How will Telstra respond to Rudd's fibre optic level playing field?
Fibre to the home could break Telstra's grip on Australia, but Adam Turner wonders how the Sol-less telco will fight back.
Many people agree that Telstra's infrastructure (which was once Australia's infrastructure) should have been split off into a separate entity when the company was privatised. The fact that it wasn't split has allowed Telstra to restrict competition ever since by limiting access to its copper network - the vital last mile for reaching Australian homes.
This kind of leverage has allowed Telstra to hold the country to technological ransom whenever it doesn't get its own way. The answer was either to separate Telstra, upgrade the existing network (which Telstra could still control) or to build a new national network that runs all the way to your door - making Telstra's existing copper and cable assets obsolete. This week, the Rudd government went for option 3.
Fibre to the Premises (FttP), free of Telstra's control, is every tech-savvy Australian's wet dream. We're talking about at least 100 Mbps to 90 per cent of Australian homes, with the other 10 per cent getting at least 12 Mbps per second via methods such as DSL, wireless or satellite. It will be a wholesale network, 51 per cent controlled by the government, which all telcos can access on equal terms. A true "level playing field" - something Telstra has always fought against.
April 7 should be remembered as D Day, the day we stormed the beaches and began the long fight to claw back Australia's infrastructure from Telstra's grasp. Like any good dictator, don't expect Telstra to take things lying down.
Telstra is no stranger to network warfare, with its opponents including Optus cable and competing DSL providers. Its weapons include dragging competitors and the regulator through the courts, restricting access to exchanges and other important infrastructure, a massive marketing campaign and aggressive pricing which has seen its retail offering come in cheaper than the wholesale pricing it offers to other providers.
Of course no NBN rollout can be completely Telstra-free, because there are so many places where Telstra still controls access to the last mile - such as new estates where all the telecoms links run though Telstra conduits. I suspect the other utility providers - anyone with a link into the home - could be KRudd's new best friend.
My colleague Paul Montgomery, former Internet industry journalist and founder of Australian fantasy football site FanFooty, summed up Telstra's strengths nicely in a recent conversation;
"The problem is that Telstra is still an all-powerful monopoly with much better weapons that everybody else put together, so it is in a great position to out-compete the NBN on deployment and price. Telstra Wholesale is the biggest in the business with the shiniest toys and the most soldiers. You just know Telstra is going to beat the NBN to every market, delaying launch until just before the NBN on an exchange-by-exchange basis, just like it did with ADSL. And they'll be particularly evil in marginal seats just to hurt the Government," he said.
Of course you can add to this an army of dodgy door to door salesman, which previously marched one suburb ahead of competing ADSL rollouts to lock suckers into two year Telstra contracts just before true competition reached their exchange. Telstra now has almost a decade to reinforce its battlements before the NBN arrives on the scene. The government is going to need a thick skin, a massive marketing campaign and a gaggle of lawyers if it wants to ensure it doesn't waste more than $20 billion taxpayer dollars on a white elephant.
The gloves will be off and Telstra will come out swinging, perhaps as a more effective opposition than the Liberals leading up to the next election. Lets hope KRudd's Fibre to the Home survives the onslaught.
Other Blog Entries written by Adam Turner:
Thoughts on this article? Add a comment below.
Comments: 1
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gnome
Apr 10, 2009 12:12 PM
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It's a sad comment on how useless past comms policy for over twenty years has been when we realise that only with this FTTP plan will be see competition for the first time in the fixed line market. |