things change...

Summary: With all the excitement over the iPhone, few people have noticed that 1 July was the 11th anniversary of the deregulation of Australia's telecommunications market.

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With all the excitement over the iPhone, few people have noticed that 1 July was the 11th anniversary of the deregulation of Australia's telecommunications market.

A lot has changed in the intervening years but lots more have stayed the same. I was reminded of this as my annual end-of-financial-year clearance — which is when I don gloves and mask and sort through the piles on my desk and around my office — when I uncovered a story I wrote for the July 1998 issue of the now-defunct LAN Magazine.

That story canvassed the changes that had occurred during the first year of deregulation, and I was struck by how much — and how little — things have changed since then. The story isn't available online, but let me summarise:

  • Then: The deregulation land rush had pushed the number of licensed carriers from 8 to 21.
  • Now: ACMA's list of registered carriers shows 251 current companies, although some of these have been revoked.

  • Then: Carriers were competing to win customers with reduced calling rates: AAPT, for one, offered STD calls for 25¢ per minute during the day and 9¢ per minute at night (an average of 17¢ per minute across a 24-hour day).
  • Now: AAPT customers pay 20¢ per minute, at any time, although bundling deals reduce this.

  • Then: "The lack of available, affordable bandwidth to the emerging internet community is a key issue for the Australian environment," said Steve Liddell, WorldCom's president for South East Asia.
  • Now: WorldCom bought MCI in 1998, suffered a catastrophic accounting scandal in 2003, and is now a forgotten unit of Verizon Business. Many Australians still lack available, affordable bandwidth.

  • Then: "Telstra is believed to be testing the commercial viability of its own Voice over IP ... [and] is testing Virtual Second Line, an integrated voice and data service that lets Web surfers receive incoming phone calls by transferring the call to the user's desktop."
  • Now: Virtual Second Line never happened. And, despite an explosion in third-party and carrier VoIP services, Telstra remains the only carrier in Australia that is not offering VoIP to its customers.

  • Then: "Complaints about drawn-out and unproductive negotiations with Telstra, criticisms that the ACCC has been slow to exercise its pro-regulatory powers to encourage competition, and frustration with the structure of deregulation legislation all guaranteed that the first year of deregulation was rife with controversy."
  • Now: Complaints about drawn-out and unproductive negotiations with Telstra, criticisms that the ACCC has been slow to exercise its pro-regulatory powers to encourage competition, and frustration with the structure of deregulation legislation all guarantee that the telecommunications industry remains rife with controversy.

  • Then: The [ACCC] issued just one Competition Notice in the first year of deregulation, an edict against Telstra addressing ... Telstra's policy of charging other backbone providers 19¢ per megabyte of traffic they sent over its backbone, but paying nothing when they carried traffic from Telstra's network.
  • Now: The ACCC has issued just two other competition notices (in 2004 and 2006 to 2007) in the subsequent 10 years. Both were directed at Telstra, and produced little long-term change.

  • Then: "Despite a long tradition of Australians being early adopters of technology, we're falling behind," said Optus chief executive officer Chris Anderson in his ATUG keynote speech. "Australia has one of the most lightly regulated former monopolies in the world, leaving Telstra free to use its control to leverage itself into the [deregulated] communications market. If change continues to occur at Telstra's traditional snail's pace, Australia will be left behind the world in terms of competition."
  • Now: Change continues to occur at Telstra's traditional snail's pace.

  • Then: "It's impossible to negotiate something that makes sense in the long term when you're dealing with people that don't want you to have those services," said Larry Williams, then CEO of AAPT.
  • Now: Telstra's efforts to prevent access to its ADSL2+ infrastructure remain a major sticking point, although its recent turnaround finally made wholesale ADSL2+ a reality after more than a year of stonewalling.

  • Then: "We want to be the carrier of choice for our competitors, but in the past wholesale has been a poor relation in the Telstra family. The challenge of competition is to make that mind frame a relic of the past; only by delivering value can we help prevent uneconomic overbuilding of Australia's carrier infrastructure. Of course, mutual trust can't be introduced by legislation; it must be earned by a track record of fair and open competition," said Douglas Campbell, group managing director of Telstra's Carrier Services Group.
  • Now: Telstra used the overbuilding argument to lobby now-senator Stephen Conroy to sink the Opel WiMAX network. The company's "track record of fair and open competition" is evident to Telstra but continues to be questioned by most other carriers in the market as they do their own lobbying for change.

