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The Australian Broadband Disaster
David Gerard writes "Monopolies are bad, mmmkay? Robert Clark of TelecomAsia discusses the disaster that is broadband in Australia - its 2% takeup putting Australia behind such dynamic economies as Estonia. 'Telstra controls the local loop, is the largest mobile carrier with two digital networks, is the largest retail ISP, the largest wholesale data and Internet provider, and is a 50% shareholder in the biggest pay TV company.'"
Australia is a classic case of why monopolies in any industry should be avoided.
The most recent broadband fiasco here in Oz concerns itself with Telstra (who handle ALL submissions for ADSL in Australia regardless of ISP) deliberately telling competitor signups that they don't meet broadband exchange requirements, then signing them up under Telstra where they suddenly just scrape in.
Then you have the woeful bandwidth limitations (imposed mostly because Telstra controls the phone lines and resells bandwidth to every other ISP by the MB).
The ONLY point I will concede to Telstra is that due to our huge, continent scale country, upgrading ALL exchanges can be cost prohibitive, however to not have broadband capability yet in large POPULATED regions is unforgiveable in 2003.
In short, Telstra as a RETAIL company should be split from Telstra the NATIONAL INFRASTRUCTURE company. Make the infrastructure company publically owned, then Telstra (Retail) can compete along with everyone else on a level playing field.
Quizo
Visceral Psyche Films
The fundamental problem is that Telecom NZ is a private company, and as such, is *required* to return a profit to its shareholders.
On one hand, people scream and moan about outrageous DSL pricing structures, but on the other, those people who have invested in the company absolutely love what it is doing to the value of that investment.
In addition, TCNZ is one of, if not the biggest, companies in the country. The government is quite understandably scared to step in and do anything, because of the economic ramifications of playing with the source of such a large part of their tax income stream.
I don't know if this is true of Telstra as well, but I suspect it is.
I remember back in high school, there was this economics simulation game we all played in class where every team owned a pen company and competed with the other teams. One of the first lessons that we learned is that 1000 pens at $1 each actually nets you mor emoney than 1 pen at $1000. It sounds like they should be the same, but in the $1000 pen case, you either get it all, or get nothing, but in the $1 pen case you can still make some money even if you don't sell everything.
The problem is broadband in Austrailia is that the monopolies cannot understand this fact of business.
The current population of Australia is about 20 million people. So at a 2% adoption rate, even if they could really, REALLY gouge thier customers at say $500 a month(!) then they stand to gain $200,000,000 a month, gross. Now, if by charging $25 dollars a month they could get a 50% adoption rate, then they will actually make $50,000,000 MORE a month than they did charging $500. That's a 20% increase in income and a 2,000% decrease in price! Everybody wins!
That's right, you can charge less of a price and still make more money, it really is possible... Even a hard core monopoly should at least care about making more money. If you can make more money as a company AND provide better service to more customers, then do it! It is absolute blind, and stupid, greed, and probably a little misanthropy mixed in for good measure, that they don't spend a few days to crunch the numbers and actually see that it's possible to make more money and more happy customers doing things a different way.