Analysing Telstra’s impending separation: the options
Filed under: business, corporate, customers, innovation, networks
I delivered a speech yesterday on Telecommunications regulatory reform and the Government’s proposed separation of Telstra, and I thought I might share it with you to invite your feedback.
As I said yesterday, when I first started thinking of what I should say, I thought we’d have a deal more certainty in terms of what’s happening in the telco regulatory space. But a very full Senate schedule and a somewhat chaotic end to the Parliamentary year means we have a few more months before we know what the Government’s final regulatory reform legislation will look like. In the mean time, we are continuing our active and constructive discussions with the Government and the NBN Co, seeking a mutually acceptable outcome that is in the interests of the nation and the industry as well as Telstra shareholders, customers and staff.
There has been much debate over the years, both in Australia and overseas, on the merits of separation. Telstra has consistently argued that there is little evidence that the purported benefits of separation in telecommunications eventuate in practice – particularly when one weighs them up against the costs and customer risks entailed. That said, we’ve publicly recognised that there’s a perception about the need for greater equivalence and transparency in the fixed market and have publicly stated that we’re willing to consider separation options.
This remains a complex issue, influenced by a great many factors. For Telstra, the two most important factors are: how do we protect shareholder value and how do we make sure we can continue innovating and providing the best possible services to our customers?
If separation eventuates, just how it will impact Telstra and the wider industry depends on the form it takes. The Government’s legislation before the Senate provides for voluntary structural separation with mandatory functional separation as the default. Either form of separation brings with it a range of impacts on our systems, products and services, retail and wholesale customers, our shareholders, our staff and subsequently on our ability to contribute to the Government’s NBN vision.
It’s in part due to these complexities that Telstra is so committed to working constructively with the Government, the NBN Co and the wider industry through the Communications Alliance process – it’s essential for everyone to dedicate the necessary resources, time and skills to getting this right.
I’ll conclude the same way as I did yesterday – if the separation issue can be addressed in a sustainable way by reaching a mutually acceptable outcome on the NBN, it’ll hopefully help to rid our industry once and for all of the regulatory uncertainty that has held back investment and innovation for the best part of a decade.
For more detail on the complexities facing Telstra and the industry please read my speech, and I look forward on what you have to say in response.
David, I summarise my feed back with a copy of my E-mail to Tony Abbott today which is self explanatory.
Regards
“Dear Tony,
I take great pleasure in congratulating you on your appointment as Leader of the Opposition and future Prime Minister. Also, offer some sour grapes to the turn coat.
I endorse your views that something needs to urgently be done to protect the environment but building castles in the air and throwing money abot is not the right thing to do. In fact, if Rudd’s internationally bound legislation was passed we would have been in perpetual debt and hence the laughing stock of the world when the dust settles in Copenhagen.
Rudd’s $43 billion earmarked for the NBN folly, which we clearly do not need to spend could be used to clean up and innovate our poluting power stations.
See Alan Kohler’s artiicle below and my response thereto.
Enjoy the festive season.
Kind Regards
Vasso Massonic
Alan Kohler 8 Dec 2009
The NBN solution was there all along
There is a paradox staring everyone in the face with the National Broadband Network and the negotiations now underway with Telstra makes the whole thing illogical and difficult, although it also provides an easy way out for everybody.
It is that if Telstra were structurally separated the government would not need to build the NBN; if it does build the NBN, Telstra can’t be separated because the network side would not be viable.
Today’s column is fairly long, but bear with it because, by George, I think I have finally nailed the NBN/Telstra problem and come up with the answer (until the next amazing development of course).
The truth is the government went for overkill by proposing legislation that forces Telstra to split while also announcing that it will spend $43 billion on a new a fibre-to-the-home network.
One or the other would have been enough. If Telstra split itself into separate network and retail companies, the network company would have to gradually replace its copper with fibre – probably just to nodes (neighbourhood stations) to start with and eventually right up to the premises, as long as there was a business case for that.
The regulatory issues that stopped the company from building its proposed fibre to the node network in 2007 would not exist, since it would no longer be integrated.
On the other hand, if the government had simply announced the $43 billion NBN, hired Mike Quigley on $2 million a year to build it, and left it at that, Telstra would have developed a strategy of migrating its retail customers to the government’s fibre and gradually shutting down the copper network that is so expensive to maintain.
Either of those two things would have made sense. By doing both, Communications Minister Stephen Conroy has unnecessarily complicated what could have been quite simple.
In the past couple of days there have been two windows into the problems that have been created.
It’s widely assumed that the legislation to force Telstra to separate is actually designed to buttress the viability of the NBN, by forcing Telstra to sell network assets and/or customers into the network.
But on Sunday, in my interview with ACCC chairman Graeme Samuel on Inside Business, Samuel said the government is not exempt from Section 50 of the Trade Practices Act, and that in considering any asset transfer proposals from the NBN and Telstra over the next few months the ACCC will assume the NBN is already built.
In those circumstances it is hard to imagine approval being given for Telstra to sell its network assets to the NBN, either in full or in part.
If trade practices law assumes the NBN is built, then it also assumes infrastructure competition in Australia already exists. Clearly putting the two competitors together would create a monopoly, and would be disallowed unless a special law was passed (see below). If Telstra is negotiating the sale of parts of its network to the NBN, then we’re talking regional monopolies, which would be just as prohibited.
Telstra could probably sell its ducts and trenches to the NBN because it would only involve the transfer of a monopoly asset, but that simply means Telstra would be renting access to them from the NBN instead of the other way around. Telstra would still own a national copper network, in competition with a national fibre network, which would be less than ideal for both.
