In this post, Shadow Communications Minister Malcolm Turnbull responds to the claim that broadband pricing will not increase under Labor’s National Broadband Network plan.

“Now what’s going to happen here is because there is no competition, because this is a government monopoly and because they are spending so much money so they’re overcapitalising it, inevitably prices are going to be high.” — Malcolm Turnbull, 1 February 2012. [1]

But is that right? Some NBN supporters argue my comment is unfair and inaccurate. They reject any suggestion that the NBN will result in broadband costs that are higher than they would have been in its absence.

We need to get real about this. When you are committing tens of billions of dollars to replacing the entire existing infrastructure of a vital industry, you cannot be sentimental or self-deluding. There are no fairies at the bottom of the NBN garden to suspend the laws of economics.

By any measure the NBN is a massive investment. The Government says the direct capital cost of the network will be $37 billion and the peak funding required by NBN Co $41 billion. Most industry experts expect the eventual cost to be significantly higher, and some estimates exceed $60 billion.

It is difficult to demur: Let’s face it, what was the last Government infrastructure finished on time and on budget? Most projects that run over budget involve types of infrastructure where the likely costs, economic drivers and probable operational complications are well understood because of previous experience – the likes of roads, dams, tunnels and major buildings. But the NBN is entirely new in the Australian context; nobody has deployed a large scale fibre to the premises network in established areas. And insofar as there is one relevant point of comparison in South Brisbane, where Telstra is currently building an FTTP network, all publicly available information indicates that it costs a lot more and takes a lot longer than projected.

The NBN is also going to be a monopoly, given other fixed-line infrastructure will either be decommissioned or contractually prohibited from competing. So the only competition for carriage of broadband services will be provided by wireless networks, which in some cases will be a substitute product, but in many will not (as Senator Conroy is so fond of pointing out). The NBN in fixed line terms will be the only game in town.

Every enterprise wants to get a good return (ideally a high return) on its invested capital. If it cannot get a reasonable return then it won’t be able to meet its obligations to its lenders or pay dividends to its shareholders. However sometimes people do over-invest – whether it is the toll road that overestimates traffic volumes or the restaurant with an excessively flash fit out.

And if they are operating in a competitive market (if, for instance, motorists can take another route or diners choose another restaurant) they will find that the return they can earn is less than the cost of the capital they have spent, and have to write down the value of that investment. You have to meet the market price that is determined by your competition.

However where a business is a monopoly it is able to exploit its market power and charge much higher prices.

Of course, doing this is an integral part of the NBN business plan. Everywhere else in the world (and in Australia to date) HFC networks are used for high-speed broadband, and usually for voice traffic as well. In most markets the HFC networks belong to cable TV companies who compete fiercely with telco services delivered over fibre, copper or a combination of both.

However in Australia, Telstra and Optus are being paid billions NOT to use their HFC networks for broadband or voice precisely so they cannot compete with the NBN. Because the HFC networks were built a long time ago in fairly densely settled areas, Telstra and Optus would be able to offer comparable services and undercut the prices NBN wants to charge for its brand new FTTP network – resulting in NBN having to cut its rates to meet the market. So in order to prevent that happening, billions of dollars of taxes have gone to pay off Telstra and Optus not to compete.

All monopolies will attempt to charge excessive prices (extract economic rent) and so typically they will be the subject of regulation – as in the case of our water, gas and electricity providers. And that will be the case, to some degree, with the NBN which is generously proposing that it will not seek to earn more than the Government’s chosen benchmark of a 7 per cent return on its invested capital.

However, this begs the question as to whether the level of capital that is being invested is appropriate. In a competitive market a business cannot maintain high prices because it wants to get a particular return on its capital. Its customers will say “that’s your problem” and move onto a cheaper service or product.

