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IN TODAY’S ISSUE: New Tasmanian hardware tender out Separation: US researchers debunk benefits New alliance targets Waikato fibre build

KEVIN MORGAN COMMENT Getting the history of how Telstra was formed right & how it affects the future

COMMUNICATIONS DAY TUESDAY 22 SEPTEMBER 2009

Australia & New Zealand’s telecom daily, founded 1994

ISSUE 3602

Telstra: commercial networks could be applied to last 10% of NBN footprint A public-funded regional wireless broadband deployment would only overbuild existing commercial infrastructure, according to Telstra. While the federal government has said regional and rural areas will receive wireless broadband as part of the national broadband network rollout, Telstra Country Wide group managing director Brett Riley told CommsDay such deployments may be commercially unviable since mobile broadband networks already cover most of Australia’s far-flung regions. The federal government is seeking to offer 12mbps wireless coverage to the 10% of the population outside the reach of fibre in its NBN plans. But while details of the wireless plans are as-yet unknown, Riley said ongoing upgrades to Telstra’s national HSPA network would mean high-speed wireless broadband will already cover the entire population. “We’ve already got [wireless coverage],” he said. “That’s what I’m missing in this whole discussion – at the moment Next G covers over 99% of the population, and there’ll always be a fraction that’ll only be satellite coverage, anything extra’s going to be overlay on an existing network.” The Country Wide GMD said areas schedule for wireless coverage under the NBN were likely already covered by commercial networks. “I don’t understand where you’d deploy it – because to make it pay you’ve got to deploy it into areas [with] population, pretty much every town now that amounts up to 200 or so have definitely got coverage,” he said. Riley even said that government subsidies for Next G users could be a viable alternative to a new wireless build. “It’s certainly one of the possibilities,” he said. “I’m not going to forecast what the government might put into place, but I think it would be a [credible] option to consider because in regional Australia there’s not enough people to support overbuild. That’s the key point. You really want to take the key networks that are out there now and make sure they’re fully utilised, of course. And there’s ways of doing that – I think the most efficient option for regional Australia is to fully use the networks that are out there and not try and overbuild them, just from a pragmatic point of view.” But even if Telstra’s Next G network is capable of 21mbps speeds, it is still unlikely to meet the federal government’s NBN requirements. Communications Minister Stephen Conroy has said wireless will deliver a minimum of 12mbps speeds to the ‘last 10%’, while a 21mbps Next G would likely offer average speeds below that mark. 3G rival Optus is currently increasing coverage from 96% to 98% of the population, while VHA now touches 94%. Riley backed wireless as the right technology for the bush. “Wireless is definitely a good solution for a lot of regional and rural Australia, there’s no doubt about that. It’s working now, it’s a proven technology, it’s got a good footprint now,” he said. “We’re still rolling out [Next G] base stations, expanding the footprint and in-filling.” “The other big thing we’re doing is upgrading the speed of a lot of those base stations... and to do that you’ve got to run fibre to them, you need the backhaul capacity. That’s not just an equipment or a software upgrade that is actually an infrastructure upgrade.” Telstra is currently moving to have all of its Next G base stations capable of 21mbps speeds over the coming year. Some $70m will be invested to roll out fibre and Ethernet backhaul to base stations, with the bolstered backhaul capacity due to support the next iteration of 42mbps HSPA planned for 2010. 270 new or improved sites are scheduled for completion by June 2010, and over 84% of the population is now covered by Next G with Ethernet backhaul, or with at least 8Mbps backhaul using multiple E1s. Luke Coleman

