[LINK] Optus & NBN - Errata

Tom Koltai tomk at unwired.com.au
Mon Jun 8 13:44:16 EST 2009


Replying to my own earlier posting - the Optus shareholder responsible
for HFC was US-West, not Cable and wireless - duh!


> -----Original Message-----
> From: link-bounces at mailman1.anu.edu.au 
> [mailto:link-bounces at mailman1.anu.edu.au] On Behalf Of Tom Koltai
> Sent: Sunday, 7 June 2009 5:44 PM
> To: stephen at melbpc.org.au; link at anu.edu.au
> Subject: Re: [LINK] Optus & NBN
> 
> 
> 
> 
> > -----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.htm
> l (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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