This issue of the level of invested capital is a vexed one with regulated utilities. Many people, including Rod Sims (formerly head of IPART in NSW and now chairman of the ACCC) have argued that electricity distributors were encouraged to overinvest in their transmission and distribution networks because they were entitled to charge whatever prices were needed to deliver the return on their investment allowed by regulators – given that regulated return was higher than their cost of borrowings, it gave them an incentive to invest as heavily as they could. Regulators’ ability to declare particular investments as “unreasonable” were usually very limited – and according to Sims, this overinvestment has been the major factor behind the rapid growth in electricity prices. [2]

The Australian Energy Regulator Chairman, Andrew Reeves, recently warned against overinvestment or ‘gold plating’, saying it has led to sharp price increases:

“NSW and Queensland are getting more infrastructure than we think they need and we are required to approve price increases to pay for it. [3]

So let us re-examine the logic. A monopoly will always have the ability to charge higher prices than a business which is operating in a competitive market. An answer to that is to regulate the monopoly. But if the regulator simply requires that the prices charged by the monopoly only be constrained by a maximum allowed return on capital, that will still most likely result in higher prices – especially if the capital invested is far greater than is needed to deliver the services or products consumers actually want at a given point in time.

And the more desperate a Government is to prevent its supposedly ‘commercial’ investment from turning up as red ink on the budget, the more certain you can be that it will do everything in its power to recoup money from consumers and keep ROI up.

When the NBN Co talks about ‘flexibility’ in future pricing in documents submitted as part of its Special Access Undertaking, there should be no doubt what they are really talking about: sacrificing affordability. Analyst Ian Martin, for one, has noted that for the NBN business case to be viable, average wholesale revenue per customer will have to increase by 34 per cent from current levels.[4]

At the simplest level there is simply more capital earning a return. In its latest review of Telstra’s access charges, the ACCC valued the current Telstra network at just over $17 billion.[5] The NBN’s direct network capital cost is $35 billion in 2010 dollars or $41 billion in real dollars. Its peak funding requirement is higher taking into account the $11 billion (in after-tax 2010 dollars) paid to Telstra to shut down its network and migrate customers and $800 million paid to Optus for similar commitments. Whether these figures are counted as operational expenditure or capital expenditure is irrelevant from a customer’s point of view – any losses they lead to will be counted as recoverable capital, and thus contribute to the eventual level of charges for use of the network.

It would be wrong to assume that any prices so far offered by the NBN Co are sustainable. In its SAU lodged with the ACCC, the NBN Co included a consultant report conducted by Synergies Economic Consulting (available online here) which states:

“NBN Co has set its initial prices to ‘meet the market’ as a means of ensuring the smooth migration of end user connections from legacy networks to the NBN and to also meet the Australian’s Government’s objectives of setting wholesale prices to achieve the “broadband take up targets agreed by Government through the NBN Co Corporate Plan and Business Case”, again as set out in the Statement of Expectations”. (p.8)

As the consultants note, the low starting base for wholesale prices is an argument for granting NBN Co ‘pricing flexibility’ to recoup its costs at a later date: “the risks of having to price to ‘meet the market’ in accordance with government expectations, are best managed by providing NBN Co with a degree of pricing flexibility;” (p.9)

Until now, the deregulated Australian telecommunications market has typically led to falling nominal and real prices for most services. The nominal retail price of ADSL broadband fell by 69 per cent between 2005 and 2010, according to figures compiled by the OECD [6]. Between 1997-98 and 2008-09 inflation-adjusted prices fell 34 per cent for fixed-line telephone services and 49 per cent for mobile services, according to the ACCC. [7]

Compare that with what we know about the NBN’s plans so far. In terms of access, NBN Co has applied to the regulator for permission to raise nominal prices by 50 per cent of the rate of inflation, per year [8]. But note this restriction only applies to access – unlike current wholesale pricing, NBN Co will also be charging usage fees (via its CVC).

NBN also has made no commitments about its pricing of more sophisticated services such as multicast video. And in any case, if the NBN gets its way, the ACCC would have its power to enforce any price commitments offered in the Special Access Undertaking overridden by separate Wholesale Broadband Agreements (WBAs) NBN Co signs with individual retailers.

With barely 4000 users connected to the NBN after four years of Labor Government, NBN Co yet to report that it has earned revenue from selling broadband services, and completion of the rollout a decade away at best, claims and counterclaims about NBN pricing are at present entirely in the realm of theory. That is as true of the rate cards announced by various ISPs as any other indicator – we all know those rates can change.

