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Australia's largest telco to be split
Pie Pants writes "Australia's largest telco company, Telstra, which is also half government-owned and controls most of the telecommunications network in Australia, is to be split into separate retail and wholesale arms. This means that the wholesale side of Telstra will have to sell the network to the retail side under the same terms it uses with other communications companies. The government has done this in a bid to improve communications service in regional Australia, so it can privatize the rest of the telco. This is a welcome move by many after Telstra was accused of taking advantage of its network against competitors."
About time this happened. From looking at other countries with a similar solution, this seems to open the broadband market wide open for end-users (referring to sweden, where my understanding is that things work in a similar way)
I've seen it happen in my native country, Hungary, when a monopoly telecommunication company was split up this way.
The ISP arm ends up swallowing loss and unfavorable conditions while milking the consumers, and passes the revenue to the telco arm. This makes competition have a very hard time and the government ends up shrugging. Do not have a false sense of success just yet, dear australians. This won't work and your government knows that.
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The Australian government would do better to keep the wholesale part of the business and sell the retail part. Forcing Telstra to divide itself only internally will lead to a situation where they can sacrafice the retail sales but make a killing on the monopoly wholesale business. Screwing customers for all they can. Once the compay is in private hands there will be little the government can do about it.
Telstra is also Australia's largest company, full stop. This move has reduced the value of the company by some $2 Billion AUD prior to a full sale. Not good for shareholders. Ultimately, not good for customers.
How unfortunate for those of us who earn well above the average salary.. and are looking for our first home. I am expected to pay rent _and_ save 5% of the price of a house over 6 months in order to qualify for a loan... and all that while paying an enormous amount of rent because the price of the house we're in went up exponentially.
Problem is that house prices here have gone up by well over 50% in the last 5 years while salaries have risen by less than 10% in the same time. The rise in house prices has been driven by the continually low interest rates (and a govt that wants to get reelected), and complete blanket of fucked "home improvement" shows that say "rip up the carpet, paint a wall red, put a fountain in and add $50k to the price of your house". Of course, everyone went out and did that.
Prices here are far over inflated; you need 2 good incomes, no children, no life and rich parents to afford anything that isn't in some grotty ghetto.
Back on topic: I was really hoping that the government would split the shitbox telco up into retail and wholesale (yay I got what I wanted). I was also hoping that the government would hold onto wholesale, drop the prices (it's not as expensive to run as the idiots in Telstra try and claim in their search for infinite profits) and force telstra retail to compete.
I don't want to see this massive piece if infrastructure privatised; once that happens, there are no controls on what they will charge, and everyone has to pay it!
I drink to make other people interesting!
I've been advocating this for years, but thought it was too late after the first share offering (T1) back in 1997 (after all, who wants a telco services company when you can own the infrastructure). A handful of us made a quick buck out of it, but those who participated in the second round (T2) weren't so lucky.
Aside from owning the copper (an extremely valuable asset, especially given the relatively low population density in Australia), Telstra provide a range of services - most notably mobiles (MobileNet) and Internet (BigPond, or as I prefer, LittlePuddle) and perhaps the most important of which is ADSL (both wholesale and retail). The issue they are addressing here is leveling the playing field, which would not have been necessary were it not for antics like selling (previously flaky, unreliable) ADSL retail cheaper than wholesale! (One could also speculate that the regular, extended outages were related to sustaining the golden goose (ISDN)).
And then there's the issue of their core competency: phone lines. In March 2000 we were paying $11.65 a month for line rental and something like 25c for untimed local calls. Now your average punter's paying the best part of 30 bucks a month for line rental and a bit less for locals. There's a bunch of capped call plans and other fluff but we're effectively paying a lot more for a service which (thanks to mobiles) we are using a lot less. Plenty of us were using the lines for Internet services and paying for an expensive, unnecessary dialtone.
This is where Australia really could have led the way - were this done properly all carriers (including the hypothetical Telstra retail/services division) would have had access to the copper for the same reasonable price (ideally inside $10/month) and could have offered combined voice/data services, and made a profit, for less than what we're paying now for line rental alone. As a bonus our essential infrastructure would not have ended up strapped to a bloated services company in a volatile market.
Still, it never ceases to amaze me that they've managed to sell us back something we already own, set the industry back a good 5 years while doubling or even tripling the cost of communications for your average Aussie in the process. It's like the Coca Cola company working out we'd pay more for water than we do for Coke itself!
It seems to have worked in the UK however. It isn't ideal, but apparently broadband coverage is 97% of the population. Unbundling lines isn't working great, but the system has been changed recently and should mean higher uptake in the future.
Gas and Electricity are done in the same way over here, with a wholesale network provider, and the service providers all use the same (pipelines|grid) to supply power, with their own billing structure and extras on top.
This method does mean that there is still no competition in the wholesale area, then again I'd prefer that to 2 or 3 times the number of electricity pylons and/or roadworks!
Mmm, as I thought, another monolithic monster who probably own the local loop. Sometimes the large old Crock needs to be removed from the pond for the good of everyone.
British Telecom have been fighting tooth and nail not to be broken up with considerable success, although they've finally agreed to give up the local loop. (They did loose Cellnet->O2 as they've found they paid too much for the G3 license.) In the mean time, I believe they've deferred the UK's adoption of broadband by about 7 years by killing off fledgling broadband ISPs with their Gold Room policy.
Australians should be very concerned about what's going to happen to their phone service. Back in the 80s, we had the Bell Telephone company split up into RBOCs (regional bell operating companies). What used to be the Bell Telephone Service became Ohio Bell where I lived. That eventually became Ameritech and then SBC. Through all of these changes, the quality of service continued to drop. The territorial wars increased between RBOCs and newer upstarts trying to get into the telco biz. Where we used to have a national business with shining R&D output (Thank Bell for Unix and Plan 9), and impecable quality of both product and service, we now have a bunch of useless small companies that refuse to cooperate with each other to server customers properly. We have mildly varying rates (save $1.00 or $2.00 a month by "chosing" your telco) with very few options for alternative services because of the territory wars.
In the house I bought last year, I found a tag on the ground strap for the phone line that was probably put there in the 50s. It harkened back to a day when things were more organized and orderly because there was little room for doing things differently. The tag was essentially a threat that said you MUST NOT remove the ground strap and if it is accidentally cut or loosened, you MUST call the phone company to get it replaced or reattached. Those were the good old days. The problem today is one of "too many chefs". The chefs need to be sent back to R&D where they belong and only the best ideas should be put forward for production. This is why Bell Telephone service was exccelent compared to the mire of crappy phone companies we have now. Not to mention the addition of people who know nothing about phone service providing phone service thanks to VoIP. Deregulation is a bad thing. It destroys carefully controlled systems that MUST be carefully controlled. Just because there is a new or cool idea out there doesn't mean it should make it to production in a short period of time. That's why phone service in the U.S. is so friggin bad. Our entire infrastructure is essentially partially in beta. The only things that do work properly and reliably are the older systems that were put in place before the deregulation.
Be afraid. Be VERY afraid.
-"...bad old ideas look confusingly fresh when they are packaged as technology" - Jaron Lanier (Digital Maoism on Edge.o