Once Again Telstra Is Refusing To Share
Sydney Morning Herald
Wednesday April 18, 2001
The US has made up its mind on high-speed data delivery, but here it's another story.
For several years analysts have debated whether cable or digitalised copper telephone lines (DSL) would emerge as the favoured access technology for high-speed data and interactive services.
In the US it is now clear DSL is the winner.
Driven by the local telephone companies, DSL is now being rapidly deployed, with nearly 2 million modems ordered in the last quarter of 2000.
The predictions vary, but by 2005 nearly half of the Internet-connected population in the US is expected to be on a high-speed line the majority are predicted to be on DSL services.
In Holland, with a population marginally smaller than Australia's, nearly half a million users are expected to take up DSL by the end of the year and several European countries have plans to push DSL services to homes and small to medium businesses.
But while the US and Western Europe are aggressively taking up DSL, in Australia it is the same, depressingly familiar story.
The numbers are hard to confirm, but no-one is claiming any more than 5,000 DSL connections, and most of these are businesses.
Talk to service providers eager to start building businesses using DSL and other broadband technologies and the reason is simple: Telstra.
To make DSL work, Telstra has to enable its exchanges and sell access to the copper subscriber lines. After several years of finding endless reasons why it was all too hard, the national carrier is now enabling its exchanges but at a pace and in locations which suggests it is continuing to protect its own business.
More tellingly, the price at which Telstra sells access to the copper lines is ridiculously high it seems designed to frustrate any development of the marketplace.
The actual wholesale price is not disclosed, but there isn't one provider which claims it can make a business from servicing homes. One claimed it had estimated line charges meant it would lose a dollar for every dollar in revenue it could make.
This is why most of the new operators are targeting businesses in the CBD regions, where the existence of alternative networks means they can at least build a viable business using non-Telstra infrastructure.
Telstra makes very good money from its current high-speed service, ISDN, and has no interest in giving away a $3 billion marketplace to the new DSL operators.
But the big reason Telstra fears DSL is because it could cannibalise its local loop business.
In the US, the DSL operators get access to the copper lines, which means they can run both data and voice services direct to the subscribers' premises. Get the local voice service and you have the customer.
This is Telstra's worst nightmare: start-up service providers picking off its best customers and bundling STD and IDD services into a full service. No wonder it is taking its time.
Just as with interconnect pricing and number portability, it is all being strung out as long as possible, with the ACCC strangely slow to call the whole process a sham.
In an all-too-familiar story, the end result is that Australia is once again going to be slow to take up a key technology.
One of the great myths is that Australia takes up technology rapidly.
We take it up rapidly, but almost always because of pent-up demand caused by endless delay, mostly by incumbents trying to protect their own markets. Pay TV was the classic case.
With DSL, the result of Telstra protecting its own business will arguably be that once again Australia will miss the next technological wave.
If, as it seems in the US, DSL emerges as the dominant platform for high-speed services, it is imperative that Australian industry get early exposure to the technology. Otherwise Australia will again miss the boat, denied software and content development opportunities.
In this scenario we become an importer of services, with the US getting the jump on everyone.
When Microsoft chief Bill Gates was here last September this point did not pass him by, as he openly discussed those countries which were driving their broadband strategies aggressively and those which were not.
He observed that Telstra's pricing was impeding Australia and that progress had been slowest in those countries where the dominant carrier controlled the infrastructure.
Where is ACCC boss Allan Fels when we need him?
tburton@fairfax.com.au
© 2001 Sydney Morning Herald