But if anyone really believes all of the above points to NBN prices for broadband below where they would have been without it, I know someone who could sell them a very nice Bridge with views of the Opera House.

References:
[1] Interview with Ben Fordham on 2GB
[2] Sims, R., (2011), “IPart Concerned About Rising Electricity Network and Green Scheme Costs”, available online here. Professor Ross Garnaut also addresses the topic of overinvestment in electricity networks in a recent update on electricity prices (Garnaut, 2011, “Transforming the Electricity Sector”, available online here.
[3] Martin, P., (2011), “Pricing Rules Boost Power of Energy Suppliers”, in The Sydney Morning Herald, available online here.
[4] Martin, I., (2011), “A Significant Gap in the NBN Corporate Plan” in The Telecommunications Journal of Australia, Vol 61, No3, p.51.5 available online here.
[5] Battersby, L., (2010), “Action by the ACCC Slashed Telstra Value by Billions”, in The Sydney Morning Herald, available online here.
[6] OECD, (2011), Communications Outlook, p.293
[7] ACCC, (2011), Telecommunications Report, p.21 available online here.
[8] NBN Co, (2011), “NBN Co Special Access Undertaking”, available online here.

Image credit: Office of Malcolm Turnbull

news The South Australian State Government today revealed that it would shortly be kicking off a huge new round of IT purchasing initiatives which would affect a string of major whole of government contracts, as part of its long-running Future ICT Services Arrangements program.

One of the aims of the program, which has been playing out over the past decade, was the realisation of South Australia’s intention to exit from its massive 10-year IT outsourcing contract with Texan giant Electronic Data Systems, with the deal to be broken up into a large number of chunks and farmed out, often to other suppliers.

The completion of that contract took place in 2007, but South Australia is still gradually working through a series of contracts which are gradually coming to full term, with the initiative being steered by the state’s whole of government chief information officer Andrew Mills.

In a notice published through the state’s tendering system this week, Mills’ office noted that on 7 March it would hold an open industry briefing to provide the industry with information regarding the next round of contracts to be signed under the Future ICT Services Arrangements program.

The state’s Minister for the Public Sector, Michael O’Brien, and its ICT Board chair, Jim Hallion will speak at the briefing. “Attendees will be given high level information regarding the State’s ICT sourcing directions with a view to supporting industry engagement in the upcoming market approach -‘Tranche 3 Services Expression of Interest (EOI),” the note states.

In late January this year South Australia updated its public status document (PDF) to detail which contracts would be within scope of the Tranche 3 contracts to be discussed at the briefing.

In that list, the state noted that it had recently completed negotiating a new client computing (desktop PCs and laptops) and server equipment panel, with new contracts expected to commence from February this year. Previously the state bought the hardware through Acer, Dell and HP, in a contract initiated back in 2006 and which had been slated to end on 30 June 2011. It is not clear which suppliers now sit on the panel.

The state is also currently negotiating a printer and photocopier equipment panel, with new contracts in that area expected to begin in July this year. It is believed that Canon, Fuji-Xerox, Kyocera-Mita and Ricoh currently provide the state with its photocopier needs, with HP, Kyocera-Mita and Ricoh working in the printer area.

In the briefing next week, the state will primarily look at telecommunications contracts, including managed network services, ISP services, mobile carriage services, telecommunications services in general, “active devices” contracts (for example, routers), PABX maintenance and electronic messaging (email). However, it will also look at its Microsoft enterprise contract.

In the past, suppliers such as Dimension Data, Telstra, Internode, NEC and Cisco have been the prime beneficiaries from new telecommunications contracts in the South Australian Government. Other major contracts not yet in scope for the state include mainframe computing, storage and hosting services.

opinion/analysis
So far South Australia is the only state jurisdiction which appears to be doing a decent job of managing its whole of government technology contracts, with every other major state appearing over the past few years to have dropped the ball completely in the area. We just don’t hear about many whole of government technology contracts from states such as Queensland, NSW and Victoria any more. And I’m not surprised, with a series of audit reports over the past few years making it clear that when it comes to the governance of technology rollouts, those states have a lot of learning to do.