New Tasmanian NBN tender announced A tender has been announced to supply hardware for the first phase of the national broadband network rollout in Tasmania. Published on the Tasmanian government’s tender website, designated NBN-builder Aurora Energy is now on the hunt for a supplier of outside plant equipment – just days after initial construction for


the fibre deployment begun. “The design of the FTTP networks for these locations is now complete. This Request for Tender is for the supply of the required Fibre-to-the-Premises outside plant materials using Factory Installed Termination Systems and associated components,” the tender said. The tender will remain open for three weeks, after which Aurora will begin an evaluation process. The contract is set to begin on November 1. A separate Aurora tender for “the Provision and Management of Optic Fibre Cables” closed in midAugust, and is set to run until the end of August in 2012. The latest tender announcement comes just days after the first civil works began for the Tasmanian build. A trench-digging machine imported from France by Marais Lucas Technologies will allow for up to 600m of trenching to be dug each day, with the first fibre cables to be laid to Midway Point (near Hobart) and between George Town and Scottsdale, with work on another link to Smithton set to begin early in 2010. Midway Point, Scottsdale and Smithton are hoped to have fibre-to-the-premises connections by mid-2010. BUILD UNDERWAY BEFORE LEGISLATION IN PLACE? But industry commentators have questioned how the Tasmanian rollout can begin without first confirming legislative arrangements around the NBN. While the federal government unveiled legislation last week which will see Telstra either functionally or structurally separated, the ownership structure of the NBN company is still undecided – as are the access arrangements for the network. Speaking at an event in Sydney earlier this month, Department of Broadband, Communications and the Digital Economy first assistant secretary Richard Windeyer said the lack of legislation would not impede the Tasmanian rollout. “There’s nothing required, in a legislative sense, to facilitate the actual rollout,” he said. “The rollout can occur. The issue is probably more, when it comes to offering services and working out access arrangements on new investments, what does that framework look like? And clearly we’re not in the business of getting services offered – you’ve got to get infrastructure in the ground first and that can be done. What’s then important is having the legislative framework and what that looks like for the delivery of services... I don’t think the absence of legislation at this stage is actually a significant barrier to work going on in Tasmania.” Luke Coleman

US researchers say vertical separation correlated with slower broadband growth, lower investment A new US research paper co-written by two economists from the respected centrist US think tank The Brookings Institution has made a damning assessment of the success of telco separation policies—citing both Australia and NZ as examples of how the US should not regulate its sector. The paper, titled “Vertical Separation of Telecommunications Networks: Examples from 5 countries”, was written by two senior fellows from the Brookings Institution—Robert Leighton and Robert Crandall– along with Jeffrey Eisenach, who chairs economic consultancy Empiris and is an adjunct professor at the George Mason University Law School. The paper argues that it is “unlikely that vertically-fragmented network owners and service providers would have as strong incentives to invest as would a vertically-integrated service provider. The knowledge and coordination required for network design and service offerings point strongly towards vertical integration in the highly dynamic modern telecommunications environment.” The paper says that one of the major issues with separation is the “information problem.” “One of the key benefits of vertical integration is the ability to share knowledge between the downstream and upstream divisions – for example, the upstream division is likely to have unique insight into the costs of constructing an NGN, while the downstream (retail) division is likely to have better information on the types of services consumers may demand from the network (and their willingness to pay). So long as the upstream and downstream functions are vertically integrated, they have strong incentives to share this knowledge in order to achieve collective success. Mandated separation destroys these incentives: Rather than sharing information candidly, each downstream firm instead has an incentive to share only that information that supports its preferred outcome.” The paper provides a critical assessment of separation policies that have been implemented in Australia, New Zealand, the UK, Sweden and Italy. For example, of the UK, it claims that the separation imposed on BT took place despite the fact that the UK’s DSL penetration and uptake of wholesale services was growing

