Telstra's trump card

From
http://www.businessspectator.com.au/...C?OpenDocument

The argument about structural separation of Telstra reached new heights this
week when the CEO of John Fairfax, David Kirk, joined in and the chairman of
Telstra, Donald McGauchie, gave him one across the chops (verbally of
course) and called on the minister, Stephen Conroy, to end the debate by
making up his mind.

But this issue is nothing but an entertaining sideshow: far more important
is whether the government is prepared to legislate to stop Telstra
overbuilding

The number one priority for the government, and the nation, is to get the
fibre broadband network built. It's clear that for the minister this will
be, and should be, the overriding consideration.

But a far more crucial issue in this than structural separation will be the
question of whether anyone other than Telstra is prepared to bid without a
ban on a Telstra overbuild.

Several groups have paid the $5 million bond to get the tender documents,
including a yapping animal appropriately named Terria, Macquarie and group
called Acacia that apparently includes Solomon Lew, Doug Shears and Leon
Kempler.

None of these groups is stupid, and they know only too well what happened to
Optus in the early 1990s, when Telstra destroyed its hybrid fibre cable
project by following its vans up and down streets duplicating their work
with a Telstra cable.

That means the Prime Minister Kevin Rudd and communications minister Stephen
Conroy will soon have a very big and interesting decision: are they prepared
to pass legislation preventing broadband infrastructure competition? And if
so, for how long? Forever?

Would Telstra really build a second fibre network at vast expense, as it did
15 years ago?

Yes it probably would in my view, but that doesn't matter. The mere risk of
it would probably make the business cases of alternative bidders collapse.
The risk would have to be factored into financing calculations and would
almost certainly make them unviable.

Why would Telstra do it? Because it would remove regulation as an issue.
Telstra and Terria/Macquarie/Acacia would be slugging it out with competing
fibre networks, and Telstra would back itself to win because it still owns
most of the retail customers.

In fact to go further: without a guarantee of carrying Telstra's existing
traffic, no national fibre network would be viable. And without a law that
banned Telstra from building a second fibre network, that could not be
guaranteed.

Even then, Telstra could quite easily decide to stick with a combination of
copper-based ADSL 2+ and NextG wireless at fixed-line rates, rather than buy
access on a fibre network built by Terria/Macquarie/Acacia.

And even less likely than a law banning a Telstra overbuild, is a law
forcing Telstra to use someone else's fibre network against its will. That
simply would not work.

These are major - possibly insurmountable - problems for the competing
bidders, and therefore very difficult issues for the government.

As for structural separation - the hot issue of the moment - it is not,
realistically, going to be forced on Telstra by the government passing a
structural separation law, and it will not be made a condition of winning
the tender for the $4.7 billion broadband investment, unless there is at
least one viable bid from a structurally separated entity (that is, someone
other than Telstra).

And as discussed above, there will only be a viable bid if the threat of a
Telstra overbuild is removed.

If anyone produced a structurally separated bid that was financially and
technically viable, then, and only then, could the minister make structural
separation a condition of winning the tender without risking the project.

Without that, Telstra would be in a position in that event to call the shots
on regulation.

The company has been refusing to build a fibre to the node (FTTN) network
for nearly three years because it is unhappy with the proposed access
regime. The impasse persisted for so long because of a combination of
political paralysis and understandable bureaucratic intransigence.

Then the old Government was thrown out and a new one installed with a clear
FTTN strategy, which involved a commitment to ensuring that a fibre network
is built that connects 98 per cent of Australians to 12 megabits per second
broadband.

It has taken six months for the new political process to crank up to
implement this promise, but now it has.

Underlying all of the argy-bargy about Australia's crucial fibre broadband
network is this obvious fact: the Government has promised the network.

If Telstra is the sole bidder as an unseparated, integrated telco, the
Government will not reject the bid because of its structure. As a result
Telstra will decide how it is regulated and priced.

In other words, the Labor Party's decision to intervene in the market and to
promise that a fibre network will be built must result in one of two things:

1. The ACCC being nobbled to suit Telstra, or

2. Telstra being nobbled by legislation to suit everyone else.

In my view it is more likely to be the former than the latter.

---

› See More: Telstra's trump card

Alan Poxington <[email protected]> wrote

> From
> http://www.businessspectator.com.au/...C?OpenDocument

Getting desperate to find anything favorable to Telstra, eh ?

> The argument about structural separation of Telstra reached new
> heights this week when the CEO of John Fairfax, David Kirk, joined in and the chairman of Telstra, Donald McGauchie,
> gave him one across the chops (verbally of course) and called on the minister, Stephen Conroy, to end the debate by
> making up his mind.

And Conroy made an obscene gesture in McGauchie's general direction.

> But this issue is nothing but an entertaining sideshow: far more important is whether the government is prepared to
> legislate to stop Telstra overbuilding

> The number one priority for the government, and the nation, is to get the fibre broadband network built.

Wrong. The current adsl2+ system is fine.

> It's clear that for the minister this will be, and should be, the overriding consideration.

Wrong again.

> But a far more crucial issue in this than structural separation will be the question of whether anyone other than
> Telstra is prepared to bid without a ban on a Telstra overbuild.

The govt doesnt have the capacity to ban that.