  • Then: "We're worried that some uneconomic definitions of standard services may be proposed. We believe having to provide 128Kbps ISDN to anywhere in Australia would be an uneconomic burden," said Douglas Campbell.
  • Now: Telstra's Next G network will jump to 21Mbps by the end of this year and 42Mbps by 2010; Optus and Vodafone aren't far behind. 128Kbps ISDN is available nearly anywhere and will be discontinued on 30 June, 2009.

  • Then: "The wireless assault on the local loop will reach fever pitch when Iridium [satellites] come online in September, offering wireless voice and data communications from anywhere ... at rates that are competitive with existing mobile services."
  • Now: Iridium was launched in 1998, filed for bankruptcy in 1999, was sold for just US$25m in 2001, and now has around 250,000 subscribers paying high rates to get phone and data service from anywhere in the world. Mobile roaming accomplishes the same thing, using existing handsets, for ordinary consumers.

What does this all mean? A year after deregulation was introduced, the main problem that most of the new breed of competing telcos had was in their dealings with Telstra. These days? Well ... the technologies have changed, but the issues haven't.

Our market is more competitive than ever, prices for normal voice calling have dropped significantly, and wireless broadband technologies are providing an ease of data access unimaginable back in 1998. But when it comes to wholesale change on the ground, most carriers are still finding that the road to effective competition, in fixed communications at least, still leads through Telstra. The NBN could change all that — but at the core, the whole industry is still wrestling with the details of how.

What do you think? Have the goals of deregulation been met? Is Telstra still the obstacle to competition that it used to be? Are competitors still right in complaining?

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

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

33 comments
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  • Then and Now?

    What a load of hogwash.

    You state there are 251 registered carriers, lets call it 200 for arguments sake.

    - Now many people do not have access to affordable bandwidth? Australia has been climbing the OECD ladder for years and even if this country reaches #1 in affordability and #1 in penetration you would still scrounge around for reasons to attack Telstra, either directly or indirectly.

    - Telstra remains the only carrier in Australia that is not offering VoIP to its customers - 100% incorrect, Telstra has provided VoIP services to tens of thousands of ends around the country (more then any other telecommunications company in Australia).

    - Competition notices can be challenged in court which is why there have only been 3 in 11 years, draft determinations can not be challenged which is why they like using this method.

    - Change continues to occur at Telstra's traditional snail's pace. Once again using the word Blog in a news site to push your blind, bias and arrogant agenda.

    - Prevent access to ADSL2+, this is infrastructure that can be installed by any one of the other 200 companies that are willing to spend a dollar. Why should they be forced to encourage a monopoly by selling a service via wholesale and discourage investment by 199 so called telecommunications companies.

    - Overbuilding? When you use private equity overbuilding is up to private industry and consumer demand whereas when you use taxpayer money this should be to deliver services where no other options or services are available. Why not twist the words to suit your argument David.

    - Optus and Vodaphone are not far behind? The Next G network has 14.4Mbps & 2,000,000 sq km today, Optus = 3.6Mbps and under 100,000 sq km, Vodaphone is about the same as Optus. In 18 months Optus claims they will have 7.2Mbps & about 600,000 sq km, Telstra will cover 2,100,000 sq km and be 41Mbps. THAT'S WHAT YOU CALL NOT FAR BEHIND?
    anonymous
  • LOL@VoIP

    So where can i get Telstra VoIP at my house for personal use? Do tell.
    anonymous
  • The Blinkered Minions of Hel$tra

    Oh Dear Charles,
    You really do miss the whole point of promoting competition in the telco industry, you struggle with the concept that consumers want a much more affordable deal than that pathetic offering by your greedy telco of choice and there deluded shareholders.

    Best you stay at NWAT and read the nonsensical ramblings of Phil and co,
    now take your ramblings and fudged figures away from where the adult discussions take place.

    oh btw, who the hell would want VOIP at work but not at home ?
    Pathetic !
    anonymous
  • Ha F'n Ha

    I love w@nkers who change letters to symbols to try and get their point across. I have an IP phone at work and it is great, I dial from the computer, my voice mail lands in my inbox, when I want to call someone I can see if they are on a call before I dial and many other things. My productivity is so much better with VoIP at work and it has nothing to do with the shortsighted notion of saving a dollar, it is about spending money to make more money.
    anonymous
  • Yes, not far behind!

    Umm actually Optus announced in May that they'll be covering over 1,000,000 sq km or 98% of the population. That's very similar coverage to Telstra CDMA, and although Telstra claim they now cover over 2 million kms with NextG many CDMA customers who were forced onto NextG do not believe it provides any better coverage.

