BuddeBlog

Participating in the Telstra Debate Down Under sometimes gives you the feeling that many of our observers and decision-makers do, indeed, live on an island. But I am sure this article also applies to many other countries.

The interesting thing is that telecoms is a very international business and, to be honest, that sometimes makes my life a lot easier. Operating an international research business covering 170 countries, and having some 45 senior analysts and researchers involved, gives me the luxury of being able to compare and analyse.

And what happens with mobile content in Europe does impact on what happens in Australia – how government policies in Asia affect infrastructure investments over there provides us with lessons to be learned in North America; wireless pioneering in New Zealand can be used in analysing and forecasting developments in Europe; and so on …..

But, back to Telstra, the arguments that Telstra is putting forward in relation to regulations and infrastructure investments are also being used in other parts of the world. In Europe the incumbents are using similar arguments in order to obtain regulatory holidays on their FttH investments and, like Australia, most governments are not giving in.

The incumbents in Germany and France have sympathetic governments, but even there the concessions in relation to competition are still significantly better than the current situation in Australia. Look for example at local loop unbundling in France, they are leading the world here. Perhaps the odd one out is the USA, but if one looks at how low the US international broadband and mobile penetration rankings are one would have to question the success of US telecoms policies.

Most countries in Europe are far less willing to give in to incumbent demands. Regulators in Britain and the Netherlands are very hard-line, and it is in these countries that we are seeing the most progress towards competition and innovation. Interestingly, it is in those countries also that significant new investments are made in new infrastructure, particularly in the Netherlands.

Countries where governments show real vision and hands-on involvement in infrastructure development show by far the highest level of new investments. Classic examples here are Korea, Japan, Hong Kong, Singapore and Taiwan, and I am sure that, in a few years’ time, China will follow this trend also. Financial analysts have told me that public infrastructure investments are often a prerequisite for private investments.

The Connect Australia initiatives from the Australian government has seen a number of proposals put forward to the government that will see at least a matching of investments once these projects are underway.

The financial market is victim to a great deal of uncertainty and misinformation regarding technologies and regulations, and many are getting cold feet when it comes to investing in such an environment.

Public investments can show the way forward, making the environment perhaps a bit more predictable, although it is argued in some quarters that public funding should be avoided, the view being that the market should lead new investments.

The reality is that infrastructure in whatever format will always involve some government participation – whether it is in policies, regulations or funding. So it is unrealistic to act as though this will suddenly go away just because we are talking, for example, about an FttH network. True, if you give the incumbents a monopoly and a 20%-25% return on that investment there might be no need to seek public funds. However, if we want a solution for home care for the ageing; quality education in regional areas; improvements in lifestyle; e-government applications and, perhaps just as important, a first-class infrastructure for the e-economy, the question is whether that is best achieved through such high ROIs for a monopolist.

It is now well-recognised that the benefits of FttH are not simply economic. They are also most important for the social infrastructure of the country. And more and more countries are coming to recognise this.

Interestingly, because of the enormous conflict in Australia between the government and Telstra, the Australian government has been forced to analyse what its role has to be. They can no longer simply hide behind promises from Telstra – that it would look after the country’s interests. Telstra has made it very clear that it will not do this and, as a consequence, the Australian government is suddenly propelled into a leadership role.

We are fortunate to have a Minister who is driving this process, and slowly but surely she seems to be succeeding in persuading her colleagues to share with her the important role that the government has to play here.

I receive regular requests from the international media, asking for an explanation as to what is happening Down Under in respect if these new government policies, these certainly are attracting international interest.

Paul Budde

See also: Industry Analyses Australia

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This entry was posted on Monday, July 24th, 2006 at 2:48 pm and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.