And as for “selling customers” … what does this mean? Would I get a letter one day from Telstra explaining that as a result of a deal with the new fibre network, in which Telstra has received payment of a ransom, I am now a customer of the NBN Co? If anyone’s getting any cash for transferring my business, it’s me thanks very much, not my previous supplier.
The idea that Telstra will be paid compensation for losing customers to a new competitor, even if it is owned by the government, is nonsensical.
Yesterday, speaking at a telecoms conference in Sydney, Telstra’s head of public policy and communications, David Quilty, explained what Telstra and the government/NBN Co are negotiating about, at least from Telstra’s point of view.
He said, according to reports in the trade press this morning, that Telstra wants a “mode of structural separation that would satisfy the company’s requirements”.
These include “fair financial consideration should Telstra’s assets be transferred into the NBN, a locked-in agreement that cannot be altered or appended at ministerial or ACCC discretion, and the right to continue to access wireless spectrums to develop next-generation products.”
The last two things are fine, but “fair financial consideration” is problematic, as outlined above.
David Quilty then said this: “My question overall is why should we do this at this point of time? The industry is actually moving out of the legacy environment. The NBN will provide a structurally separated, wholesale-only access network beginning as early as next year to be rolled out over the next eight years.
“But why at the same time, when the NBN is being built, would one burden an entire industry with a hugely disruptive functional separation that will be rendered obsolete by the time it is finished? It is a wasteful and backwards-looking process.”
Indeed. The fact is, in my view, that if the NBN is built, then Telstra will naturally separate over time, as implied by Quilty. Alternatively, if Telstra separates now then the new, fully separated Telstra network company would build an NBN.
The fundamental problem is that Stephen Conroy’s overkill has set up the prospect of two national wholesale network companies that will not be allowed to merge, but neither of which can be commercial viable on its own.
There are only two outcomes of the current negotiation that make any sense, and one of them is probably impossible.
They are:
– A separated Telstra network company takes over the building of the NBN and employing Mike Quigley and the team, or
– The government drops the split legislation in return for a long term network supply contract with Telstra.
The reason the first option is impossible is that Telstra shareholders would have to agree not only to structural separation but also to become owners of the NBN, and they hate it. Too hard.
So the only solution is the first: build the NBN but underpin its business model with a network supply contract with Telstra that would mean the company would migrate its customers gradually to fibre at a lower cost, increasing its profits and ensuring that private capital could help fund the NBN.
So there! What do you reckon?
My response:
Uncommon sense
TOPIC : Telstra tales
Congratulations Alan. (The NBN solution was there all along, 8 December) I’ve been scratching my head ever since watching you on your last Inside Business mission of the year and the scratching got more intense reading Quilty’s warning in the Financial Review this morning.
You have eloquently put me out of my misery. It seems politicians have ceased using common sense, which costs nothing – and most of us use all the time.
Vasso Massonic 8 Dec 2009 11:09 AM
Click here to Contribute
David your description of the Telstra/NBN situation does sound very involved and challenging.
While recognising the seriousness of the practicalities of the separation issue I think of equal importance is the absolute necessity that the regulation yoke that Telstra has been required to bare must also be addressed and resolved.
The best result would be for free and open competition which allows the consumer to determine who best meets their requirements. At the moment Telstra opponents use every trick in the book to gain advantage via the ACCC.
Sydney, the plot thicken. Clearly, the devil is now in the TPA Section 50 details. listen to what Graeme Samuel had to say. Principally, … “What I can say is that any acquisition by NBN Co. of assets of that sort of nature would be examined under section 50 of the Trade Practices Act and the test there is would the acquisition of those assets be likely to have the effect of substantially lessening competition in the market.”
http://www.abc.net.au/insidebusiness/
Moreover. According to the Fin review today, Teltra’s transfer to NBN is proving tricky. Kevin Rudd will give his first speech on the NBN tomorrow! we’ll see what gives.
Kevin Rudd’s government has made a mess of the insulation in the roof program. What are they going to do with this much bigger project of BROADBAND rollout.
I answer one statement copper network is NOT as expensive to maintain as stated. If you use a PREACTIVE MODE of maintenance. That is is identify and repair problems before they are active and done at the best time.
This was done in Telstra in the 90′s and the only problem was, it was TOO SUCCESSFUL. The areas it operated in were at WORLD’s BEST.
Some of you will say it is PROACTIVE. WELL I found that proactive is programmed action and it was NOT SUCCESSFUL. The program FAILED where my process WORKED. That is the reason for the name change and it suits the process. It is PRE-ACT. Preactive.
What problems have we got ahead with the FIBRE NETWORK and the way the broadband will be connected. Are we looking at massive problems in the future controlled by people who do not understand telecommunications standards.
Australia had a solid and secure communications network. Will the new NBN provide this with the control shifted to the IT area. I do not think so. We will have serious problems which will be very difficult to have repaired.
Just look at how credit card data from Australia are being used overseas in fraud transactions.
Will the one’s connecting customers understand communications properly.
NETWORK AREA: Make sure that communications have backup power supply. Here I am talking about the connection from exchange to the customer.
CUSTOMER AREA: That customers are told to have one phone which does not need commercial power supply so that a call can be made in an emergency. Note: You cannot think a mobile will always work as its tower or aerial may be blown down etc.
We DO NOT WANT KEVIN’s COWBOYS coming into the street and rolling out the NBN. What a Massive MESS this would make.
If one is to even vaguely consider any of the “sky will fall down”, Telstra separation rhetoric, constantly bandied about at ZDNet, by two “particular”, FUD promoting, TLS shareholders”, one would have thought Telstra’s separation would be a real hot topic for discussion here?
But after 2 days, apart from me now, just 2 people (coincidentally two “particular”, FUD promoting, TLS shareholders, lol) have bothered to comment!
