We are more than ready for the debate, Sol
It is pleasing to hear that the new CEO is prepared to engage in a robust debate about the future of telecommunications in Australia. He says that ‘debate is a good thing’. I agree, and I’m challenging him to make it a proper two-way dialogue.
But, first of all, I must say that I was not impressed by his rather patronising comment – that he liked the fact that ‘people are beginning to discuss this’.
I would point out that we have been doing just that since 1988, but to date Telstra has been unwilling to participate in industry debates on the topics that he is currently addressing – other than through media statements, lawyers, and actions – which often could only be interpreted as being anti-customer and anti-competitive.
Telstra is so large and powerful that it apparently felt it didn’t need to take a cooperative role in the discussions. However, I will gladly give Sol, as the new CEO, the benefit of the doubt, draw a line under the past, and invite him this time to make it a proper bilateral debate.
So let it begin …..
Let me say at the outset that I have no real concerns with most of the key issues he addresses. And I know that this applies to most of the industry members. So this should make for a good start.
For years Optus and ATUG, along with myself and many others, have been saying that we have failed to use this, in principle, sound policy to adjust to the rapidly changing telecoms environment. So it is great that Telstra is now (however belatedly) adding its voice to the discussion.
The POTS is no longer the issue, but broadband and future-proofing are.
While some commentators tried to take Kate McKenzie’s remarks in the very narrow sense of Telstra not being prepared to deliver a basic telephone service, it was clear to me that Kate, and subsequently Sol, were talking about the broader issues.
And I agree – the USOs need an overhaul and a fresh approach.
HiBIS was a great step in the right direction – compliments to the government – but the Minster has recently walked away from this issue by not wanting to include broadband in the USO regime, saying that that she doesn’t want to pick a technology.
The Minister knows as well as I do that broadband is not a technology, but a concept. And you can qualify this by indicating that customers should be able to access good quality video-based tele-health, tele-education and tele-entertainment services. Engineers can apply the concept of broadband to many technologies, and we can further finetune this based on the table below.
Residential Broadband (BB) growth predictions – next ten years
2003 – 2005
Internet plus photos
2007 – 2009
BB part of life
Telework, education, healthcare, hobby, entertainment
(Source: Paul Budde Communication)
The regional telecoms fund proposed by the Nationals is an excellent way forward, and hopefully we can increase this to $5 billion. (I was the first one to identify this as the amount needed to future-proof regional infrastructure – back in 2003.)
Telstra will be the main beneficiary of such a policy, and I have first-hand experience of the great work Telstra Country Wide (TCW) does. I have great confidence in this organisation, and it is good to see Sol’s commitment to it.
But, Sol, what is in it for the rest of the country if most of that money flows back to a company that already makes an annual profit of $4 billion plus? As an astute businessman you are well aware that, in the end, profit is the bottom line.
Like the government, you also spoke of an impressive list of competitors in Australia. What you didn’t mention was that all one thousand of them share the remaining 5% of the industry profits. Let’s add that to the debate agenda also.
There are several alternatives that can be used to address this issue of inequality. One option in the regional context could be to separate TCW from Telstra and allow it to maximise its infrastructure assets – which would be great for shareholders – by opening up this network to other content and services providers, in a truly transparent way, with no special favours to Telstra Retail.
If most of the subsidies flow back to TCW then let us debate what is in it for the customers, and for the rest of the industry. To use your examples – what does this mean for jobs, growth, productivity, regional competitiveness, higher wages and enriching communities?
But, as so many observers have now indicated, Telstra or no Telstra, the policies surrounding the regional fund need to be based on sound strategies, not on pork-barrelling.
You spoke of the need for the industry to work together. I couldn’t agree more, but we can’t do this without you, and Telstra has often been absent from any discussions about the commercial and regulatory issues that you now raise. At ACIF however, Telstra does play a leadership role in the less contentious areas of technologies, could this be extended?
On the commercial and regulatory issues you mention, Telstra most of the time has adopted a ‘take it or leave it’ approach.
What we need is the leadership of Telstra to work together. You are the biggest player in town and I look forward to your initiatives on industry cooperation. Over the years (since 1988) Telstra has been invited to participate in a number of industry initiatives taken by myself and others, but to date we haven’t seen any positive response.
