[LINK] Telstra free Internet

[Stewart Fist]

I'm sure it has occurred to Dan Tebbutt that he has been used by Telstra, but
it certainly makes a great (but flawed) story to announce today in The
Australian that Telstra is planning to offer free Internet services.  

We've talked about this possibility for years, but the conditions aren't right
in Australia to sustain free Internet systems - except if Telstra does it
through internal subsidies.  In the UK, Free Internet is finance by timed
local call charges which BT collects, and filters through to the ISPs. 

Advertising support is not enough to finance an ISPs operations in Australia
at the wholesale prices charged by Telstra for Internet communications. The
business case for those free Internet services starting up, must be miserable.
 They can only be seen as IPO share-market ploys.

So Telstra alone can run a free Internet service in Australia for any
sustainable time, and then only by internal cross-subsidies. 

Therefore, I'd bet that this story is a complete wank floated by Telstra for
three reasons:
 1. It lets them be seen as the good guys - they are trying to paint
themselves in a favourable light with the general public.
 2.  It diverts attention away from their other deals (ABC etc)
 3.  It destroys the likelihood of eisa being able to finance the Ozemail deal.

If the term 'predatory pricing' means anything at all, then the ACCC will
certainly not allow this to happen, and Allan Fels will come down on Telstra
like a tonne of bricks. But the markets will know that Fels is due to retire
in October, so the stifling effect on eisa's fund raising will continue to
exist.  Ozemail will remain unsold.

Look at the other ambit claims that Telstra has been floating recently. 

1. First there was the claim that they would buy Ozemail themselves, but they
didn't even bother leaving a deposit after supposedly doing the deal.  They
got out so quietly after the ACCC said it would look into the matter, that
anyone with any sense should suspect that they had not expected to get it anyway.

2. Then there was the suggestion that the government should fund the purchase
of 6 million set-top boxes for the homes of Australian viewers.  Costello must
have laughed for days after that one.

3. Then after the softening up, we had the Telstra-ABC announcement.

4. Now we have free Internet access.

I say that all of these are complete bullshit -- except for part of the ABC
content deal which is the only one they really expect to get (and then only in
part).  The questions of ABC content are complex issues, and so the ABC deal
story can be washed off the front pages of the newspapers in a matter of
minutes by a simple story like Telstra's free access.

I've worked in top corporate PR, and I know how these things are planned.

I'd also bet that Dan Tebbutt will get a visit from some ACCC representatives,
asking to be given the names of the Telstra executive who passed him the
story.  Ethics insists that we journalists not provide these names -- but only
when the story is passed in good faith.

I would be almost certain that this story is part of the tactics of Telstra's
political PR operations, and in this case I would certainly assist the ACCC
with their enquiries by giving the name.


-- 
Stewart Fist - writer and columnist
See http://www.australianIT.com.au/
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