When the National Broadband Network was announced it was fairly obvious it was going to be a big stab to Telstra. Their monopoly on Australia’s copper line infrastructure was beneficial in the early years when it was wholly government owned. However in true Liberal style John Howard thought it best to privatise the company, and that’s when things started turning bad. There’s only one thing worse than a monopoly controlled by a government, and that’s a monopoly controlled by shareholders.
It seems however that in order to circumvent the mistakes of the past the Labor government (I highly doubt Conroy was the driving force behind this, but I’m willing to be proved otherwise) is in essence bringing Telstra back under government control, albeit in a rather weird fashion:
Communications minister Stephen Conroy has put the Government on a collision course with Telstra, warning the telco giant to split its wholesale and retail arms, or face business restrictions.
The major reforms to the telco giant’s structure and operation were announced today as the Government geared up to roll out its $43 billion National Broadband Network and move Telstra towards becoming part of it.
The Government is moving to restructure the sector to pave the way for the rollout of the network, which it plans to build in the next eight years.
Now don’t get me wrong I like this idea. Telstra has been using its monopoly on the copper lines as a bargaining tool for many years and it’s done nothing to improve the level of service that Australian’s recieve. In fact around 8 years ago they were caught selling broadband plans cheaper than what they sold wholesale to their competitor ISPs (I can’t find a direct article, but here’s the results). Putting their retail section at arms length from their wholesale division is a good move that will hopefully keep them a little more honest, but I still have this weird feeling about how they’re going about it.
Really the issue stems from the previous government selling off our assets in order to fund their surplus (although the historical position on the matter seems to be that the government couldn’t keep pace with technology, go figure). Bar actually buying Telstra back from it’s shareholders there’s not a lot the government can do apart from legislating against them. Although with the government hammering them with legislation that will, let’s be honest here, damage Telstra’s business they could get themselves a bargain with the share price dropping 6% on this announcement. I guess it’s probably the best solution we can hope for as the government’s hands are tied from any other course of action.
On the surface this would appear to be a hastening of Telstra’s defeat at the hands of the National Broadband Network but in reality it’s the opposite. The initial plans announced by the Labor government made no mention of Telstra’s involvement at all and in fact, their involvement in a previous Fibre-to-the-Node (FTTN) request for tender was seen as joke rather than an actual submission. It seems however that this separation might form part of some deal that will get Telstra in on the ground level for the National Broadband Network, with the public announcement just the government making sure Telstra stays honest.
Overall this appears to be a benefit for Australian’s at large. It should mean that the Internet service we get is more uniform and at a lower cost than what we currently get. It will also stop Telstra from standing on top of its monopoly hill in order to keep themselves going, hopefully leading to some actual innovation by the company. It’s going to be a long process to get this whole thing worked out and I’m sure we’ll be hearing much more of this over the coming months as negotiations take place.
I’ll be watching.
Another day, another multi-billion dollar proposal to stimulate the economy and conveniently distract everyone from the shambles of a proposal that was the Great Firewall of Australia. The newsbots are in a flurry about this one and with this being right up my alley, I can’t help but throw my few cents in ;). So let’s take a good look at this proposal and see what it will mean for Australia, the public at large and of course, Senator Conroy.
Australia is about average when it comes to broadband penetration with the majority of our users on ADSL, some on cable and the rest on some unknown connection (usually satellite or 3G wireless). This is quite comparable to many other countries and the norm seems to be the majority on ADSL with only Japan and Korea having a large representation of customers with fibre/cable speeds. What this proposal aims to do is to bring fibre connections to 90% of all homes in Australia. By my estimates with approximately 8 million households in Australia that will mean fibre speeds to about 7.2 million houses, with 800,000 left in the digital dark age. Whilst this is still a very aggressive target to meet you’d still be pretty annoyed if you were one of those 800,000 homes that was left out. Hopefully the extra fibre being run everywhere will also spur others to upgrade the DSLAMs in local exchanges for those poor people who are left out.
The current proposal is signalled to run for about 8 years. Now anyone in IT will tell you that a time frame like that for a project in this field will inevitably be out-dated by the time it is completed. Using Moore’s Law as a basis, we would see that the average computing power would have increased by about 16 times, with data rates and storage capacities following suit. If this kind of project is to be undertaken the network must be scalable with newer technologies, otherwise it will be useless by the time it is implemented. Whilst they haven’t described what kind of fibre technology they’re going to be using I would recommend single-mode fibre which should scale up to 10Gb/s, allowing the network to not be outdated the day it’s switched on.
I rejoiced when I heard that the whole thing would be government controlled, hoping to avoid the catastrophe that Telstra has become. However it became apparent that the initial investment from the government will be $4.7 billion with the rest to be raised from private investors. Once the network is complete they will sell down their holdings in the company, thereby releasing all control on it. I don’t think I have to make it anymore clear that they are basically creating a monopoly on the network by allowing this one mega-corp to own all the infrastructure instead of the government. Unless there are strict provisions in place to ensure that other ISPs will be able to tap into this network and use it fairly, we’ll just end up with yet another Telstra who won’t have much incentive to be competitive, let along co-operative with others.
Overall for Australia this proposal is mediocre at best. Whilst I applaud the idea of upgrading Australia’s broadband and making us a market leader in terms of broadband penetration the way Senator Conroy is going about it is, as usual, confused and misguided. When it was obvious that his attempt at a fibre to the node was not going to win him the right amount of political points he turned his attention to the Internet Filter. Now that filter is dieing on the vine he’s taken the $4.7 billion that was allocated for the new broadband network and tried to make it look like ten times more by saying that investors will make up the rest. Maybe he is just trying to make everyone think that they’re dreaming….
Luckily it appears that the IT community is remaining sceptical, as it should with any that Conroy proposes. Triple J’s Hack program ran an excellent show yesterday exploring the new proposal and even, interviewing the man himself. Conroy is awkward at the best of times but when he was confronted on the issue of the Internet filter and the new broadband network, he seemed to hit a few brick walls:
Senator Conroy: We said if the trial shows that this cannot be done, then we won’t do it.
Interviewer: And what’s the definition of cannot be done? What would be the acceptable amount to slow the internet down?
Senator Conroy: Well now your asking me to preempt the outcome of the trial.
Interviewer: No I’m not, you’ve got to have an understanding of what’s a pass and what’s a fail. You can’t wait ’til the trial finishes and then look back and decide how your going to measure the outcome.
Senator Conroy: Well actually that’s how you conduct a trial. You wait to see what the result is and then you make a decision based on the result. If the trial shows that it cannot be done without slowing the internet down then we will not do it.
I’m not sure I can comprehend what he thinks a trial actually is. If you follow the scientific method you’d know that first you formulate a hypothesis, establish the test, formulate the thresholds for successful/unsuccessful and then perform the test. You don’t make up your pass/fail from the data, that’s just bad science. I once defended Conroy as just a figurehead for a bad idea put forth by Labor to win votes, now I’m sure that isn’t the case.
An amazing idea that was twisted and contorted into something that will at best, create another mega-monoply on Australia’s telecommunication network. It seems no one will listen to George Santayana:
Those who cannot remember the past are condemned to repeat it.