So what would I like to see from South Australia’s Tranche 3 of contracts? Well, of course it’s hard to say where each vendor sits relative to each other at the moment.

However, in general, I suspect Telstra still has a huge lion’s share of telecommunications contracts in South Australia. I’d like to see some of that work farmed out to Optus, which has a good and growing enterprise division, and local player Internode continue to pick up as much Internet services work as possible as well.

When it comes to PABX gear, I’d like to see some recognition of the worth of shifting to modern IP telephony platforms, with Cisco and Avaya getting gurnseys in that area, as they’re the dominant players in that still emerging field. In switching, if that is in scope, it’d be nice to see Cisco given some competition by the likes of HP ProCurve. Switches in 2012 don’t always need to cost the earth.

As for email, if that area needs work, I’m sure an integrator like Dimension Data will pick up some work there. Realistically, for an organisation like the South Australian Government, Microsoft Outlook/Exchange is basically the only option. I’m sure there are still some Lotus Notes and even GroupWise installations in Adelaide which need to be “upgraded” to Exchange.

Did I miss anything?

This article is by Martin Hirst, an associate professor at Deakin University. It was first published on The Conversation and is re-published here with permission.

analysis Telecommunications giant Optus managed to convince the Federal Court in Sydney this week that there’s a legal blindspot in relation to its download pay-per-view service.

Telstra – given its business relationship with The National Rugby League (NRL) and Australian Football League (NFL) – had tried to prevent Optus from recording and re-broadcasting matches screened on free-to-air television. But Justice Steven Rares found Optus’s mobile television service didn’t breach the Copyright Act for a couple of reasons: Optus keeps separate recordings for each customer, and individual customers are responsible for requesting the recordings. So what’s going on here?

To my mind, former rugby league coach Roy Masters – ever the shrewd observer – hit the nail on the head when he wrote the following for the Sydney Morning Herald yesterday:

“They framed the copyright laws to protect the average punter from being sued for taping a TV show, including a football match on his home recorder. Now, their legislation is being used by Optus to sell a service.”

Naturally, Telstra has concerns. The AFL’s A$1.25 billion five-year rights deal signed last season with Channel Seven, Foxtel and Telstra, included a A$153m payment by Telstra for the online broadcast rights to games. The NRL, likewise, expected a proportion of its next deal to come from internet rights.

We’ve done nothing wrong
Optus is not breaching current copyright laws by charging its customers for a record-and-download service that includes material in which its competitors hold some or all of the copyright.

In court, Optus successfully argued its customers already access its competitors’ content via free-to-air television and record and replay programs when they choose to. This model of free distribution is embedded in our media culture. Now that old interpretation of the law – protecting home recording rights for the “average punter” – lets Optus monetise a data stream for its customers, using free content provided at great cost by others.

The potential appeal issues confirm it’s about the income from broadcast, repackaging and online rights. The AFL and NRL are claiming a loss of trade. If they stick to their word and fight back, and Telstra joins in, it could cascade into a series of messy contract disputes.

The whole issue is further complicated by the pay-TV siphoning regulations in which all litigants are also stakeholders alongside Foxtel. As everyone knows, from the Communications Minister Stephen Conroy down, the regulatory regime and legal framework for the digital economy and the new convergent media landscape is out of step with the machinery of change. We have a high-performance engine under the hood, but the tyres and the suspension can’t really handle the speed. We are living through a techno-legal time warp.

The laws that worked to allow the “average punter” to record and replay TV shows using personal recording devices (such as TiVo) are now creating lucrative business opportunities that everyone involved in this legal stoush is keen to exploit. Monetising the click-stream is the main game in digital Dodge City and an analogue copyright law is not player-friendly for everyone. Contrast Masters’ old-hand wryness with the corporate-speak from Optus spokeswoman, Clare Gill:

“This has been a win for Australians, for innovation and for the law. This is a product similar to things that you can do today. So we see this no different (sic) from any other personal video recording device.”

As one punter wrote on sports website The Roar, it’s not a pretty sight to see communication giants slugging it out: “The battle between the telcos is getting ugly, and the sporting landscape is getting caught up in it.”