Far cry from the 673 comments/complaints in one day, elsewhere! But that’s another story, here…
http://exchange.telstra.com.au/2009/11/04/a-new-view-on-communications/comment-page-3/#comment-991
May need to scroll up a few comments, for the entire correspondences!
Regardless, this separation thread and the lack of interest, paints a very clear picture, I believe Mr Quilty!
Robbie: Most people only think of what affects them NOW! It wiill be too late to complain after it happens and all the problems then arrive. I look at things in a PREACTIVE state and I get results. Read on and you will learn something.
David: I read your speech and it does raise a number of issues. Firstly the performance of BT. The PMG then telecom and now Telstra was built on the Briitish system. That is one communication system throughout, not like the USA which had numerous companies throughout the USA and the problems that came with that method.
We also have problems in addition to BT. Australia is much larger and we go from the TROPICS, to the outback and remote areas of Western Australia to the South West areas of Tasmania.
It is also interesting to note BT faults per 100 services increase and could not maintain a reliable standard of service. How will Telstra make sure it is not worse. Indications are it will be FAR WORSE.
In Australia we had very skilled staff who put in place a very good communications system. A comment I heard stated from a manufacturer was “They need to put padlocks on the exchanges and leave them there for a few years as the performance level you are working at we can only dream of approaching in systems on the design table.” It appears most of these people have left or packaged out of Telstra. They could easily have built the BEST BROADBAND NETWORK in the WORLD by far.
When is everyone going to learn that it is more than just selling a PRODUCT. It is also maintaining and repairing the product. This is not a simple process that can be done always from a computer voice system or call centre operator following computer directions. You need experience and understanding for the more difficult cases.
Who will benefit from Separation. ISP’s, other carriers wanting to make big profits.
Who will suffer from Separation. Australia and Telstra.
The Customer will PAY MORE.
Customer dissatisfaction will rise. It will be against TELSTRA.
Does the government and the Australian public understand what separation will do behind the scene? I do not think they understand the problems about to hit us.
Does Telstra management understand what separation will do. I do not think they fully understand all the problems just around the corner.
One problem PMG and Telstra have always had is the retail staff DO NOT UNDERSTAND the problem. You need experience and understanding which these staff do not have. How is this going to be fixed.
You state a cost of over $1 billion to change IT systems for separation which it appears you the ACCC and government do not fully understand. Where will this money go? ( e.g. INDIA ) How secure will the systems be.
WHY DO WE NEED SEPARATION!
e.g. So some quick profit companies can make their millions.
Some can have illegal access to our networks?
( It is bad enough now with the FRAUD going on, how much will it increase to.) You need a very secure NETWORK.
What do we need of a NATIONAL BROADBAND NETWORK.
1. A secure and reliable network.
2. Provide customers the services they need now and in the future.
3. A network that can be extended and maintained at best performance and cost.
4. That present services are not affected.
5. A NETWORK that is maintained by people who care about Australia and our Australian Customers.
PREACTIVE EXPLANATION.
When I was working I found that everything about fixing future problems was classed as PROACTIVE. But it DID NOT WORK. I asked myself WHY?
I found that a suspect problem was identified and they did not fully understand the problem. They just worked on fixing all things in this area in a programmed way. They added work that were not really potential faults just to get them done. Unless you pushed the job, your job got put out to the distant future. A lot of the work classed as proactive was not needed to be done as proactive. The real problems became active before they got fixed.
PREACTIVE:
With preactive you identify actual future problems and get them done before they became active. It WORKED. Now in retirement I use it in day to day working. It is very successful.
Telstra has a massive network throughout Australia built by very dedicated and experience people over many years. We do not want to loose it in just a few years by very rushed decisions by people lacking understanding and true experience at the top costing Australia massive in the long term. Some people think they know everything but they DO NOT.
What happens with a customer with a problem which can not be identified at first in the network or customer end. Who will have the experience and understanding to assist the customer and get the problem fixed without costing the customer a fortune.
The Future: In Sydney we have not had MAJOR RAIN for a very long time( approx 30years) . What is the state of the plant? Telstra should of done some preactive work in seeing the future problems. Lets wait and see.
Grahame Barclay,
Most interesting stuff, thank you. Nothing like the thoughts of one who has been on the coalface.
Hi Graeme, thanks for the kind personal invite to learn!
But whether you get to read this reply is unknown, as a lot of my comments still seem to be “mysteriously misplaced here at the listening centre”?
Regardless, I always like to correspond with those who have knowledge and who are not totally overcome by the portfolio. It makes a nice change to the lack of comms knowledge and strict shareholder rhetoric; we seem to be forever bombarded with, by some here!
Forgive me though, but you have made the same pre-active speech many times, here, NWAT and probably at NWAT2 too, can’t quite remember. But fair enough I am accused of doing likewise with my playful antics, aimed at some FUD promoting shareholders so…
Whether you are right or not, in relation to separation, may boil down to the future. However it must be noted, everyone agreed our comms needed an overhaul, as they have been and are substandard!
Remember in 2005, Telstra wanting to upgrade the old network, with an add on FTTN network, because we needed to be more globally competitive? All the shareholders said yes, “we need it”! Seems some have now flip-flopped; since Telstra’s enviable position of overwhelming dominance has been lessened.
Unfortunately for Telstra and their shareholders, due to Sol and his teams incompetence, greed or both, they let a renewed monopoly FTTN, slip through their fingers.
Unbelievable, how could they miss out on that? It was there for the taking. All they had to do was simply agree to a large return, as opposed to the mammoth return they wanted and done. Telstra would not now be in the precarious position it is in and would have their FTTN. Much like their NBN bid which was non compliant – “again, Telstra’s fault entirely”!