> Several groups have paid the $5 million bond to get the tender
> documents, including a yapping animal appropriately named Terria, Macquarie and group called Acacia that apparently
> includes Solomon Lew, Doug Shears and Leon Kempler.

> None of these groups is stupid, and they know only too well what happened to Optus in the early 1990s, when Telstra
> destroyed its hybrid fibre cable project by following its vans up and down streets duplicating their work with a
> Telstra cable.

That aint what happened. They lost the content war, THATS what happened.

> That means the Prime Minister Kevin Rudd and communications minister Stephen Conroy will soon have a very big and
> interesting decision:

Nope.

> are they prepared to pass legislation preventing broadband infrastructure competition?

They aint actually that stupid, even if you are.

> And if so, for how long? Forever?

Never.

> Would Telstra really build a second fibre network at vast expense, as it did 15 years ago?

Nope, because they didnt do that 15 years ago as far
as the 98% coverage the govt requires is concerned.

> Yes it probably would in my view, but that doesn't matter. The mere risk of it would probably make the business cases
> of alternative bidders collapse.

Only in your pathetic little drug crazed fantasyland.

> The risk would have to be factored into financing calculations and would almost certainly make them unviable.

Only in your pathetic little drug crazed fantasyland.

> Why would Telstra do it? Because it would remove regulation as an issue. Telstra and Terria/Macquarie/Acacia would be
> slugging it out with competing fibre networks, and Telstra would back itself to win because it still owns most of the
> retail customers.

Pigs arse it does. AND there is just the tiny matter of the return on
capital that the hippo claims they require on new investments too.

> In fact to go further: without a guarantee of carrying Telstra's
> existing traffic, no national fibre network would be viable.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> And without a law that banned Telstra from building a second fibre network,

Taint gunna happen, you watch.

And there is ALREADY a fibre network, you pig ignorant clown.

> that could not be guaranteed.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> Even then, Telstra could quite easily decide to stick with a combination of copper-based ADSL 2+ and NextG wireless at
> fixed-line rates, rather than buy access on a fibre network built by Terria/Macquarie/Acacia.

They've already done that with all except the NextG wireless rate, ****wit.

And it aint possible for the govt to ban that now without passing massive
compensation to Telstra, which they aint actually stupid enough to do, you watch.

> And even less likely than a law banning a Telstra overbuild, is a law
> forcing Telstra to use someone else's fibre network against its will.

Must be one of those rocket scientist terminal ****wits.

> That simply would not work.

Corse it would work. The govt aint actually that stupid tho.

> These are major - possibly insurmountable - problems for the competing
> bidders, and therefore very difficult issues for the government.

Only in your pathetic little drug crazed fantasyland.

> As for structural separation - the hot issue of the moment - it is not, realistically, going to be forced on Telstra
> by the government passing a structural separation law,

We'll see...

> and it will not be made a condition of winning the tender for the $4.7 billion broadband investment, unless there is
> at least one viable bid from a structurally separated entity (that is, someone other than Telstra).

It aint possible to make that conditional, ****wit.

> And as discussed above, there will only be a viable bid if the threat of a Telstra overbuild is removed.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> If anyone produced a structurally separated bid that was financially and technically viable, then, and only then,
> could the minister make structural separation a condition of winning the tender without risking the project.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> Without that, Telstra would be in a position in that event to call the shots on regulation.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> The company has been refusing to build a fibre to the node (FTTN) network for nearly three years because it is unhappy
> with the proposed access regime.

They're welcome to not bid if they dont like the conditions.

> The impasse persisted for so long because of a combination of political paralysis and understandable bureaucratic
> intransigence.

Nope, because anyone with a clue realised what Telstra was up to.

> Then the old Government was thrown out and a new one installed with a clear FTTN strategy,

Wrong again. JUST a hare brained scheme to hand out $4.7B to
anyone prepared to comply with the conditions that they specified.

> which involved a commitment to ensuring that a fibre network is built that connects 98 per cent of Australians to 12
> megabits per second broadband.

And when most have that available already, whoopy ****ing do.

> It has taken six months for the new political process to crank up to implement this promise,

Wrong again. It takes that long to allow other than telstra to make a viable offer.

> but now it has.

> Underlying all of the argy-bargy about Australia's crucial fibre broadband network

Its nothing even remotely resembling anything like crucial and it aint a fibre broadband network either.

> is this obvious fact: the Government has promised the network.

And it remains to be seen if they can actually deliver on that promise and whether
anyone is prepared to build it for that number someone plucked out of their arse.

> If Telstra is the sole bidder as an unseparated, integrated telco, the Government will not reject the bid because of
> its structure.

They are welcome to accept the bid and force separation as well.

> As a result Telstra will decide how it is regulated and priced.

Wrong on the pricing. And an absolute condition
on the tender is that that stuff isnt up to telstra.

> In other words, the Labor Party's decision to intervene in the market and to promise that a fibre network will be
> built must result in one of two things:

> 1. The ACCC being nobbled to suit Telstra, or

> 2. Telstra being nobbled by legislation to suit everyone else.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

> In my view it is more likely to be the former than the latter.

Thanks for that completely superfluous proof that you have
never ever had a ****ing clue about anything at all, ever.

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