[LINK] Telstra - taking its ball and going home.

[rchirgwin at ozemail.com.au]

Frank,

Great rant!

Frank O'Connor wrote:

> Gotta love the new Telstra management,
>
> They get here, one of them lets the public know what he thinks the 
> value of a Telstra share is and lo and behold, it sinks to that.
>
> They argue that telecommunications shouldn't be regulated (at least 
> that bit of the regulation that affects them) in this country to 
> ensure some semblance of service to the bush and areas removed from 
> exchanges. The government says no. They have a hissy fit. Share price 
> sinks lower.
>
> They use FTTN as a bargaining chip with the ACCC ... lose out, and 
> cancel any investment in FTTN. Share price drops again.
>
> And it was purely an ideological dispute. One could argue that EVERY 
> damn publicity seeking debate we've had over the last 12 months has 
> been ideological. Management should be pragmatic, not ideological.
>
> Now I have some sympathy with those who espouse little or no 
> regulation in telecommunications ... hey, it's all privatised now so 
> who gives a damn.  Trouble is ... Telstra is coming off 20 years of 
> network neglect and little infrastructure investment, has been 
> actively pursuing business practices which have reduced their client 
> leverage (through those dinky copper wires) by charging like wounded 
> bulls for same - when to my mind the whole copper network was probably 
> amortised 20 years ago, have failed to take advantage of their initial 
> fibre investment by making any attempt to bridge the last kilometer, 
> have pursued rather inappropriate technologies in their place (Foxtel 
> and cable internet for God's sake! Wasn't that a winner?

...while I like the rant, apart from stupid management decisions (for 
eg, mile-for-miling with Optus), what exactly is so wrong with the HFC 
network, except for the fact that it gets a bad press as not being FTTH? 
It's fibre to the node, with the node fed outwards by one type of copper 
instead of another...

> They won't amortise that for another 40 years), got into really 
> dubious and sensationally non-profitable overseas investments to 
> absorb the mountain of cash they previously accrued. and now seem into 
> be intent on squeezing the last buck out of their ever diminishing 
> number of clientele ... who are leaving due to Telstra's brilliant 
> policy of charging them like wounded bulls for a copper service that 
> there are any number of existing alternatives to.
>
> I mean, I have always seen ADSL as an intermediate solution until when 
> fibre or fast satellite 

...fast is feasible but the speed of light don't change. Up and down 
latency to satellite is always going to be there for geostationary...

> or wireless became the norm. 

...ok. I'll go with wireless up to a point. Its problem as a broad-scale 
broadband mechanism is economics.

Big coverage = lots of users = good payoff. But big coverage = less 
speed (Shannon's law, distance from antenna etc), and lots of users = 
more contention.

Small coverage = better bandwidth per user = more antennas = more expensive.

> From Telstra's perspective though it was another Golden Goose 
> technology (that they got into VERY late) that trapped people on the 
> copper and could provide a money stream for time immemorial.
>
> Does anyone at Telstra have an idea of how they are effectively being 
> rendered into obsolescence by technology?
>
> If they had had fibre to the node 10 years ago ... it may have helped 
> them. If they had had fibre to the home 5 years ago, we'd probably all 
> be locked in to Telstra's service ... no matter what they charged.

Funnily enough, regulation helped block FTTN last time around. It was on 
the plan; but it would have broken competitive access, so (among other 
reasons) the need for competitive access meant "keep the copper".

Leaving the rest uncommented; with the exception of my sceptical 
attitude to the wireless silver bullet, I mostly agree!

RC

>
> But now ... now real alternatives are starting to appear. Now the 
> copper wire really is on the way out, and Telstra doesn't have a 
> product leg to stand on. Third parties already provide IP pipes that 
> don't use Telstra's infrastructure ... and the number of these third 
> parties continues to grow. Technological alternatives for out-reaching 
> Telstra to consumers are becoming legion ... at a much lower initial 
> infrastructure cost than the current exchanges and wires.
>
> These days a high end router could probably handle a whole suburb's 
> need. Little numbers like 802.16n and the like point toward eventual 
> high speed wireless ... they don't mean that yet, but they point to it 
> ... and how much does a high end wireless router cost viz-a-viz a full 
> blown telephone exchange? Not a hell of a lot.
>
> And despite this looming crisis, Nero "Fiddling while Rome Burns" 
> Trujillo and the lads from the US persist in peeing against the 
> political wind, seem absolutely bereft of ideas for increasing 
> business or meeting the challenge of the future, have actually opposed 
> ideas which would have ensured the telco's survival for a number of 
> years (eg. splitting Telstra wholesale and retail operations), have 
> made any number of current suppliers happy with big orders for 
> replacement obsolete equipment ... and have NO credible strategies, 
> ideas or tactics.
>
> These guys weren't involved in Enron were they?
>
> Anyway ... this weekend I'm gonna advise my mother to sell her Telstra 
> shares, as there is no hope for the company now. I'll tell her to wait 
> a few years before investing in the telecom sector again (when new 
> players have effectively wiped Telstra off the board, and we have some 
> idea who ... and what technology ... is going to be a winner in the 
> new environment) and in the interim invest her money in blue chips 
> with a future.
>
> Trujillo said a couple of weeks back that he's be revealing a strategy 
> for Telstra ... well I hope he has the good grace to go down with the 
> ship. About the only 'strategy' left for Telstra is to liquidate the 
> over-valued double counted assets (the copper wire for example is now 
> probably worth whatever the price of copper is ... and the fibre is 
> only a half done job). That said, I'd hate to see the boys from the US 
> rewarded for conducting the fire sale.
>
>                 Regards,
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