Online reaction to Telstra’s not-quite-forced “structural separation” is split along razor-sharp lines. Telstra shareholders are angry. Everyone else is quietly jubilant — especially Telstra’s key competitors.
“The big winner from these reforms is the Australian consumer,” said Michael Malone, managing director of iiNet, Australia’s third-largest ISP.
“It is a landmark decision that has the potential to change the entire telecommunications landscape forever, resulting in considerable benefits for all Australians,” said Optus chief executive Paul O’Sullivan in a statement.
Optus, Australia’s second-largest ISP, says the government’s draft legislation “closely mirrors” its own proposed model from June. Its four key pillars: structural separation, open access principles, cost-based pricing, and ACCC oversight.
As Crikey reported yesterday, Conroy also preferred Optus’ cost modelling that suggests the NBN will have an end wholesale price about $60 per month.
At the other end of the spectrum, Roger Mangraviti, director of Independent Service Providers, a “boutique” ISP with just six staff, is cautiously optimistic.
“This isn’t the first time that the government has hinted or asked Telstra for structural separation … Even if the government did force a separation, that would take two to three years,” he told Crikey.
“I believe that if successful separation were to occur, it could result in cheaper access. One needs to remember that the major cost is not only the last mile but still predominantly bandwidth,” Mangraviti said.
If Telstra does split into wholesale and retail divisions — which, if the legislation passes, seems almost inevitable — the new retail business would supposedly buy access to the existing wholesale copper and hybrid fibre-coaxial (HFC) networks just like any other ISP. Similarly, the NBN fibre-to-the-premises network will be wholesale only, with all ISPs buying access on an equal footing — and with anyone able to offer their existing infrastructure as part of the NBN.
But what is to become of Telstra’s legacy copper network?
On Lateline last night, Senator Conroy indicated it’ll be ripped out as the NBN is built.
“It would be a very poor outcome if there were, ultimately, two pieces of fibre, and the expense of that to the economy.
“It’s very similar, as you’ll remember, to the rollout of the HFC cable where Telstra’s and Optus’ vans went down the same streets, dug up the pavement twice, strung two pieces of cable. This was a disaster. Five billion dollars was lost by Optus and Telstra lost many billions of dollars but protected their incumbency at the time…
“We welcome Telstra, Optus, any of the other potential vendors, to be part of our network and if that turns out to be a partnership with Telstra, it would see, as we lay the … fibre into the homes, we’d be taking the copper out. And we the NBNCo would become the sole connection from the kerb to the home.”
It will be the one true NBN or nothing, it seems. Did someone say competition?
Wait a sec, if they take the copper out, what about the Internode ADLS2+ connection that i may want to keep if i don’t want to join the NBN? Or if the NBN is too expensive?
And why is this c0mment not the big news this morning? At least it would force a clarification from Conroy’s office.
Regards cable TV: Kerry Stokes ability to get into position also looks pretty good. If Senator Fielding wishes to question the Future Fund’s actions to manage risk and lower its dependence on one particular share holding (and industry), he might also like to look at the last few months of Stokes’ agile work anticipating telecommunications change. Plus subscribe to crikey.
We have an Australian company that successive governments have deliberately structured to be the way it is today and has invited Austalians to invest in Telstra as it was privatised. Now the government wants to destroy the value of the company for shareholders without offering any compensation. If I was a director of Telstra I would be briefing my lawyers as we speak. I don’t hold Telstra shares and don’t use Telstra’s services
Telstra under Sol Trujillo will be a case study in how to antagonise the regulator and destroy any reservoir of good will that might have existed. Corporate Affairs practitioners will study it for decades to learn what not to do.
Management at Telstra has stubbornly resisted anything that may have undermined its monopoly, while doing everything possible to entrench that monopoly and defy the regulators.
They have reaped what they have sown.
@mtats: I only saw Senator Conroy’s comment about ripping out the copper network as I reviewed the Lateline transcript shortly before filing this story. It’s something I’ll be following up.
@Phillip Musumeci: James Packer is also well cashed up to counter any moves by Kerry Stokes. That said, Packer does seem more interested in casinos and other investments than the media. Telstra may or may not negotiate a deal good enough — that is, sufficiently acceptable to the government — for them to retain Foxtel. If Foxtel comes into play, well… game on!
@ westral: I’m with Bernard Keane on this one. That Telstra might one day be forced to split is hardly a secret. People buy shares in a company and play the investment game, for better or for worse. Yes, Telstra shares dropped yesterday but today they’ve recovered somewhat as people get their heads around this thing. What happens a year or three down the track when Telstra is finally restructured is anyone’s guess.