I find it most interesting that Telstra has now stopped sitting back reaping the easy PSTN profits, resting on their laurels and are now (following the Conroy big stick) upgrading and investing!
Graeme, you obviously have knowledge of how the network works and how it was built and thoughts on preventative maintenance measures which all have credence, so I respect that. However, sorry to also say, your comments still have a hint of disgruntled shareholder, who is resisting change for his own benefit.
Thanks Robbie and Vasso for reading my comments.
I am not just a dissatisfied shareholder but a very dedicated Australian who wants the best for Australia. I not only saw it at the coalface but also from the area above. I looked at things different to ones just at the coalface.
That is why my ideas are different. I saw it from more than one direction. I also saw how the actions of different levels had on a result. I built my process on the result of the above.
Graeme,
The BT example is an excellent cautionary tale, certainly. That does not mean that a separation of Telstra would have to be carried out in the same way, any more than a developing economy ought to stay away from DSL just because say, South Africa is making a mess of it. Not all DSL deployments, nor separations, are created equal.
I’m not sure how Telstra’s failure to retain its talent is anyone’s fault but its own; the idea that management might want to ask itself how that came to be is a good one but beside this particular point. This limitation of staff competence you speak of has to be worked around sooner or later unless you propose we leave the CAN as it is forever, which I’m sure you don’t. On a similar theme, addressing David’s speech, the fact that Telstra took forever to achieve some semblance of order in its databases is nobody’s fault but its own, and if it had any commitment whatsoever to the concept of fair access for competitors, it would have integrated them with loose coupling in the first place so that Telstra’s retail arms were Telstra Wholesale customers like any other – like the Telstra Wholesale party line to its customers always was.
I find your spin in relation to the motivation of the various parties involved interesting and amusing. You refer to competitors as “wanting to make big profits” and as “quick profit companies”. Are you telling me Telstra don’t want to make “big profits”? Why are you referring pejoratively to the business model of companies that in some cases, have been around longer than Telstra (as a private company)? Why do you imply that these competitors do not “care about Australia and Australian Customers”?
We need separation because Telstra has shown either an unwillingness or inability to provide access to the monopoly network on fair terms, as per the agreed terms of sale from the government. If you think that’s spin, refer to the competition notices. You can’t chalk all of them up to some “rogue regulator” being out to get Telstra. It may be that separation provides a smoother and quicker (and possibly fairer to Telstra) path to NBN customers being able to unbundle the sub-loop or for NBNco to get pit, pillar, exchange, etc. access than trying to have Telstra give up the whole CAN. This is bigger than just the copper loops; parts of the infrastructure will be significant for quite a while yet, we can’t just leave the whole thing to rot waiting for lengthy appeals and injunctions from a compulsory acquisition decision.
Telstra knew there were strings attached to privatisation. Telstra thought they could ignore them; pure hubris. Got a problem, shareholders? Castigate Telstra for failing to adequately deal with a risk they knew about well over a decade ago, not the government for trying to do what is long overdue, and realise that there are no guarantees in the share market.
James It is good to see your comments. I will expand on a few points you have raised.
Telstra came from what BT was first like, but Australia is different in a number of ways e.g. size,climate,population. This has made TELSTRA different to BT and such a copy of BT model could not be used. But the differences will make it harder to obtain. We need Telstra to build up an understanding of the network towards NBN. To split Telstra will stop this happening and give Customers very poor service.
The C.A.N. What I am saying is use a PREACTIVE process to keep the CAN operarting and use the spare capacity produced to improve the network effectively. You will have resources to build the CAN of tomorrow today. The only problem appears Telstra has already cut staff to the low reactive fault rates due to the low rainfall. How many faults are just waiting to come in when it finally rains?
It is Telstra who could not use the excellant talent it lost. It must learn how not to do it again. Companies need to identify skills and how they can keep and use them.
Telstra computer database were large systems working on different platforms. The upgrade by Telstra would of been a massive job. It appears this did not go the way it should of gone.
Companies after QUICK PROFIT.
They want uncontrolled access to the NBN so they can have customers send what they like over the NBN.
e.g. A customer wants the latest HIGH DEFINITION VIDEO downloaded ASAP. What happens to everyone else in that area. Do they have to wait till that customer has got his video.
e.g. The INTERFACE’s of customers will they keep up to date. ( You buy a computer today and in two years it has slowed down.)
e.g. Will cases of FRAUD INCREASE because of service providers DO NOT LIMIT what a customer can do.
We need to improve SERVICE to ALL not just a selected FEW.
Look what separation has done with the railways. All the lines that have closed. Stations closed after hours and on weekends.
TELSTRA
The exchanges are common areas now. Look elsewhere how the outside of buildings have gone. What is the inside like???
When Telstra had FULL OWNERSHIP and staff , they took pride in the place.
For Australia and the people of Australia TELSTRA MUST NOT be SPLIT. To SPLIT will give us a worse service than we have today.
If Telstra was split how would the staff be split as a lot of technical/lines service staff have gone but it appears a massive increase in IT staff. What are they doing and what understanding do they have?
James, although I’m sure you don’t need anyone to tell you, I thought I would anyway. Kudos, absolutely spot on analysis of the situation – hear hear!
Sadly, the biggest problem you will encounter in trying to relay such factual information here (particularly to the most vocal supporters, who say ridiculous things like God Bless Telstra) is that they have no concept of right/wrong, or what is best for anyone else.
Seriously, some of these people would be happy with a couple of cans and a piece of string, as long as it equated to a higher share price.
This is fine in itself, but… The problem being of course, they expect the rest of us to accept the cans/string too. Not only that though, they expect us to come here to be thankful for our cans/string, simply because it is better for “their portfolios”.
