Archive for April, 1999

Invitation to meet with us at Now99 (Sydney 17-20 May)

Wednesday, April 28th, 1999

I would very much like to invite you to visit us at NOW99, the ATUG conference and exhibition at Darling Harbour in Sydney.

The event will take place from 17-20 May and our stand is at the ATUG Cafe in the Exhibition Centre (Hall xxx). We will be there from 10am on Tuesday 18 May until 6pm on Thursday 20 May.

Louise, Sue, Teresa, Leanne and Isabelle will take turns at the stand. We would love to catch up with you and maybe demonstrate our Web site. All 20 publications will be on display, as well as information on our half-day Telecommunications Knowledge Workshop.

I will present an overview on the Australian Telecommunications Market on Wednesday 19 May at 2pm. This presentation will be along the same lines as our Knowledge Workshops.

I will be at the conference from Monday evening on the 17th till Wednesday evening on the 20th. While there will be plenty of opportunity to catch up with you personally you may like to make a definite ap-pointment with me to make sure that we meet. From experience I know that this will be a very busy couple of days for all of us. You can contact me beforehand for this purpose on 02 4998 8144.

Hope to catch up with at Now99.

Paul Budde

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Australia – European Union seminar

Wednesday, April 28th, 1999

At Now99 (the ATUG Conference) on Monday, 17th May 1999 there will be an Australia – European Union seminar/open day event organ-ised by the Information Society Technologies. The event takes place at Darling Harbour, Sydney, and starts at 9am.

The aim is to brief Australian companies and research institutions on the opportunities for undertaking joint research projects with the European Union in the field of Information So-ciety Technologies (IST), a combination of information technology and communications tech-nology.

Topics to be covered:

· What are the benefits of Australia/EU re-search partnerships?

· What is the EU’s Fifth Framework Pro-gramme and User Friendly Information Soci-ety Programme?

· How will Australian participation be sup-ported?

For more information:

John Colless –

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Thursday, April 1st, 1999

While satellite communication has been around since the 1950s it was not until the 1990s that its full potential was explored. It is becoming more and more clear that satellites are going to play an increasingly important role in the superhighway market.

While the current developments are concentrating on one-way DTH services, new interactive services are planned for a totally new generation of satellites. In the first couple of years of the new millennium these satellites will begin commercial operations; the best known of them at the moment is Teledesic.

The broadcasting industry remains largely locked out of ‘convergence’ for the next five years. The TV receiver is not going to become a significant device for viewing Internet. Nor will the PC be developed as a tool for viewing digital or analogue TV. They will remain two separate devices.

The lack of interactive possibilities has hampered the satellite industry for more than a decade; this development is seen as the single most important element that could lift satellite into the world of interactive broadband service.

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Thursday, April 1st, 1999

There has been substantial drop in the price of telephone calls in most western countries over the past year. However the latest NUS International Telephone Price Survey found that Australia has failed to keep pace with the changes.

The benchmark annual survey found the cost of long-distance/STD calls rose only in Australia, while they fell or remained steady in every other country in the twelve-nation survey.

Australia also remains the most expensive country for local telephone calls.

In contrast, the independent worldwide comparison found the price of international calls had dropped in Australia for the year to 1 February 1999.

Australian local calls are one of the major market sectors still to experience price reductions through competition. While some competitors do offer a local call service, Telstra currently retains a monopoly in this area.

Real local price competition will only occur when interconnect and realistic wholesale price issues are resolved. Australia is the only country in the survey, which operates charged and untimed local calls. Germany posted the greatest drop, with local prices down 36.2%.

In the national call sector, Australian STD call costs rose by an average of 4.1% over the year, taking Australia from 8th to 3rd position. This change in ranking was due to greater price reductions in other countries. For example, the largest reduction was again Germany, which saw a fall of 64.4% in national charges.

International calls saw a 38% drop in price for Australian consumers, moving Australia one place down the rankings to fourth position. Five other countries recorded price reductions of over 40%.

Business line access charges remained relatively stable for the majority of countries, Australia again improving by one place to 11th position due to international changes.

