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Telstra as bully boy « Previous | |Next »
August 4, 2007

I see that Telstra is taking the Communications Minister, Helen Coonan, to court for her decision to award its rivals almost $1 billion for rural and regional areas. Does Telstra--the aggressive gorilla--- have any friends left in Canberra these days?

We all know what Telstra wants: to be able to build its fibre-to-the-node network, the government to get the regulator out of the way, to be able to set prices as it wants and to destroy the competition. Telstra aims to create the next generation of landline asccess network as a new monopoly. This would boost its share price to over $5 a share.

I just cannot see this happening. It would be too blatant, even for the Howard Government, that is wedded to anti-competitive markets. Even that Government stands behind the ACCC and bulks at a Telstra broadband monopoly. So Telstra has a constitutional challenge before the High Court against the competition regulator's powers to set prices for access to its copper wire network. Telstra is attempting to have the regulations that allow access to Telstra's copper network by its rivals overturned on constitutional grounds concerning confiscation of property without just terms.

What Telstra is trying to do is to prevent its competitors from building a fibre network. Broadband is the current battleground to prevent an open access regime, and to ensure Telstra's market dominance arising from its infrastructure monopoly.

The pay TV debacle of the 1990s looms overall this. Telstra's pay television cable system still remains monopolised. So an open access optical fibre network regime is crucial and that means ending Telstra's current monopoly over landline access infrastructure. Does that eventually mean structural separation of Telstra?

| Posted by Gary Sauer-Thompson at 12:40 PM | | Comments (4)


I read somewhere that Telstra is doing exactly the opposite in New Zealand, where it is the upstart.

I hope that they waste a lot of dollars on lawyers for this one. Talk about a wanna be monopolist. NO NO NO NO NO.....

Where is the value for consumers in this proposition?

since the infrastructure is a natural monopoly, the solution is auction off the metro areas and large blocks of bush to various companies to run the glass or copper lines under gummint regulation. then the service to consumer companies have a level playing field.

allowing telstra to operate in both ends of the market is madness.

Telstra is concerned with its shareholders not consumers. The latter are there to increase the wealth of shareholders.

@al: It is an unusual monopoly that has five extant and independent providers. My street in inner Melbourne has three sets of high-quality cable running down it (1x TP and 2x coax run past my house), not to mention access to two retail wireless IP networks.

In fact, very little of the infrastructure of the telecoms network is a "natural monopoly". Certainly, the inter-exchange network and significant parts of the customer access network could be duplicated to some extent at reasonable cost, and this has in fact been done e.g. by the Optus coax network.

In my opinion, there is one serious problem facing competition in Australia: the high cost, difficulty and very high risk associated with accessing the customer network and Telstra exchanges.

Telstra's advocacy of a HFC/FTTN network is neither utilising a new technology (Telstra is suggesting that 6Mbps HFC links would replace the competition's existing 24Mpbs links!) nor does it require the anti-competitative removal of existing infrastructure; it is merely a way of discouraging competition by increasing risk and uncertainty.

The solution is as simple as the problem: Telstra should be allowed to roll out it's HFC network but it should not be allowed to remove existing infrastructure. The new network should duplicate the existing network, not replace it. This would not cost substantially more than the existing proposal, unless Telstra wants it to. I know this because HFC networks are already common in Victoria.

Of course, Telstra would never willingly do this because they know that their HFC proposal is bankrupt. Telstra is pushing HFC solely because it will cause the removal of existing, adequate & fast infrastructure. But the replacement of the TP CAN with the proposed HFC CAN will actually result in a decrease in average available bandwidth to consumers, if Telstra's own figures are to be believed.

How Telstra gets away with this stuff is beyond me.