Then, when you question this (ir)rationale, your comments are either omitted, as this one is destined to be (I think I’m currently running at about 1 omission for every 5 or 6 comments) or if you do sneak the odd comment through, you are blindly referred to as a Telstra basher/hater, by these same cans/string people!
Anyway James, again nice work! It’s just unfortunate your words of wisdom will mostly, fall on deaf ears!
Robbie and James.
One major problem Australia has, is a lot of the communications is FAR from cost effective. A lot of areas have to be supported by the profitable areas to be able to operate.
Do you want Telstra to drop costs and provide new types of services to the selected profitable areas and provide low access costs to providers in these areas.
The areas that cannot support communications on their income left to fail and proceed to the almost tin can communication system. Cost involved is not small.
This is another reason why TELSTRA MUST NOT be split because who else will support these unprofitable areas.
Australians will NOT want the government having to support these areas. They will ask WHY!!!!!!!!!!!
They already are suspect on the BROADBAND ROLLOUT and where that amount is coming from. This is before cost blowouts which always appear. Who will pay?
We need Telstra to provide AUSTRALIA with
what it needs NOW, the BEST way possible!!!!!
The government needs to understand that TELSTRA’s NETWORK is a NATIONAL ASSET and must be looked after by a non-split Telstra. We must not have fly by night carrier’s come in just to see how much they can make. The network is not there for these carriers to jump in and make a quick profit with little outlay.
Finally James and Robbie. Australia does not want a network built that will not last. The setup you state will provide short time gains with long term FAILURE.
Well Grahame (I did apologise for misspelling your name previously, but it wasn’t published, lol?) whilst I still respect your views and ideas…
Telstra were vested the PSTN in 1992 and here it is almost 2010. 18 years on and people in the bush and even in the cities on RIM’s, are still receiving substandard products and services.
And yes, it is Telstra’s fault.
So I’d prefer to “take the chance” with the “setup” we state, for those currently without (which isn’t me I have ADSL2) to even finally receive short term gains and then failure, rather than sticking to the tried and untrue current situation, of complete short, medium and long term failure…thank you.
Robbie.
I know what you mean and it is a major problem. The issue is the people in charge DO NOT UNDERSTAND how to look after the NETWORK BETTER. In fact it would of been worse given to others!!! Look at the state of other’s overhead paytv cable network.( e.g. The earth they used?)
The field structure introduced to Telstra is a matter of concern.
I wished today that 20 years ago I had really pushed hard my ideas and today we would have a totally different TELSTRA. One with the latest communications in the World working very effectively. Customers being extremely satisfied with their service.
Robbie your last paragraph got me stumped at first at what you meant. After some thought I understand what you mean. DO YOU want a service which will NOT LAST, or is UNSTABLE. You need that small extra to provide a SERVICE that will LAST and be STABLE and SECURE.
How are the people on RIM’s and in the BUSH with limited services going to get the NBN. This will require NOT only money and a lot of it, but also the technical understanding to get it done.
It is a major concern the problems the NBN rollout will produce if not controlled by one like Telstra.
Fibre to the home if chosen will bring massive problems and extreme cost blowouts when extra work required.
Grahame, I thoroughly enjoy your take on comms. Most interesting, thank you.
I do agree FTTP when problematic, will cost much more to repair, but I guess that is part and parcel to going all out. It’s a bit like buying a Rolls and then complaining how much services are…
In the end I suppose all we can otherwise agree upon is, that times are changing. Whether the changes actually are for the better, we will only know in time. I hope so…
But to digress, one thing I have also found both refreshing and interesting (to encourage further cordial correspondences) is the sudden disappearance of the two most negative and outspokenly biased Telstra spokesmen? I have not sighted neither, either here nor at ZDNet for weeks? Nor have I been referred to as a disparaging opponent, out for my own financial benefit or an ignoramus, lol.
Perhaps they have finally awoken to my pleas (although I won’t hold my breath) to stop undermining Mr. Thodey by continually digging up the Sol negativity and bagging anyone who comes here with “constructive criticism”. Because it simply causes animosity between us all and further hostility towards Telstra…
Let’s hope this is the case and they are now smelling the roses?
Let’s also hope Australia’s comms improves (and as a consequence, TLS shares start to rebound significantly) with the conciliatory approach of the new Telstra and Mr. Thodey! That’s all I have ever wanted…
Merry Christmas to you and your’s Grahame and to all the readers here!
Grahame,
I don’t understand how separating Telstra’s wholesale and retail arms should have anything to do with services in the bush. Wholesale would still be obliged under USO/DDSO to maintain the network in the bush and retail would still be obliged to sell services until USO is overhauled. The only difference would be that Telstra would be forced to behave competitively in the fashion that they should have been anyway. Now, having said that, I thought that USO and DDSO should have been overhauled as part of the NBN anyway, but the government seems to have gone in a totally different direction with the NBN to what I would have thought was best. Regardless, whoever is/are the universal service provider(s) will be subject to USO/DDSO.
I don’t understand how you can describe anything owned by Telstra as a “national asset”. A national asset is an asset owned by the nation and administered by agents of the elected government. This is not the Kingdom of Telstra we live in.
“Fly by nighters”? Internode, for example, have been an ISP since then-Telecom’s premier data products were on the Austpac X.25 network. Actually, your rhetoric regarding competitive carriers sounds a lot like what the party line on NWAT was, when they – Telstra’s wholesale customers, mind you – were described as “leeches”. If you’ve ever actually investigated TEBA from a customer perspective, I don’t think you’d use terms like “quick profit” and “little outlay”. Unless you expect every carrier to dig their own trenches (which I’m sure you understand is a ridiculous proposition, especially considering that none would have the opportunity to do so as the incumbent monopoly carrier) then access to Telstra’s network is necessary.
