On metropolitan broadband, and Telstra reminding us not to forget our place

After all that heat generated on broadband telecommunications in Australia, the issue seemed to lose its air after the Optus-Elders partnership won the rural/regional part of the fibre-wiring of the country.

This leaves the metropolitan network which, given the propensity of Australians to live in urban areas, one would think was of more political importance. At the moment, though, it seems the debate has weakened to its bare minimum: Telstra and Optus trading barbs on the pages of the newspaper.

On the 19th, independent consultant (apparently – I didn’t see any evidence of it in the article that he wrote) Kevin Morgan wrote in the Age:

Telstra the only choice for broadband

Communications Minister Helen Coonan has asked her expert group on broadband to consider a very difficult question.

Should taxpayers pay a couple of hundred million dollars in compensation to Telstra’s competitors so that the national phone company can build its high-speed broadband fibre network (FTTN) or should taxpayers pay $20 billion-plus so someone other than Telstra can build the network and maintain the illusion of competition.

Apparently, he suffers some of the confusion of Bill Clinton (M. Morgan: “is” is a present subjunctive belonging, in your case, between the noun “Telstra” and the definite article “the”). Sorry, that was snotty. Newspapers are annoying.

Nowhere in the article does Morgan explain why we would owe Telstra AUD20bn if they don’t get to keep their monopoly. He mentions their investment, and that of their shareholders, in Teltra’s copper network. Which doesn’t help, particularly, explain why they get AUD20bn for not winning a public tender. His argument seems based upon the fact that, should the Australian government push fibre-optic broadband, Telstra’s copper network becomes obsolete. Which is pretty-well true. Explain to me, again, why we should compensate Telstra for that?

At the very least, he conflates a massive compensation claim with a massive compensation payout. His attempt to put it in terms political (a thinly-veiled, and weak, threat) does not do much for me, either.

Should the group effectively recommend that Telstra proceed with FTTN, voters would be entitled to ask why the Government has delayed Telstra’s plans for two years and in the unlikely event it finds in favour of a G9-type proposal, the electorate will scarcely be impressed with a massive compensation payout to Telstra.

Again: if the electorate will scarcely be impressed with said payout, there probably will not be one. So…

In fact it appears to be more of the same from Telstra, the self-presuming monopoly that objects in principle to the government doing anything about that. Which is fine – telecommunications, with its massive infrastructure, is a natural monopoly. But not a royal one, for all that Tesltra can act like it. They appear to be smarting, still, from the government’s opting for a competitive tender rather than an in-house deal with Telstra, to give them the FTTN network and retention of their monopoly. Said tender is apparently attracting overseas interest, as well.

Returning to Morgan’s point about the electorate demanding to know why the government has taken so damn long. I’ve commented previously that the Howard government has in fact done nothing at all, for a long time, and then made decisions very quickly, according to electioneering expedience. As to the time taken, Morgan might look instead at Telstra’s relationship with, engagement with and treatment of the ACCC. Their walking-away from the ACCC late last year did not help the timeliness of establishing a FTTN network.

Ravi Bhatia, chief executive of Primus Telecommunications, sometime-partner with Optus, responded to Morgan’s article on the pages of the Age also. His perspective:

The so-called broadband debate is also not about its speed in metropolitan areas. To most in the industry, the fundamental concern is one large recalcitrant industry player wanting to decimate competition and increase broadband prices by 300 to 500 per cent, thereby transferring $2.5 billion to $3 billion annually to its profits from the wallets of Australian consumers. Such an outcome is unacceptable to the industry, the regulators, the Government and consumers.

For the rest of it he contradicts most of what Morgan said concerning the technicalities of the network (specifically, how Telstra could be the only provider). As a non-technician, I didn’t really follow much of it, except to understand that the two sides disagree. I do agree with his characterisation of the “so-called debate”, however.

Politically, this does not help the Howard government. They will be hard pressed to get anything firm, or even useful, ‘out’ before the election. In the meantime their relationship with the monopoly that they privatised becomes ever more acrimonious. All households need to know is that they still have an out-dated network, and no credibly promise that the replacement will be any more affordable. At least they don’t have the net neutrality debate on top of everything else.


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