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National Telcos Can and Will Change Their Behaviour, Case in Point: Telstra

When discussions with overseas colleagues made it clear to me how fast things are changing here in Australia compared with the rest of the world, I was prompted to write this update about the developments in Australia, particularly in relation to its incumbent telco, Telstra.

Most people overseas have not yet fully caught up with the fact that the destructive regime of Telstra’s former CEO is well and truly over—in the past there has been plenty of international reporting of the shocking behaviour of Telstra under Sol Trujillo (former US West) and his persistent attacks on the government included suing Ministers and abusing the Regulator.

This behaviour continued until April this year, when the Australian government pulled the plug and announced its plans for the structural separation of Telstra, and threatened to use its $43bn war chest to overbuild Telstra.

As a result of this the Telstra Board sent Trujillo home early (since his abusive monopolistic behavior had clearly not paid off for the company) and appointed a new CEO, David Thodey. I have been in contact with this new CEO ever since, discussing trans-sector developments, amongst other things.

It is like a breath of fresh air.

Thodey understands the reality of the situation but also sees huge national and business opportunities for his company (interestingly, Ad Scheepbouwer, CEO KPN Netherlands, has made similar statements—so Telstra is not the only one amongst the national telcos). David has stated publicly that he is in favour of an open national FttH network and he has indicated that he is willing to cooperate with the government on that plan.

This has opened up the way for negotiations. Along with others I have argued that it would make sense if Telstra were to become part of the new FttH infrastructure company (NBNCo)—and perhaps even take a large shareholding in that company by bringing in its relevant assets. This would allow the new network to get off to a flying start and avoid overbuilding.

We are now moving in that direction.

There are still plenty of issues to resolve, such as what sort of separation is needed in the interim, but with a determined and committed government on the one side and a cooperative Telstra on the other these problems can be solved.

So the message is that if the country agrees that telecoms is more than simply high-speed Internet access, and that this infrastructure is of national importance because of its economic and social trans-sector values, the government should come up with a very strong policy. Once the government has embarked on this path it would be essential for it to remain fully committed to it.

Only if a strong policy like this is in place will incumbents change, and when they realise they have to change they will explore the situation and automatically recognise the new trans-sector opportunities. With the assistance of these telcos further pressure can then be put on the government to develop policies that will see the government committing itself to use the new network for the delivery of e-health, tele-education, energy services, and so on.

In a cooperative environment like this we can investigate how best to use existing infrastructure, and identify the gaps. This will allow those involved to do some good quality mapping and planning, and with industry-wide cooperation (especially if this includes the incumbents) most problems can be solved in a far less confrontational way.

We will have to wait and see how this turns out, but Australia is certainly on the right road. Our experience will provide interesting case studies that can be used by others around the world to plan their own open national high-speed broadband networks that can be used by all sectors on a wholesale basis.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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Incumbents will act monopolistically until their hand is forced Gulumbit Grut  –  Aug 18, 2009 3:25 PM

Incumbents such as Telstra acting monopolistically until their hand is forced is hardly an insight that I would hold the presses for.

Respectively, I found Mr Budde’s article to be drivel. Australia is a long way behind the world’s broadband leaders. Government policy will always be confused whilst government is a major shareholder in industry actors. Australia is finally doing something constructive towards deploying acceptable broadband. Well done them. In terms of speeds and affordability Australia is still years and years behind countries such as France… or the UK.

This article is nothing more than advertising. Mr Budde has a vested interest in suggesting that Australia’s experience should be held up as a case study - an argument that would help him sell himself and his reports.

Trans-sector approach accepted by more countries Paul Budde  –  Aug 18, 2009 11:23 PM

Thanks for your critical note. Yes Australia is several years behind, that’s why this drastic action was taken. But latecomers do sometimes have an advantage. Australia is basing its $43 bn BB investment on a trans-sector approach towards healthcare, education, etc. In this respect I indeed feel that Australia can lead the way and yes I am not ashamed of pushing that stand.

I feel rather comfortable about this as this concept has now been accepted not just by the Australian government but also by the Obama Administration and the governments of the Netherlands and New Zealand.

However, in all my reports and statements I will always say that there is no silver bullet and that each country will have to develop the best way that suits them. However, I am convinced that in the end we do need to create a utilities based infrastructure that facilitates all these different sectors using it for the delivery of their applications and services in an economic viable way. This is not all that different from other forms of infrastructure.

And… I do provide lots of free information and reports on these topics but I of course I will be more than pleased if people sometimes also buy a report from us?
Paul Budde

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