The knowledge of how to run a GPON-based FTTx network is not Telstra-exclusive knowledge, and the idea that Telstra would have it in any more quantity than all of the other candidates is unfounded, seeing as other telcos around the world have rolled them out and Telstra haven’t. In fact, it has even been done in Australia, by TransACT (but are they fly-by-nighters in your book?). How any of this relates to separation, I’m not quite sure. Assume that Telstra built the NBN: the engineering up to the point of demarcation would be done by Telstra Wholesale, and beyond that, Bigpond/Internet Direct. Why would the fibre guys need to work for retail? Bigpond/Internet Direct would interact with Wholesale just the same as the way other ISPs do now. If that relationship wouldn’t work, why? Have Telstra’s retail arms had an unfair advantage over other ISPs buying services from Telstra Wholesale this whole time?
RIMs would make little to no difference to provisioning the NBN; any of the technologies being mooted involve shortening the local copper loop or eliminating it entirely. If the loop is being shortened as in FTTN, stick a (eg) VDSLAM in the RIM cabinet for customers within VDSL reach of the RIM and fibre muxes or switches to serve customers at other nodes. If it’s FTTH, turn them exclusively into fibre mux nodes as necessary. There is absolutely nothing wrong with RIM technology in theory, the only problem is that Telstra has not seen fit to install DSLAMs in enough of them to provide ADSL to all the RIMed customers.
Robbie What I mean with FTTP is not the repair but the installation of it.
The work and cost of getting it into homes will be a massive issue. New homes would be no problems. The only problem here would be, is their a workable standard for the home that will work. We do not just want a theory idea that will fail at the first major issue like a blackout etc.
Now will cabling that is now overhead stay overhead. Now how will they cable areas with underground with problems with underground fibre.
Who is going to pay the cost of connecting customers wiring to the fibre.
We cannot have cowboys doing this work. The result would be felt for many years and will cost us a lot of money.
We need a NON-SPLIT Telstra to provide the best service to ALL Australia. Other service providers will not want the work in the areas where their is NO PROFIT on the work required to provide service.
One area of Telstra which we appear to have lost TOO MUCH is the middle area staff who had the theory, experience and understanding to operate communications.
Hoax emails etc are getting more clever and we need the experience to build communications to beat these and other problems that are and will come.
Theory and front line staff will not provide this.
To
check on HOAX emails etc with Telstra is an issue!!!!!
The emails are becoming more effective but the front of house of Telstra is getting worse!!!!!
My main concern as an Australian is that we can do nothing to a acceptable standard.
The Phone, Internet, FoxTel Pay T.V., to name a few servies running as we speak will be thrown into chaos, even moreso as debate over what will happen to Telstra, heats up.
Can the Government under Rudd do anything at all to smooth the clerical nightmare I see on the horizon. The existing Telstra customers will fall down a crack in the infrastructure as complex issues as new services are implemented.
The Telstra system, a common one in Australia; “I come first, Customers can suffer multiple sessions with a untrained support person, and eventually the customer moves on, the System migrates and all records are lost.” It’s a great system of chaos and ineptitude and intimidation.
Think for a second when things get hard over the next six months what will be shelved at Telstra to offer Telstra more man power to fight to survive. The Government is irresponsibly dumb, and focuses energies in all the wrong places. What a conundrum this is going to be. Telstra will not be prepared for these changes, putting good backups of customer records into archives and a good indexing system to find these records. It’s the scam of all business, that Computers are magic, and can do everything without being told first.
Paramount to most financial and support issues these days of “High” Technology is that nothing has changed, a good sound clerical background must be planned and implemented just like it was the old days of invoices in triplicate typed and manually filed logically.
I think the big guys realise Computers with no System are a great way to rip off consumers, and confuse staff, to their (Telstra and many businesses) benefit.
No one is prepared to do business, a lot of juvenile smartass delay tactics is all we will see in 2010, like we’ve never seen before.
And you and I will pay for it.
Anthony cut the bs, Telstra have had an enviable position for years ($b’s in unearned profits from the vested PSTN they received in 1992) and the government are simply now going to even things out… AT LAST and rightly so…
The juvenile delay tactics you menion have come from Telstra, no one else, wanting to hang on for dear life to these $b’s in unearned PSTN profits, and they have done so for many years.
As such, it sounds like you speak with a forked tongue and as a shareholder who is more concerned with profits and his portfolio than falling down any cracks.
James: Separating Telstra WILL AFFECT the bush. The real bush areas cannot support themselvesand splitting Telstra will bring Australia further problems we do not need. Providers other than Telstra would NOT be interested in providing services which will cost much more than they will ever get.
Who is going to pay? Will the federal government put in more?Anthony:
I agree with you. We are on the path to MASSIVE PROBLEMS. You need not only the best records but the experience and understanding required to get this done.
Even Telstra is starting to lack is this way. I had a problem with my personal web site on a BIGPOND server this morning. I had to go through at least threee sections NOT UNDERSTANDING the problem before I got someone who reset a few programs and then all returned to normal.
Australians need better!!!!!!!
A split Telstra will make it FAR WORSE. How will you get a problem fixed which the one answering does not understand.
I stated I had problems with access to my web domain on a web server of bigpond and all other internet web sites access OK. What did they do first test my ADSL line. They just DO NOT UNDERSTAND or the managers are useless who trained them. They state they are technical support. They have NO TECHNICAL UNDERSTANDING. WAKEUP TELSTRA.
