Telstra, and before that, Telecom, has been anything but an endearing name in Australian history. As a public company, we’d face unreasonable delays, poor customer service and mazes of bureaucracy; now that it’s privately owned, we complain about download caps, high prices and anti-competitive bullying.
Being privately run hasn’t increased its service levels either, as indicated by PC Authority’s recent national survey, the
Reliability and Service Awards. Not only was it the lowest ranking telco in the survey, but it was the lowest ranking company in any category.
Telstra is in a tricky position, of course. On the one hand, it is at the mercy of its shareholders, who want to maximise profits for the company. On the other hand, due to Telstra’s incumbent ownership of the copper infrastructure, the ACCC is watching every move to ensure the company isn’t taking advantage of its position.
These two mobs aren’t independent of each other – Telstra’s share prices go up and down depending on the tightness of government regulation. So, how can Telstra increase its attractiveness to shareholder investment while keeping the ACCC off its back?
Telstra’s answer is
Now We Are Talking, combining blogs, facts, figures and forums to communicate why backing Telstra is the way of the future, and why regulation is holding broadband back.
Is it honest, transparent opinion hoping to appeal to ordinary Australians, or is it clever propaganda designed to demonise the ACCC and its competitors? We dove head first into the site, pulled out some choice elements, and asked Now We Are Talking’s Chief Editor Rod Bruem, and David Foreman from the Competitive Carriers Coalition (CCC), just what was going on.
Back to basicsThere’s little doubt that Now We Are Talking (NWAT) has tried hard to remove itself from its corporate parent site. However, amid the polls, counters, widgets and blogs is a very clear goal – to present Telstra as a victim of the ACCC, and by extension, every Australian who uses the Internet.
One particular section of the site, BACK Telstra, represents the strongest campaign, which, according to the CCC’s Foreman, is clearly directed at investors.
“It speaks increasingly to shareholders, asking them to act in the interests of their share portfolios, not in their interests as consumers. Increasingly, it seems to have morphed into a resource base for the ‘shareholder army’ Telstra imagines it can mobilise.
“This page is symptomatic of a company that is so removed from reality that it has descended completely into group think. The reality is, it is talking to itself, and persuading no-one,” says Foreman.
NWAT’s Bruem suggests the BACK Telstra section not only influences its own shareholders, but “was launched with the aim of encouraging broadband investment. For the past two years Australia has languished at 17th place in the world broadband rankings and this is a direct result of a lack of investment in new technology.”
Attack of the leechesContributing to the sorry state of broadband in Australia, NWAT cites competition from foreign companies taking advantage of Telstra’s infrastructure and over-regulation. “Like leeches, foreign companies are encouraged by lopsided regulations to act like parasites on Telstra’s infrastructure, milking the investments of Telstra’s 1.6 million shareholders,” states the site.
Such an attack on the competition is justified, according to Bruem, due to the relatively cheap access cost for competing telcos that the ACCC has regulated.
“Because access prices are below cost there is no incentive for any company to invest. SingTel Optus now connects more customers to Telstra’s network than to the [optic fibre] network it built and owns. That tells you something is definitely wrong with the regime,” says Bruem.
According to Foreman, however, this is hypo-critical, given Telstra’s own access arrangement with Telecom New Zealand. “[In NZ] Telstra urged that the regulator should always choose the lowest price possible for competitors using the Telecom New Zealand network, saying this would lead to the following: lower prices for consumers, stronger competition, more innovation, more investment and less wasteful investment in duplicate networks,” he says.
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| Telstra’s Rod Bruem, editor of the www.nowwearetalking.com.au site. |
Unjust lawsNWAT’s take on the ACCC is that Telstra is unjustly disadvantaged. The site calls for pressure to be put on the government to “get rid of the regulations that only apply to Telstra and stifle investment in broadband infrastructure”.
Bruem elaborates on this, pointing out that existing regulations are an outdated throwback to a time when Telstra needed to open up its phone lines. Now, times have changed.
“When Telstra develops new products, the ACCC forces it to share them with competitors. The rules were introduced a decade ago to open up the phone network to competition before ADSL even existed. Unfortunately the ACCC is now applying the same rules to new broadband investments including ADSL2+,” says Bruem.
Of course, Telstra is actually a private company built off the nation’s largest publicly-funded infrastructure.
“Telstra is the subject of the application of these laws more than other carriers because it is in the happy position of having been given ownership of the ubiquitous copper access network that was built by taxpayers over the course of much of the 20th century,” says Foreman. “In other words, Telstra owns the playing field and the laws are designed to allow other people to get a game.”
NWAT’s references to regulation don’t appear to dispute its origins; rather, it suggests it will negatively impact investment in broadband technologies. Remember that Telstra even went so far as to cancel its fibre-to-the-node (FTTN) upgrade in 2005 due to this same heavy-handed regulation, which Bruem claims is putting us behind. “Australia is lagging behind in terms of investment in fibre networks,” he says.
“Experts predict it won’t be long until homes and businesses are demanding bandwidth of 100 megabits or more. As it could take three to four years to build a national fibre-to-the-node network, it’s important for investment to start happening now.”
A small victoryThe relationship between Telstra and its consortium of Optus-led competitors (the G9) will determine the future of the FTTN network. How much this delicate relationship will be kept in check by government regulation, however, is clouded in uncertainty – a recent Federal Court decision found the ACCC acted illegally when it served a competition notice to Telstra after wholesale prices were raised and retail prices lowered in December 2005.
“This case demonstrates it’s simply too easy for the ACCC to dash out a competition notice, exposing Telstra to potential fines mounting at $3 million a day, as a form of bureaucratic bullying,” said Telstra’s director of regulatory affairs, Tony Warren, after the announcement.
Ultimately, the success of Now We Are Talking and the BACK Telstra campaign will be determined by its ability to gain enough investor attention to get the FTTN upgrade under way, and whether it ensures that government regulation won’t block its path.