Also, any debate will necessitate an openness by Telstra on these difficult issues. But a debate must be a two-way street. We are interested in hearing of your concerns and, as I have said, we share common ground here. But you should also take the industry and consumer group issues seriously. Their views have regularly been submitted to the dozens of government Inquiries in relation to the future of telecoms in Australia – so far to no avail.
Again, I agree wholeheartedly with Telstra on this. Let’s get rid of as many as possible of the old regulations that are hindering progress. I am horrified by the potential regulatory nightmare that the issue of ‘regional presence’ will bring with it, in my opinion a totally unnecessary exercise, a waste of time and effort and I can’t see what it will do for the future proofing of the regional network, but lets first wait and see what Telstra’s response to this will be.
But, once again, this should not be a one-way street, which ends in Telstra becoming an even larger monopoly. We hear your concerns about having to make innovative new Telstra products available to competitors on a wholesale basis, but what is the alternative?
What’s in it for the customer – further increases in access charges? These have already more than doubled over the last four years, with hardly any alternative last-mile infrastructure providers available to customers. Telstra dominates this market with a 90% market share.
And what’s in it for the industry – more unsustainable wholesale products with little or no margins?
It is easy to complain, but what is your alternative? The rest of the world thinks the answer to your problem is to start with operational separation, but you completely reject this. So let’s talk about it – what are your other ideas?
I was asked by Telstra to retract my comment that Sol simply wants a bigger monopoly, but what else can I conclude if Telstra asks for less regulation when it has a well-documented track record of anti-customer and anti-competition behaviour?
You ask us to trust you, but we have yet to see you meeting us halfway. We have no idea whatsoever what your approach would be on creating a more transparent environment, and we are very worried that you could prolong such a debate for many years. As you, yourself, said – see how things will change over the next years, if we don’t resolve these issues more swiftly we will forever remain looking into the rear mirror.
Are you aware that nobody in your company, in the industry, in the regulatory organisations or in the government has any idea what Telstra’s high lever strategies are? You might see this is a rather sweeping statement on my part, but I believe I have probably conducted more ‘exit interviews’ with senior Telstra managers than anyone else in Australia and none of them have been able to shed any light on Telstra’s vision for the Australian telecommunications market.
Best services and best prices
Again, I am in full agreement with you on this issue. As an industry we have to ensure that all Australians receive the best services at the best prices.
How do we achieve this – through competition, of course.
So how can you help to establish sustainable competition – and I am more than happy to take into account that we also need to have an environment that stimulates real investments from Telstra and others. We see that competitive environments, such as those in Japan, Korea, France, Netherlands, Canada and the USA, stimulate competition as well as investments. A central plank in the government policies in those countries has been to prohibit telcos from owning cable TV networks.
So how do you see us stimulating competition when Telstra owns both the telco and the cable TV infrastructure, and, at the same time, has the power, under the self-regulatory regime, to defend its dominant position by overbuilding new networks to undermine competitive investments (Optus and Unwired examples).
Some of Telstra’s investments in this area were purely defensive and had nothing to do with providing better services, innovation, etc.
You would do the country a big favour if you separated Foxtel from Telstra, included Sensis in the new company, and created a new and formidable media competitor in this country.
If it should happen that Telstra were to stop being a big bully in the marketplace, and even so Optus, AAPT and other foreign-owned telcos operating Australia still refused to invest in Australia, then I would be right there by your side calling these companies to account.
Sol, I agree with you that ‘there is nothing wrong with argument and debate’ and will gladly answer your call to engage in that debate, without clubs, on your podium.
I would like to go on record saying that I have never encountered unreasonable people within Telstra, and I have the greatest respect for what I consider to be some of the best telecoms people in the industry who work for your great company.
It has been the Telstra culture that has stifled the debate, not the people. You have the power to break through a regime that has historically channelled debate within the industry, through lawyers and PR staff.
There are 1,000 companies, able regulators and well-represented industry and consumer groups in this country who are all eager to debate this with you and your management – not as barbarians with clubs, but as reasonable people who respect each other.
On 24 and 25th of August we publish close to 2,000 pages of research on statistics, developments, trends, and forecasts on the Australian telecommunications market. Packed in 10annual reports this will provide all the essential facts and figures needed for the robust debate. So I hope you will join me at the ‘State of the Industry’ Roundtables in Sydney and Melbourne. For more info see Roundtables and Seminars.