Hey Robbie Stephens, maybe re-read my post, it’s not that clear maybe. My concern is that existing service holders with Telstra will just get lost as Telstra thrashes in an effort like a spoiled child to hang onto its, ” … ($b’s in unearned profits …” Telstra’s not going down without a fight, and theycertainly wont be fighting for the rights and accounts of existing customers, I feel. Naive of the Government to think that what is said one day long in the past will be honoured in the coming months.
basically we’re going to see a Godzilla movie wth Telsra fighting with all its might to spoil any chance of a NBN, or anything resembling a service in my opinion.
I said Robbie Stephens:
“The Telstra system, a common one in Australia; “I come first,(* TELSTRA) Customers can suffer multiple sessions with a untrained support person, and eventually the customer moves on, the System migrates and all records are lost.”
It’s a great system of chaos and ineptitude and intimidation.”
Maybe I need explain as I have had too many experiences of service providers not understanding what staff is required to program a Computer Billing Network, and I think they feel it’s a money maker; no records, no fuss, lots of income.
Man oh Man, if people can’t see the classic clerical chaos about to overcome this debate, and kill off customers funds through planned ineptitude I dunno what we are all whining about ?
I do not own one share of Telstra stock .It wont be worth a cent shortly, then again the game of business is fickle.
To all here, let’s get real simple:
Will Telstra give over to the Rudd Government the Windfall, the piece of good fortune which has been accruing in unexpectedly large amounts once they received it in 1992 ? Will the split come ? Does Rudd have the brain for this, has Telstra got Rudd in a sleeper hold he can never break free of ?
Will in a juvenile spit of the dummy Telstra destroy all it is, if Rudd seems he will get his way, that is what has worried me, that all my services will be lost in a clerical sabotage, burnt earth tactic by Telstra ?.
Grahame,
Why wouldn’t/shouldn’t USO apply to a split Telstra? Wholesale would be obliged to maintain the infrastructure and retail would be obliged to offer and support them them to end users in the bush.
Obviously I misinterpreted, apologies Anthony!
But I have faith in this governement to improve Australia’s comms and not stand for any bs from any Telco/ISP.
Just look at the improvements already gained and the turnaround in Telstra, simply with the inference that if they pull any more Sol like standover stunts, they will be taken to with the big stick.
Best of luck David (Quilty) with the untangling and successfully piecing together of the new Telstra.
Despite the enormous complexities of the situation I believe that as an Australian Icon, Telstra will negotiate a win, win result for the Australian Nation, customers, employees and the 1,400,000 Australians who own the Company.
Robbie Stephens says:
\Just look at the improvements already gained and the turnaround in Telstra, simply with the inference that if they pull any more Sol like standover stunts, they will be taken to with the big stick.\
Wonderful image, Sol taking it like a man, uhum …
Sydney Lawrence says:
\Despite the enormous complexities of the situation I believe that as an Australian Icon, Telstra will negotiate a win, win result for the Australian Nation, customers, employees and the 1,400,000 Australians who own the Company.\
Sydney Lawrence, I have a fear, a grave fear that we do not have the talent. It has moved overseas, or just doesn’t exist. I feel the pool of Australian talent is very shallow, I see Australia in all aspects of things, except sport, being totally inept. Do what you will the average Australian will like a \Homer Simpson\ just pay for a very expensive service, just to be one of the crowd.
Melbourne has a wonderfully over budget transport system which took London six months to get up and running, It’s around four years the much smaller system in Melbourne has been unleashed on a very brow beaten commuter populace, even though it isn’t working properly.
Can anyone restore my faith in Australian made ?
Anthony I agree with you. We need to have restoration in Australian made.
James I hope you DO NOT HAVE MAJOR PROBLEMS. Retail will not have the ability to fix them. Communications is so much different to other business’s. They may think they can do it, but they will lack the major requirements that they will need.
A week ago I had a problem with bigpond web server and had to wade through sections till I got to the area in control of web servers. They reset some program and everything came back on. The process did not expect users to get this type of problem.
The ones doing the process’s DO NOT UNDERSTAND that the odd problem can and will occur.
To have to relay problems through another party (RETAIL) is going to make service WORSE NOT BETTER.
Wake UP we DO NOT NEED a SPLIT TELSTRA.
James A USO with a SPLIT TELSTRA will not work. To start with a retail operator other than Telstra will not want it because it would cost them a lot of money in areas outside of the capital cities. Far more than what they would get. There will be problems that they will not want.
For over 100years the PMG to Telstra has built the Australian communications network we have today. We do NOT WANT the government to fully mess it up. That is what will happen.
For most of this time we had very SPECIAL STAFF who built and maintained the network. They were very unique in the way they worked on problems. They did not jump at solutions, they did analysis of the problem and solved it. They mostly did the the job before others without this qualifications did it. The technical staff were specially picked with this ability. It appears this has been lost today.
WAKE UP Australia.
We need Telstra to build the network that they can do. It appears a lot of it is just waiting to be switched on. This switch on MUST be CONTROLLED.
I do not think the government understand the problems that will come. We MUST NOT have the retail groups after the quick sale. Australians will regret it. Australians will have problems with their homes and the way it is connected if a proper standard is not followed.
Anthony it is with reluctance that I agree with your feelings that Australian business leaders, in most cases, do lack the progressive guidance of their counterparts in other parts of the world.
It is a fact that without our vast mineral resources Australia would be third world. The time is at hand for Telstra to cast off the shackles of past restrictive operational consequences, improve performance, and be a world leader in its operation.
As identified by Mr. Thodey, customer service must be improved, and with urgency. With the changes that may be enabled by the creation of the NBN Telstra will need to provide superior customer service to consumers.