While telecommunication prices have generally dropped in Australia, they have not dropped as much as several other countries. Major reductions here have come from new players and not the two major carriers. The new players, intent on building market share, are very competitive on price, but as yet have had marginal impact on the prices offered by the major carriers with established customer bases.

From a long-term (1987-1999) review perspective:

· Local calls costs in Australia have increased 27.9% over the above 12 years (the third greatest rise), taking Australia from 2nd position then to now being the most expensive;

· National costs fell 26.7%, but this was the smallest drop of all 12 countries over this timeframe and as a result Australia has moved from 7th to 3rd position this year;

· International call costs fell 63.6% over the 12 years, but again this was the smallest drop among countries surveyed and has taken Australia from 8th to 4th place;

· In contrast, access charges dropped by 8.4%; the second biggest drop in prices, taking Australia from 5th in 1992 to 11th position today.

Mainly because of drastic policy changes in Europe, there were more changes this year than in any other year covered by this 14-year survey.

From around the world, the survey found:

· Local and international costs are high in Belgium;

· Canadian exchange line rentals fell, despite having free local calls;

· Exchange line rental is now cheapest in France;

· Local call costs tumbled in Germany, down 36%;

· Local costs continued to increase in Sweden;

· In contrast, Swedish international prices plummeted, down 50%;

· International calls dropped the most in the US, down 57%.

Our Web Reports have been updated to include the latest NUS statistics.


· Global Telecommunications – Tariffs, Interconnect

· Australia – Telecommunications Services – Call Statistics

· New Zealand – Telecommunications – Voice Services and Major Players.

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Thursday, April 1st, 1999

Last week’s $1.5 billion hostile take-over bid by Cable & Wireless Optus for AAPT, would, if successful, be one of the worst things that could happen to competition in Australia.

AAPT is rapidly establishing itself as the third major force in the market and it would be a very sad outcome indeed if this company were to disappear amidst the bureaucracy of Optus. It would be back to the good old duopoly, just when we were beginning to see some real competition in the market.

The company cultures of the two organisations are diametrically opposed. AAPT has done more for competition over the last few years – through very aggressive pricing in business, residential and Internet markets – than Optus has done since its inception in 1992.

Optus has, in general terms, been happy simply to stay under Telstra’s pricing – not rocking the boat too much and reaping the highest possible profits – rather than doing the right thing for its customers. Admittedly Optus has changed such policies over the last few years, but only because of fierce competition from companies like AAPT.

In the meantime the initiatives taken by AAPT over the last few months alone were welcomed as major new developments – offering more, better and cheaper services not only in metropolitan Australia but also in regional and rural areas. It would be far better for the country if these initiatives were to be developed independently of the two incumbent players.

Around the world the greatest threats to duopolies have come from new competitors rather than from struggles between the incumbent companies.

Looking at the development of market shares, it becomes clear that Optus can only just hang on to its current market share. The new telcos are the ones that are winning the battles. In 1998 they were able to increase their revenues by 62%.

Viewing the hostile bid against this background, it is of course understandable that Optus would like to wipe out one of its major competitors and at the same time increase its business, since it is having difficulty increasing market share through natural growth. While this makes sense to Optus it does not, in my opinion, make sense to AAPT and certainly not to the competitive environment of Australia.

Table 1 – Market shares top 10 SPs contestable total voice services market (retail) – 1997-1998

Service Provider 1998 1997

Telstra 54.4% 60.9%

Optus 18.2% 18.4%

AAPT 4.5% 4.3%

Primus 3.6% 2.5%

United Telecommunications 2.7% 2.8%

One.Tel 1.9% 1.6%

RSL Com 1.8% 0.3%

Vodac 1.6% 0.8%

Vodata 1.3% 0.7%

WorldxChange 1.1% 0.4%

Other SPs 8.7% 7.3%

(Source: Paul Budde Communication -Telecommunications Strategies Report 1999)

Note: contestable retail market is total voice market at retail prices (fixed and mobile) less the local call market.

· Postscript: The proposed merger may have sent shock waves throughout Australia, but on the same day news was leaked from Europe regarding negotiations for a $200 billion merger between DeutscheTelekon and Telcom Italia. Rumours of a merger between C&W and Deutsche Telekom have also been around for some time.

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