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faster than many other countries in the EU. “Broadband line growth actually decelerated after the adoption of functional separation,” according to the paper. “The new policy has been associated with a severe decline in UK growth relative to the growth in the EU-15. Indeed, the UK broadband growth rate is now less than the average rate for the entire EU-15, and broadband penetration in the UK has fallen relative to EU-15 penetration in the three years that the policy has been in place.” Of the five regulatory regimes, the paper says “the early evidence suggests the growth of broadband penetration has slowed in countries which have adopted vertical separation, and that investment, especially with respect to NGN fiber networks, has been deterred.” “In three of the four other countries where vertical separation has been implemented – Australia, Italy, and New Zealand – broadband growth was greater than the OECD average at the time the new policy was under discussion and ultimately implemented, but subsequently subsided to be approximately equal to or even somewhat below the OECD average.” Talking about the UK, the paper says “while other nations (with integrated incumbents) are rolling out FTTH infrastructures, and its own cable operator is deploying DOCSIS 3.0, the UK’s plans for upgrading the traditional wireline network are dependent on the outcome of a long and difficult negotiation between and among BT and its downstream retail customers, with Ofcom (and perhaps now the government’s Next Generation Fund) serving as mediator and referee, for which there is no certainty of success, or even completion.: The paper says these are precisely the sorts of “transactions costs” economists have in mind when describing the economic efficiency benefits of vertical integration, and, “conversely, precisely the sorts of difficulties we would expect to find when vertical dis-integration is mandated.” The paper says that Australia’s operational and accounting separation regime along with unbundling requirements has led Telstra to invest “billions in its relatively unregulated backbone, 3.5G wireless, and HFC infrastructures, while significantly reducing investment on traditional last-mile access facilities. In a tacit admission that the regulatory regime is incapable of supporting private- sector investment in a next generation network, the Australian government announced in April 2009 its intention to start (the) NBN Co... At the same time, the government requested comments on a proposal to impose functional separation on Telstra.” The paper concludes “the evidence shows no increase in either investment or broadband penetration in nations that have mandated vertical separation; indeed, the evidence suggests that vertical separation has impeded the rollout of next generation networks.” Supporters of separation are likely to dismiss the paper on the grounds that its disclaimer says that the writers have received financial support from US telco Verizon. But at the same time, the authors are not associated with normal conservative, pro-free market sources– the Brookings Institution has variously been described as “centirist” and “(left) liberal”, and is a favoured venue for US Democrat politicians and appointees such as Hilary Clinton and FCC chairman Julius Genachowski, who was scheduled last night to announce new Net Neutrality rules at the think tank. Australia’s own PM, Kevin Rudd, spoke there in 2007 and described it as one of the world’s pre-eminent public policy institutes. Grahame Lynch

Ubowireless prepares for WiMAX launch Unwired subsidiary Ubowireless is busily preparing for a new WiMAX build after scooping a prestigious engineering award. Starting out as a spin-off from Unwired, Ubowireless won the top prize at the annual Engineering Excellence Awards last week, and chief technology officer Phil Ridley told CommsDay the company is already at work on the planned Vivid Wireless WiMAX network in Perth. “Ubowireless is all about managing the complexity of 4G wireless networks,” Ridley told CommsDay. The system is used to optimise throughput on wireless networks using data gathered from customers and operators. “It takes information from a great deal of systems... and using some sophisticated mathematics comes out with solutions that tell us what we need to fix in real-time,” he said. The technology was designed and developed in Sydney by a team of just over a dozen people, and has already garnered interest from USbased wireless operators. The technology is already at use on Unwired’s existing networks in Sydney and Melbourne, and will be implemented on the upcoming WiMAX network of sibling company Vivid Wireless. “The absolute focus of the Ubowireless team now is the adaptation of the technology, of the service suite, to run on our Huawei Vivid Wireless network in Perth so we’ll be able to get the same benefits of improved network utilisation and customer service that Ubowireless delivers,” Unwired regulatory director David Havyatt said. But while the technology has the potential to be used on LTE deployments expected over coming years, Ridley said the company remains focussed on Vivid and Unwired. “Technologically, yes it could [be used on LTE]. It could be used on any modern 4G technology, particularly LTE and so on, but because WiMAX is so ahead of the game technology-wise we’ll apply it to that first. It could be used on [LTE] but I see its true future really being on true 4G stuff,” Ridley said. “At this stage, our focus is on the support of our own business, but the algorithms will work with any 4G