Also, the Telstra Management must ensure that any agreement with the NBN has no adverse effects on Telstra Employees or Australians who own Telstra. Without this result Telstra must follow other avenues to ensure future success.
If amicable agreement with NBN is not possible could Telstra not roll-out a FTTN system and compete with the NBN thereby creating competition in the industry to the benefit of customers as called for constantly by Telstra opponents and the ACCC.
Roll out FTTN Sydney? Great Scott… quick, Marty to the De Lorean!
Although it was a selfish move and not in Australia’s best interests – as I have said many times, Telstra (as a sound business move for the future and to appease shareholders) SHOULD have done exactly that in 2005, as FTTN is just an extension of the existing PSTN.
It would have trampled competition by concreting Telstra’s “urban monopoly” for decades and Telstra DIDN’T, have to compete with an even bigger player – the government. FTTN would now be finished and your more precious than life itself shares would surely be worth much more, than the current 8c increase, over the 1997 IPO price.
But no, the “old” management’s greed and ego got in the way and instead of agreeing to a fair but very handsome ROI they wanted both their monopoly and a rubber stamped, massive ROI, lol…
This will go down as one of the biggest corporate blunders in Australia’s history and certainly #1 in Telstra’s scrapbook. Particularly, as that gun to the head from Telstra, was the impetus for the Rudd NBN plan and subsequent Telstra separation plans.
Telstra’s only hope now that the horses (with amigos in saddle) have bolted is to negotiate the best deal possible, with the government, remembering that the government will (as they should) put all Australians, before Telstra and their shareholders.
Like it or lump it…
It appears Mr RUDD and his mates think that Australians DO NOT OWN ANYTHING.
That they can take what ever they want, whenever they want. The Telstra case is the same as the Peter Spencer(NSW Farmer) situation.
We NOW have the situation of NON-Australian business’s and people who think anything is just there for the taking.
Non-Australian Business’s wanting to use any resource there is at the cost they want to pay under their conditions.
This MUST NOT be allowed to HAPPEN.
Hard working Australians built this country and Telstra and it is an insult for this to happen. Telstra is owned by private people. How can the government just think they can take whatever resource( Conduits etc ) they want without payment.
What about the Superannuation of older Australians etc!!!!!!!! Just forget them!!!!!!!
It MUST be a FAIR GO for true Australians.
The use of racial reasons is going to cost true Australians and we will suffer for it. I can see problems and feel indications of major problems( which I cannot identify as yet) ahead. Non-Australian think it is a free for all for them.
To split TELSTRA will do the above.
Wakeup TELSTRA and Australia before it is TOO LATE and place communications and Australia in a situation that will take many years to fix, and that is if it is possible.
Australia’s Business including Telstra has LOST a level of operation which is URGENTLY required to be rebuilt.
The age group to 40 appear to lack this skill level. It is a skill only showing in the over 40′s group.
e.g. One part is dedication to work. Young ones appear to take a lot of leave.
e.g. The young ones want to be boss in six months.
e.g. They also cannot think the way older ones did . They just want to follow process’s.
e.g. They DO NOT want to do the HARD work.
It was always around but not as much as at present. I noticed another government department just a few days ago the problems they have with the above problem.
The above problem with a split Telstra will be a nightmare.
Robbie: I regret to say it, but we DO NOT WANT IT LEFT to the government and frequent visitor Kevin and his mates to build the NBN. Australian’s are very low on their list. Their part should only be as far as the ACCC area.
Reasons:
They would NOT use STAFF with EXPERIENCE and UNDERSTANDING that will be required.
They would use ones with theory and nothing else.
Plus other major issues I have mention before.
It would cause major PROBLEMS in the years to come.
We need a FULL STRUCTURE to BUILD and MAINTAIN the NBN from inside Australia. We need the BEST.
TELSTRA needs drastic improvements also.
Already now providers are talking about downloading videos to your home. With high defintion and full surround sound this will be a large load on the NBN. You will need interfaces that will work with these loads not only today but continue to operate and be able to be fixed when problems happen. They need to be able to look ahead and be ready and have the solution done before any affect on customers. They need to be PREACTIVE.
That security of information is taken as a major concern. We MUST not have any type of information being hacked. We must have standards AT LEAST IMPROVED NOT get WORSE.
Sydney, you have complained about the “cost” of the (what did you call it) $43b “white elephant” NBN and also said why not just build it and leave Telstra to compete.
As a TLS shareholder, better be careful what you wish for, even if you obviously don’t mean it…
http://www.theaustralian.com.au/australian-it/bypassing-telstra-proposed-to-cut-nbn-costs/story-e6frgakx-1225820992223
Please build it – I like many others are fed up with being stuck on a Telstra RIM. My simplistic view is Telstra deliberately moves as much of the exchange as possible onto the street to ensure monopoly. It absolutely stinks.
I agree Pierre about time somebody did something so all can get fast internet access at a reasonable price not daylight robbery for a few megabytes of download and then go back to what is dial up speeds and not just people ion the cities in ther bush where i live also , the lines are still copper and still shared lines in this day and age is crazy just because the phone company doesnt want to spend money on improving the lines or internet access but then again i suppose when you get charged 100 bucks for 6 gigs why give people what thay want when you are raking it in
A MAJOR issue with the NBN will be the security of it. I read recently about the high number of ciber attacks the USA has daily on the internet. Australia cannot have this on our main backbone link.
Where will the Australian NBN be controlled from { CHINA }
Australians do NOT WANT THIS.
But indications are it will be.
We DO NOT WANT the ( Pink Bat Installers ) joining the NBN rollout.
We need a NBN built by Australian’s for Australia and the best solution is a rebuilt TELSTRA.
WAKE UP AUSTRALIA.