    Within the same announcement Optus also stated they'd be offering 28Mbps from late 2009 and 42Mbps by mid 2010.

    Considering they're also far better value, and they actually wholesale their network (unlike Telstra) which will bring in many more players like Virgin, Soul and possibly even Vodaphone to these areas this will be an huge win for Australians.
    anonymous
  • You love w@nkers?

    Good for you! :)
    anonymous
  • Optus announcements

    Optus should stop making announcements and start doing. Based on what you said:

    Optus will be covering 1,000,000 sq km or 98% of the population = THEY HAVE NOT DONE IT YET.

    Telstra claim they now cover 2,000,000 sq km = THEY HAVE DONE IT AS THEY WOULD HAVE BEEN SUED FOR FALSE ADVERTISING IF THEY HADN'T
    anonymous
  • MCI / WorldCom

    "Now: WorldCom was bought by MCI in 1998, suffered a catastrophic accounting scandal in 2003, and is now a forgotten unit of Verizon Business...."

    Actually, it was WorldCom (a very poorly run holding company) that bought (brilliantly operated) MCI thereby ruining it and ultimately, the lives of *many* of its employees.
    anonymous
  • Just goes to show

    David Brauenless has no idea. He publishes bias, false, misleading and factually inaccurate information and then will turn around and use the "this is a Blog and is only one person's opinion" response when he is caught out.
    anonymous
  • The blinkered minions of T4

    Competition in the telco industry equals Telstra invests and the rest sponge. Nice if you're the sponger not so nice if you're the spongee. No wonder you grubs making a living from sponging want it to continue. And you have the hide to call that competition.

    Best you stay at T4 and read the nonsensical ramblings of everybody including yourself.

    And yes, you are pathetic!
    anonymous
  • Yes, not far behind means true competition

    Wow, you guys are finally starting to get the picture. Congratulations. This is known as "true competition".

    Mobile, unike fixed, rejects the restrictive regulated, Telstra invests then the others ride on their backs, and because of this investment is occurring in mobile - "as you rightly highlight Carlo"!.

    This is what Telstra and their supporters have been saying is required, all along and you obviously agree. See it works.

    Also, unless things have recently changed or I am mistaken, in their typical sly fashion, you might (as you seem to have) picture Virgin as an Optus competitor, belonging to an eccentric Englishman. However Optus actually owns Virgin!
    anonymous
  • Telstra VoIP

    I can't see why people keep laughing at Telstra for not offering redidential grade VoIP.
    If they wanted to offer people a way to make cheaper phone calls from home, don't you think they could just lower the prices on the PSTN?

    http://www.telstraenterprise.com/PRODUCTSSERVICES/ENTERPRISECOMMUNICATIONS/UNIFIEDCOMMUNICATIONS/Pages/TIPT.aspx
    anonymous
  • Then = Now

    The whole point of the article is summed up in the line 'Well … the technologies have changed, but the issues haven't.'

    Clearly Telstra continue to actively undermine competition, and this is the core element delaying investment in the industry.

    Despite this, you will still find competitors who deployed their own network solutions.. and suddenly Telstra supports NBN on it's own terms, purely for the purpose of stranding competitors assets.
    anonymous
  • then = now

    either that or we have the same old leeching, whinging, whining competitors, still just leeching, whinging and whining.

    clearly these telstras competitors, plus now many more, continue to actively undermine *real* competition by delaying investment to keep their profitable leeching status quo.

    in the regulated fixed market, competitors throw a few DSLAM's into Telstra exchanges and say we have our own network. pffft but in mobile, where they are unable to leech, they are having to actually invest in actual infrastructure and we are all benefiting.

    the members of terria support the NBN simply in a desperate attempt to have telstra split for their own selfish agendas.
    anonymous
  • "True Competition"

    SJT,

    your right!! We have "true Competition" in the mobiles market. Conroy should look closeley at this success when he considers the NBN!!!
    anonymous
  • then = now

    I would like to see a world where Telstra retail competes on equal footing with other retailers.

    Then, and ONLY then, will consumers benefit from true price based competition.
    anonymous
  • then = now

    True dat.

    And that would be worth more in my pocket than these useless Telstra shares.
    anonymous
  • then=now

    OPTUS are still looking for the "Gravy Train" ride
    anonymous
  • then = now

    easy get rid of regulations which force telstra to subsidise the leeches.
    anonymous
  • Fake Edwin ....

    Yeah Sure, any w*nker can pretend to be anyone. The only one that sucks cock is your mother.
    anonymous