At the heart of the legal issues is the Copyright Amendment Act of 2006, which specifically allows home recording of free-to-air TV content. At the time smartphones were not so ubiquitous and the download technology was clumsy. The law worked for its time. But not any more. The techno-legal time-gap kicks in when the technology perfects a new application that the old rules were not designed to deal with. Here, the respondents argue, the law is out of date.

Under review
A review of digital copyright law was announced late last year by the then Attorney-General Robert McClelland. This is way overdue and may still take some time to come to fruition. The problem we have is that nothing in the government’s much-vaunted and much-despised Convergence Review seems to deal directly with this issue.

The interim report from the Department of Broadband, Communications and the Digital Economy (DBCDE) doesn’t even deal with copyright law and, in a section where you might expect to find some comment on it – chapter seven, entitled “Competition” – there is only hollow sentiment and principle:

“Submissions to the Review addressing competition fell into two broad categories:

• Some stakeholders argued the market is functioning effectively and existing ACCC [Australian Competition and Consumer Commission] powers are adequate when anti‑competitive situations arise (including in relation to content)
• Other submissions expressed concern that emerging market situations could reduce competition in content and communications markets and that these situations will require a flexible operational response from the regulator.

The regulator should be entrusted with suitable powers to deal with content‑related competition issues in rapidly changing markets.”

Surely taking copyrighted material and on-selling it, as Optus looks set to do, is “anti-competitive”, even if a six-year-old loophole says it’s OK to do it.

The techno-legal time-gap
I first wrote about the techno-legal time-gap in 2006 in Communication and New Media: From Broadcast to Narrowcast, a book I co-authored with John Harrison. In that book we made the point that legal, moral and ethical debates and regulation lag behind the speed of technological change.

My example at the time was peer-to-peer file-sharing, but within a year of the book’s publication, Napster and others were facing huge legal threats and were effectively shut down. The problem then migrated to The Pirate Bay and other BitTorrent) sites. As that appears to be resolved – to the commercial satisfaction of some players – a new front has opened up. The latest target for the anti-piracy forces is Kim Dotcom, the founder of the Megaupload “cyberlocker”. Dotcom’s repurposing of other peoples’ content has got him into serious trouble. Other service providers are also caught up in this net.

Private matters
The fights over copyright – or “copytheft” to some – are not the only digital skirmishes. The very concept of privacy – both real and online – has been blown wide open. Not only has there been rampantly criminal behaviour that exploited loopholes in phone security leading to a tsunami of scandal engulfing the Murdochs, it seems our total being is exposed online. Daily hacks and distributed denial of service (DDoS) attacks compromise data, much of it personal and all of it valuable in the surveillance economy.

It’s not just credit card fraud and online dating scams – seemingly innocuous transactions – buying products through online vendors, for instance – leave a trail that is collated, digested, modeled and spat back as marketing or social enhancement experiences.

It’s hard to see the “white hats” among the online baddies. But caught up in all of this today we have Julian Assange, a military whistleblower (Bradley Manning) and a collection of techno-savvy activists (Anonymous) attempting to bring down the military-industrial complex. They are all now caught up in the time warp. But the regulators are not having it all their own way.

Paradox effects
The Stop Online Piracy Act (SOPA) protests of the past few weeks forced a backdown in the US over so-called internet censorship laws.

The time-gap exists across social media too. In 2006 Facebook was new and exclusive, Twitter was just around the corner, smartphones cost a fortune but the apps weren’t that good. In half a decade things have changed dramatically. These paradox effects will continue. The review of copyright law, a new round of privacy commission policy papers and the convergence review are all institutional attempts to deal with the contradictions, loopholes and inconsistencies.

We see the same pressures exerting themselves on the Australian Press Council and other regulators too. Analogue models of regulation, control and ethical boundary-setting are no longer working smoothly. The Media and Entertainment Arts Alliance (MEAA) code of ethics was updated in 1997, but it too is now showing its age.

Where are the guidelines for journalists on managing their social media accounts? Where is the advice on how to deal with lifting material from Facebook or YouTube to illustrate a story? I have collected several examples of these problems and discuss them on my blog (Ethical Martini). Ripping images from Facebook, for example, is a breach of both copyright law and an invasion of privacy (even if legal).

