[LINK] Optus & NBN

Tom Koltai tomk at unwired.com.au
Sun Jun 7 17:43:47 EST 2009



> -----Original Message-----
> From: link-bounces at mailman1.anu.edu.au 
> [mailto:link-bounces at mailman1.anu.edu.au] On Behalf Of 
> stephen at melbpc.org.au
> Sent: Sunday, 7 June 2009 3:48 PM
> To: link at anu.edu.au
> Subject: [LINK] Optus & NBN
> 
> 
> Telstra split-up key to NBN viability, says Optus
> 
> Mitchell Bingemann | June 06, 2009 The Australian
> www.theaustralian.news.com.au/business/story/0,28124,25594083-
> 36418,00.html
> 
> 
> THE federal Government's $43billion national broadband 
> network will be 
> economically unviable unless Telstra is structurally 
> separated, arch- rival Optus says.
> 
> Speaking at the Trans Tasman Business Circle in Sydney 
> yesterday, Optus 
> chief executive Paul O'Sullivan said a monthly wholesale 
> access price of 
> $50 could be expected if NBN penetration levels hit 60 per cent. 

Absolute Crapola.
Japan is offering 100 mb per second for under $38.00.
There is no requirement to bundle a telephone.
Australia is the eigth most expensive country for broadband in the OECD
world in other words, there are 22 countiries around the world including
Slovakia, Hungary, Portugal, Czech Republic that are cheaper than
Australia.

I blogged about it here
http://www.perceptric.com/blog/_archives/2009/5/15/4186493.html (with
OECD Graph)

> A $50 per month wholesale access charge would equate to a 
> retail price 
> average of about $106 per month for a broadband and telephony bundle 
> today, an Optus spokeswoman said. 
> 
> "We think this is a realistic price level -- and will allow 
> for retail 
> prices which are not out of line with those paid today," Mr 
> O'Sullivan said. 

Yeah - in a world where the ogilopoly sets the wholesale pricing.
No thank-you - I though that was the whole idea of the NBN to get us, as
a nation, away from price fixing cartel type activities.

> An NBN penetration level of 60 per cent would be sufficient 
> to ensure a viable commercial return, but Mr O'Sullivan said this
could only be 
> achieved if Telstra was structurally separated and its access network 
> used as the building blocks for the Government's 
> fibre-to-the-premises 
> broadband project. 

Ummmm, I beg to differ; in a price led envirobnment - all comers same
wholesale cost price, I think you will find that a lot of small CSP's
spring up overnight to service their communities. As the smaller
companies don't have executive dining floors, they can afford to work on
much lower margins whilst offering much higher levels of
non-ivr/non-malaysian call centre service levels, so I would hazard a
guess that around 18% penetration Australia wide would be sufficient to
deliver a profitable NBN.

After all - the NBN isnt about Telephony any more.

Paul - you are so out of touch it aint even funny.

> "First of all, we think the NBN can be economically viable," Mr 
> O'Sullivan said. 
> 
> "Secondly, to achieve this outcome the NBN must be the only network 
> delivering high-speed broadband services to Australians. 

Bullshit. Telstra have spent an arm and a leg in 3G/4G emerging
infrastructure. (Am I defending Telstra? God - I must be having an off
day).

To throw Teltra's, (and vodaphones) investment out the window someone
would have to repay their shareholders the outlay. Mr. Sullivan, do you
see Optus doing that ?

Apart from being downright stupid - the end of a monopoly is what the
NBN is all about. You words indicate that you want the monopoly to
continue, but with you at the head of it.   Shame shame shame. Resign
now. Take my word for it, I'm an expert at putting my foot in my mouth
and I'm telling you Paul, you just did it.....

> "Thirdly, the essential way to ensure that is to structurally 
> separate Telstra, so that its network becomes the foundation for the
NBN into 
> which the Government invests. 

Whilst I agree with Structural seperation, If you remove the HSDPA
network and demand open access to all Testras fibre network, what do
Telstra shareholders have left?

To structurally separate Telstra, the individual business models must
have a chance of surviving.

For example - Telephony is dead. Get used to it.
Foxtel is dead - get over it.
Broadband wirelss data is very much alive. (That's one division.)
Copper maintenance services (Lot of life left there.)
Customer service (Mobile/cellular has serious life left.)

That only leaves the Wholesale division, which happens to own Australias
largest Co-lo facility (well if they managed it as one) and some copper
and a little bit of Fibre.

There are actually at least five separate entities in any unbundling
exercise, however it has to be done in a manner as to not disenfranchise
the shareholders.

That means a 1 to 5 split on Telstra - and I'm suggesting long on that
one - but then my tips arnt all that good, so maybe we should forget
that.

> "But if there are two competing networks around the country, 
> Telstra's and the NBN, then we think the NBN business case becomes a
very 
> challenging one." 

Yep. What a shame the Optus wireless plans were ditched.
 
> Mr O'Sullivan cited the cable broadband wars of the 1990s as 
> an example of how competition could sour when new entrants attempted
to take on 
> vertically integrated incumbents. 

I don't see a problem. It's called market competition. Optus had the
market all to themselves. Telstra entered it and won.  It wasn't a war.
It was consumer benefiting competition - right up till the ACCC folded
on the cable content inquiry.

> "In the HFC network wars of the mid-90s, Telstra spent billions on 
> rolling out its own HFC network -- not to secure new revenues but to 
> defend its existing telephony revenues. Hence the approach 
> became known as the 'telephony defence strategy'," Mr O'Sullivan said.


Actually, I didn't see that as a cable play, I saw it as a save the ISDN
network, Broadband play. Especially with Telstra attempting to legislate
pairgain modems illegal (early DSL). 

> During these cable wars Telstra took a $1 billion write-down 
> as it rolled out its network wherever Optus had gone before. It ended
up being a 
> successful strategy for the telco, though, as it destroyed the
viability 
> of Optus's cable business and protected Telstra's fixed-line margins. 
 
I have a different version of events and it relates to management
shareholder issues.
Optus had a shareholderm, Cable & Wireless who somehow managed to
convince Optus to install an HFC siolution that didn't work when it was
rolled out.

> "If the Government does not act to ensure a single network 
> for the NBN, expect to see 'telephony defence strategy mark II'," Mr 
> O'Sullivan said. 

If that means more competition with subsequent lower prices for the
consumer, higher uptake of services and more commerce as a result -
BRING IT ON........

> Mr O'Sullivan said Optus was now willing to vend its HFC assets for an

> equity stake in the NBN. 

Except it doenst work. Well not very well.

> "We are willing to look at putting ... our HFC network into 
> the NBN but 
> it's up to the NBN Co whether they need it or not," Mr 
> O'Sullivan said. 

I hope not. It's outdated legacy technology that was outdated when it
was installed.

> "We are willing to consider all the options as long as there is a
clear, 
> level playing field being created, and what we get is true 
> open access and competition, and that no retail carrier can control
the network."

At last - a statement that I have no problem with.

Tom


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