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network,” Havyatt noted, saying Ubowireless’ work for Vivid was “well progressed.” But could Ubowireless technology soon be used on both Vivid’s WiMAX network and competing LTE networks? “We will cross that bridge when we come to it,” he said. “Quite frankly, dealing with their LTE deployments is still something significantly in the future.” Luke Coleman

Telstra break-up hoped to benefit regions The federal government expects that the break-up of Telstra will create competition in regional areas. Speaking at a regional broadband forum in Tamworth, communications minister Stephen Conroy said new legislation designed to functionally or structurally separate Telstra would be a boon for competition in regions, which he said had suffered due to Telstra’s vertical integration. Conroy called Telstra’s vertical integration “one of the major obstacles to service delivery in rural and regional Australia,” saying there was a “lack of choice for people to take their business elsewhere if they are unhappy.” “Opening up the market to more effective competition offers the opportunity for other companies to enter these markets and compete hard with Telstra,” he said. “This competitive stimulus will lead to more choice and more affordable prices for people in regional Australia.” The legislation is also designed to give greater powers to the Australian Competition and Consumer Commission, which Conroy said would benefit regional users. “The changes will give competitors greater confidence and certainty to enter regional markets and provide new services,” he said. While the federal government’s national broadband network plan stipulates that fibre will be rolled out to towns with more than 1,000 people, Conroy said smaller towns might also receive fibre-to-the-home connectivity. “This does not mean that towns with under 1,000 people will automatically miss out – as has been claimed. Locations with less than 1,000 people may well be connected by fibre if their proximity to relevant infrastructure is favourable,” he said. “If small communities are well positioned in relation to backbone fibre links and other facilities, then it is very possible that they will be served by fibre.” Meanwhile, the Australian Telecommunications User Group has finished a ‘Regional Communications Roadshow,’ visiting Bathurst, Dubbo and Port Macquarie. According to ATUG, “the Mayor of Bathurst welcomed the Roadshow as a means of highlighting that the NBN would provide business and residential users the opportunity of further developing new and innovative communications services to support health, education and business in Western NSW.” Bathurst was said to be conducting a survey of community needs which is hoped to form part of state NBN planning. ATUG also said the Mayor of Dubbo had welcomed Telstra’s imminent separation “as a means of providing competition and better outcomes in price and services for the region”. Luke Coleman

Waikato network alliance formed Hamilton-based Velocity Networks and the Hamilton Network have formed a timely alliance with lines company WEL Networks to propagate fibre deployment in New Zealand’s Waikato region. Combining their wares and ideas, the three parties hope that the government’s regional broadband focus will result in a productivity and economic boost for the region. WEL Networks Julian Elder said that the three parties are “more in tune” with the region that national telcos could be. “We know the local needs when it comes to fast communication networks. I’m confident that our companies working together can get ultra fast broadband to more people and businesses throughout the Waikato in a speedier timeframe than could have been achieved by traditional telco companies. We are ready to invest in local and rural infrastructure –in many cases, it’s already in place and ready to use,” he said. Velocity Networks MD John O’Donoghue said that the regional roll out will model itself from the

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Chief Editor: Luke Coleman Luke@commsday.com.au 02 9261 5490 Assistant Editor: Petroc Wilton 02 9261 5436 petroc@commsdaymail.com Editor, United States: Patrick Neighly Pneighly@madyakpress.com Correspondent, Auckland: Juha Saarinen juha@saarinen.org Journalist: Kei Contreras kei@commsdaymail.com Editor at large: Tony Chan tony@commsdaymail.com For subscription details contact Laraine Davis at laraine@commsday.com.au or phone at 02 9264 1781

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45km Hamilton Fibre Network. “Velocity and WEL Networks will now apply the learning gained through this successful implementation to extend the metropolitan broadband network while also taking it out to the wider region,” he said. Paul Clearwater