None of these problems is easily fixed. They are global issues and the World Trade Organisation is one of several transnational bodies looking for answers. The danger here is that regulators go with a business-friendly commercial fix, rather than regulation in the public interest. At the heart of capitalist property law is the right to exploit: just ask Optus.

Martin Hirst is the author of News 2.0: Can Journalism Survive the Internet?

This article was originally published at The Conversation. Read the original article.

Image credit: Back to the Future, Universal Pictures

news Telecommunications analyst Paul Budde has published an entry in his blog thanking Optus, Australia’s second largest telco, on its 20th birthday for its contribution to telecommunications in the country over the last two decades, but also cautioning it on its lack of a vision for the future.

Budde considers the arrival of Optus to be one of the three most significant events in the history of Australian telecommunications, along with the separation of Telstra and the arrival of the NBN (National Broadband Network).

Budde recalls that Optus began with a shaky start in 1992, reselling Telstra’s services and focusing on the small, expensive, nascent mobile market, content with a 20 per cent market share in fixed line services that was given to it by a national ballot. “This lacklustre interest in the fixed market also led to Optus being one of the last telcos to enter the Internet market, a mistake that still haunts the company, as it has never been able to bridge the market share gap that this created,” wrote Budde.

Optus’ vision of building an information super highway with its HFC (hybrid fibre coaxial) networks to deliver alternative voice services and future broadband services did not pan out as expected. However, despite the poor regulatory system during the 1990s, Optus demonstrated leadership in bringing significant reforms to the telecommunication industry. It also emerged as an innovation leader in the mobile market during that time

Budde applauds Optus’ enthusiastic commitment and contributions to Australian industry as having gone well beyond its own business. “It remains the key competitor to Telstra, putting enormous effort into all the legal and regulatory changes over the last 20 years, without which Australia would not have the marketplace that it has today,” wrote Budde.

Optus’ forays into the rapidly changing and highly competitive telecom environment have been cautious. In 2011, it launched Google Apps for Business, a new software for small and medium business (SMB) customers, and Optus TV Now, which enables customers to record and watch free-to-air TV shows on their mobile. It also launched an exclusive loyalty program with Qantas Frequent Flyer and a new Internet TV service, ‘Optus Me TV’ in collaboration with fetch TV. In November 2011, Optus launched commercial services on the NBN, and it has plans to introduce a 4G network in 2012.

Looking into the future, Budde opines that the fixed market is not Optus’ strength and the fact that it does not have a good NBN strategy in place compared to Telstra, iiNet and TPG does not bode well. With average revenue per user (ARPUs) declining in the mobile market, there is a shift in power from the traditional telcos to companies like Apple and Google. Budde feels that while the telco industry and Australian users owe a big thank you to Optus for its commitment and energy over the past two decades, unless the company comes up with a better strategy to address the current market shifts, it will be reduced to the position of a mobile infrastructure provider.

“So far I have not seen any strong future vision or strategy from Optus – Telstra has a much clearer strategy going forward,” he said. “This does not necessarily mean that Telstra will therefore be a winner, but at least it is embracing the new environment in a more strategic fashion.

opinion/analysis
I agree with Budde on most of what he has written here. Australia has a lot to thank Optus for over the past several decades. Back when the company launched, it was the embodiment of competition in a telecommunications market which had no idea what that meant. In fact, there was no “market” at that point — just Telstra.

However, over the past decade Optus has focused so strongly on competition in the mobile market — where it definitely is a strong competitor — that it has completely forgotten about the highly important fixed telecommunications market. Right now, in that market, Optus is definitely not the key competitor; that would be iiNet and TPG.

Most of my friends and family and many Delimiter readers consider Optus completely irrelevant when it comes to fixed-line telecommunications, and the fact that Optus’ HFC cable customers will be migrated onto the NBN will open up a further opportunity for the likes of iiNet and TPG to snaffle up that customer base. Optus needs a strategy to deal with iiNet, particularly, in the fixed telecommunications market. And it needs it as soon as possible.

