Save Unwired – competition on trial once more
The next few months will be critical for Unwired.
Will their business case stand up? And will they be able to maintain their competitive position in the market? Of course, in the end it is Unwired who will have to prove that it took the right decisions; but, at the same time, this is yet another test case for competition in Australia.
Here we have a very innovative telecoms company offering a service that, even on a global scale, rates as innovative. Yet this infrastructure-based company is finding it very difficult to survive.
At its launch the company was in a good business position, with 30% of the Sydney area not covered by DSL. But, half a year later, Telstra had closed the gap and covered 95% of the area in which Unwired operates with their own DSL service. Now there is obviously nothing wrong with Telstra trying to defend its market, but this clearly demonstrates that if we, as a country, don’t have a national policy regarding telecoms infrastructure, infrastructure-based competition will never get off the ground.
The classic example of this (which is cited all around the world) has been Optus. Same story – the company was rolling out the most innovative triple play network in the world, but was then totally overbuilt by Telstra, and, $7 billion and ten years later, we were back to the monopoly.
With a company as dominant as Telstra (the most vertically-integrated telco in the western world) I would dare to say that nobody, absolutely nobody, will be able to successfully compete with the incumbent on an infrastructure basis.
If we take this as a given, then the next step is to ensure that we get a regulated monopoly which won’t stifle the innovation that we would otherwise be getting from companies like Unwired –and here you can add Nextgen, IP1, Comindico, Flowcom, and half a dozen others.
However the government is putting greed before the national interest; it wants the highest possible share price for Telstra and is prepared to strengthen its monopoly to get it.
So the government should not then pretend that it would like to see infrastructure-based competition, because, if that were indeed the case, it would have to create the right environment for new and innovative investments, and it would have to protect those investments from the dominance of the incumbent.
This is precisely what happens in the USA, Canada and Europe.
See also: Wireless Broadband Australia
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