Kids internet use booms during holidays 40% of Australian children spend an extra three hours or more a day online and using mobile phones during the holidays, a new survey has found. A survey conducted for Telstra found that one in five parents were surprised to receive high bills after the holiday period, when usage increased significantly. “Mobile phones are great for kids’ safety and security, and the internet is a must for education nowadays. On top of that, kids are using both their home internet and mobile phones to connect with friends and for entertainment,” Telstra Consumer executive director Jenny Young said. “When talking to your kids about internet usage, it’s timely to remind them of the importance of protecting themselves online. For example, the dangers of providing personal details or meeting strangers online without telling you. PC security software helps safe surfing and a PIN number on a mobile phone can prevent others running up large bills or accessing personal information.” Telstra gave parents advice on how to manage their children’s internet and mobile consumption, such as using unmetered content, being careful about premium text messages, and considering prepaid mobile phones or wireless broadband. 69% of parents said children frequently played games on the internet or their mobile phones during the holidays, while 68% said internet surfing was a popular holiday activity. Kei Contreras

TELSTRA CABLE SCORES ENGINEERING AWARD Telstra has won two Engineering Excellence awards for its Endeavour cable between Australia and Hawaii. The Engineers Australia awards were given to Telstra in the Project Management and Infrastructure Projects categories. The Endeavour cable was the first major international cable to be laid out of Australia in seven years, and is said to be the largest ever built and owned by an Australian company. The cable can be scaled up to deliver 1.28Tbps of traffic, the equivalent of 160,000 simultaneous high definition television channels. OPTUS INTRODUCES FAMILY FAMILY VALUE PACKS Optus has unveiled a new bundled service for mobile and fixed lines, called ‘Family Value Packs’. Optus Family Value Packs allow customers to tailor a bundled package of Optus ‘yes’ Fusion, Optus ‘yes’ Family Cap/iPhone Cap mobile plans, and (optional) prepaid mobile plans under one billing name and address. Family users can access free unlimited standard voice calls to each other when all relevant services are combined under the same name and service address. Optus Consumer MD Michael Smith said, “Families can now talk to each other as much as they like with the customised home phone, broadband, and mobile plans. A simple four-step process will allow our customers to link their services to take advantage of the Family Value Pack call benefits.” QUICKFLIX INTRODUCES NEW BOARD MEMBERS Online DVD rental and movie subscription service Quickflix has appointed Simon Baker and Ross McCreath as new non-executive directors to its board. Baker was formerly REA Group’s CEO and MD while McCreath has acted as a senior media executive with PayTV Australia. Baker and McCreath will join Quickflix founder and executive director Stephen Langsford and MD Simon Hodge to replace non executive directors Kevin Campbell and Jon Schahinger. According to Langsford, the online, media, and business expertise of Baker and McCreath will be invaluable in assisting the company to meet its “aggressive” growth targets. HISCHMANN’S SPIDER SWITCHES SWITCHES CATER TO INDUSTRIAL APPS Belden subsidiary Hirschmann has introduced the new SPIDER family of switches, which can be used wherever industrial ethernet switches are used in a star or line topology. The switches feature a plug and play functionality and high port density, making them ideal for most industrial applications including process and factory automation, machinery manufacturing, industrial systems and printing presses. The SPIDER product family also includes 21 switches from 2 to 10 ports covering the entire industrial ethernet pyramid from the entry level through to layer 3 backbone switches. AVAYA INTRODUCES NEW IP OFFICE SOLUTION Enterprise communications systems provider Avaya has developed a new solution said to simplify unified communications and customer service for small and medium enterprises. Called Avaya IP Office Release 5, the product will enable business sites to use servers at alternate sites to keep an IP communications network like phones and voicemail operating in the event of an outage. A new contact centre reporting application has

