Group of nine has a full house

Were Telstra's major rivals bluffing when they said they would build their own national fibre broadband network if Telstra opted not to?

commentary Telstra's major rivals (who have formed a group known as the G9) may have been bluffing on Monday when they said they would build their own national fibre broadband network if Telstra opted not to.
Renai LeMay, ZDNet Australia

But that's an awfully big bluff, made in front of way too many journalists.

It takes more than guts for the CEOs of top-level telcos like Optus, PowerTel, Macquarie Telecom and Soul to face the press with a common message like that.

It takes a boatload of behind the scenes work from lawyers and financial bean-counters, not to mention the omnipresent spin doctors.

This toil is designed to ensure the companies concerned can actually deliver on promises made in the glaring media spotlight.

The likes of Optus CEO Paul O'Sullivan, for example, can't just blithely talk about billion dollar amounts of investment capital without being able to bring the chips to the table.

It would make Optus's parent SingTel very nervous, for one thing -- not to mention watching shareholders.

Now there are only a few parties in Australia who are likely to know what cards the G9 is actually holding, and they're mostly in the investment community.

The G9 said its next move would be to beat a path to the doors of financial giants (eg Macquarie Bank) to gauge interest in funding a new fibre network.

If investors call the G9's bluff, the game is up and a Telstra-owned fibre network starts to look like the only option.

On the other hand, if investors react favourably to the G9 proposal, Telstra would have a good reason to cancel its own plans and let its rivals do the hard work.

As O'Sullivan said this week, it would save Telstra a lot of effort -- keeping money in the telco's coffers.

This would be particularly useful "at a time when they've been flagging a major expansion in their capital expenditure, one which takes them well above the norms established in other incumbents globally," as O'Sullivan said.

In a deliciously ironic situation, the G9 could then charge Telstra whatever it wanted for wholesale services.

No matter what way the cards are played, however, the G9's collective power has still given the group a few aces up its sleeve.

The government and competition regulator can hardly ignore the united interests of a group representing the major competition to the nation's former monopoly telco Telstra.

By banding together, the nine telcos have gained themselves a substantial voice in any discussion on a national fibre network ... or indeed any other telecommunications issue they choose to cooperate on.

In many ways the group is building on the strengths of the Competitive Carriers' Coalition (CCC), an increasingly vocal lobby group which half of the G9 are also involved with.

Is the G9 bluffing when it says it will build a national fibre broadband network if Telstra doesn't? Drop me a line directly at or post your opinion below.