Image credit: Optus. Opinion/analysis by Renai LeMay

news Telecommunications giant Optus announced yesterday that John Paitaridis would be the new Managing Director of Optus Business, a its division providing telecommunications and information and communications technology (ICT) solutions to businesses.

Paitaridis will head the Optus enterprise, government and corporate business and is responsible for every part of the division’s sales, operations, marketing, products and service delivery, including Optus’ wholly owned subsidiary Alphawest and its Uecomm business.

Paitaridis, an accomplished senior executive, comes with 20 years’ experience in the telecommunications and IT sectors. His most recent position was Executive Director, Network Products and Services of Telstra, in the government and open space. He has spent a decade of his career working in international markets, with five years as the APAC regional director and three years as head of sales and marketing in Europe.

Highlighting Optus Business’ achievement in winning contracts with Sydney Water, NRMA and Tabcorp in the previous 12 to 18 months, Paitaridis said that this had helped the company make strong in-roads in the government and enterprise market. “Optus Business is an established whole-of-business ICT solutions provider with the capability to scale services across APAC as part of the SingTel Group, coupled with a strong customer focus,” he explained.

Paitaridis also stated that Optus Business would up the ante in the enterprise market by endeavouring to deliver the most compelling ICT solutions and develop into the service provider of choice for corporate and government customers. “Our focus remains on delivering superior customer experience and giving customers a competitive edge through differentiated products and services in areas such as cloud computing, data networking, mobility and enterprise collaboration,” Paitaridis said.

The new announcement follows a number of senior appointments to the Optus Business leadership team in 2011, strengthening the division’s market position with differentiated offerings and focus on customer experience. The recent appointments include Paul Mullins as Government Sales Director, Sam Kennedy as General Manager of Queensland and Northern Territory, as well as the promotion of Optus SMB Marketing Director Phil Offer as the Director of Mobility and Convergence.

In September 2010, the acting Managing Director of Optus Business, Rob Parcell had announced the launch of a new scalable commercial enterprise ‘cloud’ service – Optus Cloud Solutions, in collaboration with its subsidiary Alphawest. The infrastructure for the cloud, called Infrastructure as a Service (IaaS), is delivered through Optus’ ‘Evolve’ IP network. Optus Business has a partnership with the joint VMWare, Cisco and EMC technology platform for the cloud computing services.

Speaking about the scalable service, Parcell had said, “Optus Cloud Solutions have been designed to give customers the flexibility, agility and control to scale their IT services up and down in real time to support business requirements and fluctuations, without having to maintain their own infrastructure.” The portal allows administrators to create, manage and use virtual machines, catalogues, users and groups.

Image credit: Optus

news Independent Australian footwear retail chain, Payless Shoes has inked a million dollar, three-year deal with Primus Telecom, one of Australia’s largest telecommunication carriers. Primus will provide an integrated Voice and Data Network solution that includes a network-based EFTPOS system plus additional hosted services across the retailer’s 232 stores and its Sydney-based head office.

The deal includes the deployment of a Primus Private IP Network (PIPN) and Accella Hosted Phone System, in place of the current legacy telephony services, across all sites, a cloud-based Managed Firewall and VPN service. Primus Australia is part of Primus Telecommunications Group, with headquarters in McLean Virginia. The Primus Australia network has facilities in 66 cities and 286 DSLAM exchanges across Australia.

According to a statement issued by Primus yesterday, Primus’ PIPN solution offers a fully integrated and managed private IP network based on a Multi Protocol Label Switching (MPLS) network. It employs the benefits of the newest dynamic routing protocols, MPLS traffic isolation, and Quality of Service (QoS) management to generate the modern Layer 3 private network. Primus has designed the network to efficiently assimilate data, video and voice traffic, and EFTPOS transactions on a single data platform.

All Payless Shoes sites will utilise Primus’ business grade Accella Hosted IP Telephone System (HPS). Other Unified Communications features with HPS include voicemail to e-mail, remote office capability on every handset and call forwarding, on every site. Catering to the fast growing numbers of mobile and remote users, Primus plans to provide a Secure Socket Layer (SSL) remote access with its secure, cloud-based Managed Firewall Service.