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likewise been introduced to track customer service progress and agent productivity, while using alarms to help administrators react to issues in real-time. TELSTRA OFFERS ‘HEROMESSAGE’ FOR AFL FINALS FINALS Telstra has launched the Telstra AFL ‘HeroMessage’ program, allowing fans to send messages to their AFL Grand Final heroes. Fans can send their AFL HeroMessages during Toyota AFL Grand Final week via SMS or on an interactive ‘livesite’ at Melbourne's Federation Square. “We know that athletes get an incredible thrill from receiving HeroMessages from fans and it really does inspire them to go that extra step in trying to achieve their ultimate goal,” Telstra CFO John Stanhope said. AGILE NZ HIRES BUSINESS DEVELOPMENT EXEC Better known for its unified communications and contact centre solutions, NZ’s Agile is gearing up for growth in its network business. The company announced that it has hired telco veteran Phil Josephs as its new business development manager. He will be responsible for growing the carrier and service provider part of the business. “It's great to be working with a NZ based company” says Josephs. “I have been privileged to work with some great multi-nationals, but I am looking forward to the more immediate environment here at Agile, where everyone in the company is part of a team focused on serving our customers and the key stake holders are working right alongside me.” Agile is in talks with network vendors to increase the company’s solution portfolio. The company currently deals with Juniper, RAD and Ceragon. SPRINT NEXTEL TO INCREASE WIMAX FUNDING? Sprint Nextel could increase its funding commitment in the Clearwire WiMAX venture. CEO Dan Hesse told reporters the operator had no intention of being left behind now that mobile rivals AT&T and Verizon Wireless were accelerating their LTE programs. “If the funding is not there, we are clearly willing and able to step up to our fair share of whatever that funding requirement is. Our goal with Clearwire is just that they keep building out that 4G network very, very quickly,” he said. The comments come just days after the WiMAX operator revealed it could adopt LTE should subscribers reject its WiMAX offering. Clearwire has launched in just 14 US cities to date.

Comment by Kevin Morgan

Optare and error: Defending the Beazley legacy Now the government has two new words to repeat ad nauseam about its $43 billion FTTH network and structural reform of the sector – mistake and choice. The policy is no longer just ‘visionary’ and ‘nation building’. It also corrects the ‘mistakes’ of the past and offers Telstra a ‘choice’ about its future. But there‘s a problem with the government’s new mantra of correcting mistakes and offering choice because like Humpty Dumpty, when he scornfully told Alice, “When I use a word, it means just what I choose it to mean – neither more nor less”, the government’s use of the words defies any common understanding. Consequently a “mistake” becomes Kim Beazley following ALP policy in 1990 on the merger of OTC with Telecom and “choice” becomes telling Telstra to sell its network or no access to spectrum and suffer a web of new highly intrusive regulation under functional separation. Let’s deal with the curious concept of a ‘mistake’ first, especially as finance minister Lindsay Tanner has joined the chorus arguing it was another ALP mistake when Telstra was allowed to enter the Pay TV market in the mid 1990s. Beazley’s mistake was to follow long standing policy on merging Telecom and OTC and in making the $800 million sale of Aussat the price for the duopoly licence. Despite the collective amnesia in ALP ranks the merger was slated to happen in 1975. The Whitlam government introduced legislation to merge the OTC with the newly formed Telecom in 1975 shortly before Whitlam was dismissed. The legislation obviously lapsed. Far from creating an anti competitive monolith by following that policy what Beazley did was correct a structural flaw in the sector and bring Australia into line with every major economy other than Japan in having an integrated national and international carrier. The merged company was far from being a huge new monopoly because all the merger did was add about 7% to Telecom’s revenues. Even that windfall was short lived because the vastly inflated international margins OTC had fed on were the first victim of competition. Consequently any suggestion that Beazley made any mistake is grossly inaccurate especially in the context the decision was made, which was to licence full service infrastructure based competition, not resale. Based on international precedent Telstra remained a vertically integrated incumbent and there was no mistake as no government separated its incumbent following liberalisation and no government has subsequently seen the need for structural separation to bolster competition even when the incumbent was privatised.

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KEATING THE HERO? Curiously in this rewriting of history the then treasurer Paul Keating emerges as a hero who supposedly pushed valiantly for a more competitive model. Nothing could be further from the truth. Despite some wishful thinking Keating did not call for structural separation. Indeed far from it. The reform minded treasurer wanted the Overseas Telecommunications Corporation— the fattest monopoly in Australia’s history—to have the second licence with Telecom copping Aussat whilst being kept out of the international market for several years. Some competitive model! And what of the second mistake, that of ‘allowing’ Telstra to enter the pay TV market. John Menadue, who was a Telstra board member in the mid 1990s, has a somewhat different take on that. Following publication of his memoirs in the late 1990s, Menadue told ABC radio that he had opposed the Foxtel deal ”which the government wanted Telstra to do with Rupert ” because it was “a bad business case and (represented) undue political influence.” As its 1995 accounts show, Telstra underwrote News Ltd to the tune of $2 billion to secure Foxtel programming from Australis. It was this government driven programming deal and the initial HFC rollout that Telstra was forced into that underpinned Foxtel’s pay TV dominance, not Telstra’s devious anti competitive conduct. Such misreadings of history can perhaps be excused – after all these are events of fourteen to twenty years ago and the spin cycle of modern governments scarcely has time for the nuances of history, especially if they are inconvenient. But what can’t be excused is the government’s assertion that Telstra has choice over its structure. Despite eluding most commentators, the option put to Telstra if it wants access to spectrum and is to stand any chance at the minister’s discretion of holding its cable and Foxtel interests isn’t structural separation – it’s divestiture. Telstra has to sell down its interest in any network it offers fixed line retail services over to a 15% holding . That definition of ownership or control has been lifted from the Broadcasting Act because it is the most punitive definition of control that can be found on the statute book. LEGISLATION APPLIES TO CORE, BACKHAUL: BACKHAUL Nor is the prohibition on owning/controlling a fixed network that retail service is offered over necessarily limited just to the access network, the focus of Telstra’s purported anti competitive conduct. As the legislation stands it could apply to backhaul, trunk and even international capacity unless the minister exempts a network element once Telstra has nominated what it will relinquish in an offer on ‘voluntary’ structural separation. For Telstra to concede separation and make an offer perhaps initially of the access network would be high risk indeed if the government and the ACCC were intent on establishing the separation boundary at the heart of its networks. In effect to remain a telecommunications company Telstra might have to sell much of its core network including even those elements used jointly in delivering mobile services. Telstra would no longer be a telecommunications company. To describe the policy as extreme is utterly inadequate. The policy is ludicrous and as the explanatory memorandum issued with the legislation demonstrates there isn’t an international precedent to support divestiture nor is there any independent evidence offered to justify the government’s proposed course of action. All the government can do is claim that ‘reform’ is needed because Telstra is amongst the most vertically integrated telecommunications companies in the world. Please note not the most vertically integrated operator because there is no independent research the government can point to that suggests there is anything unique about Telstra as an incumbent other than the Pay TV interests it formed at the government’s behest. There is no evidence quoted from the international experts such as the OECD nor the International Telecommunications Union nor even independent domestic experts such as the Productivity Commission. What is offered as justification is merely the self serving complaints of Telstra’s access seekers, albeit filtered in part by the ACCC. What is even more disturbing is the curious logic that defines structural separation as no longer owning a network, which the ACCC has accepted as its definition and which has become the cornerstone of the choice offered Telstra, has its origins in the Optus regulatory submission. Clearly Paul O’Sullivan has woven a spell over the ACCC and the government. Should we be surprised? After all ‘optare’, the Latin word which inspired our second telco’s name, means choice. Now what’s the Latin for mistake? Kevin Morgan served on Kim Beazley’s ministerial Advisory Committee in 1990/91

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Communications day by Luke Coleman - ENG (Marais Trenchers)