Primus has promised a high quality, high availability and highly reliable solution with this infrastructure and carrier-grade network equipment, supported by across-the-board tracking and resolution of network events. Primus is setting up a parallel network for each site to enable a smooth changeover to the new infrastructure. This involves new data access, Accella HPS and Internet access, along with conducting a complete User Acceptance Testing program before each site migrates to the new service.

IT Manager of Payless Shoes, Kerry Smith, stated that the reason for the project’s success was Primus’ willingness to work closely with the Payless business team. Speaking about Primus’ flexibility while building a solution around the shoe retailer’s unique needs, Smith said: “Primus is a low bureaucracy, nimble and proactive company with a genuine commitment to delivering excellent results. The provision of a parallel network to ease the transition to the new infrastructure has given the entire company an additional level of comfort and confidence in the project.”

Primus Telecom’s General Manager of Marketing and Products, Andrew Sims, expects the upgraded infrastructure to have benefits for Payless Shoes, such as enhanced communications quality, flexibility, reliability and efficiency across all sites. “We have worked very closely with the Payless team to ensure we deliver infrastructure that matches their current needs but also has the flexibility and scope to support their own business growth and future requirements” Sims stated.

Smith said that Primus would enable Payless to concentrate on the running of its business by taking charge of the solution infrastructure. “Primus came to us with glowing credentials in the retail sector, and as the process unfolded the team demonstrated a genuine understanding of our specific business needs,” Smith explained.

A quick look at Primus Telecom’s solution for Payless Shoes:

• Primus Managed Private IP Network Solution (PIPN)
• Integration of Data, Voice, E-mail and EFTPOS on a single network
• Accella Hosted Phone System across all Payless Shoes offices
• Automatic failover for EFTPOS and telephone services to PSTN
• Dynamically configurable PABX features through a Tool Bar
• Inbuilt Disaster Recovery and Business Continuity Services
• Universally available secure remote network access
• Primus Hosted Managed Firewall solution
• High availability and SLAs

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news National broadband company Internode revealed a new service last week that allows customers rent its Fritz!Box broadband routers and accessories. The announcement also unveiled lower pricing across the series of Fritz!Box equipment.

Starting January 11, Internode customers can skip upfront costs for the Fritz!Box 7270 and 7390 routers and Fritz!Fon DECT handsets by paying a monthly rental fee on a 24-month contract. Customers can rent the 7270 for $9.95 a month, the 7390 for $14.95 a month and the DECT handset for $4.95 a month.

Philip Dempster, Internode product manager, explained that Internode had launched the Fritz!Box rental program to meet customer demand. “Many customers prefer the affordability and convenience of renting their broadband hardware. This has proved popular with the Set Top Box for Internode’s FetchTV IPTV service, so we’ve introduced it as an option for customers who prefer to rent FRITZ!Box routers and hardware,” Dempster said.

Internode has cut $50 from the price of the two Fritz!Box routers and $20 from the Fritz!Fon handset for its customers who wish to buy the equipment outright. The price of Internode’s Fritz!WLAN WiFi USB Stick has also been cut by $10 to just $79. The new Fritz!Box pricing means that the 7390 now costs $349, the 7270 costs $249 and the DECT handset costs $109. Additionally, Internode has lowered its Fritz!Box bundle pricing by $50.

The Fritz!Box (read a review of the 7270 here) offers a long list of features. It connects to standard ADSL2+ networks and has inbuilt NAT, DHCP and DN servers, a DDNS client and quality of service alongside packet inspection and port forwarding. The Fritz!Box also supports the TR-069 standard that internet service providers such as iiNet require for access to their FetchTV IPTV platform that Internode launched recently.

The device also supports 802.11n Wi-Fi that delivers up to 300Mbps theoretical speeds and comes pre-configured with wireless encryption (WPA and WPA2 on offer) with a unique password active upon delivery. The separate Fritz!Box USB stick can be used to automatically connect PCs to the router. The device can also act as a base station for up to six cordless telephones through the DECT standard, and support ISDN telephones and ISDN PBX boxes.

The device includes an answering machine service for up to five users, and users can set up fax numbers, number blocking, quick-dial numbers, calls between three parties, linkages with PBX, number blocking and much more. Users can place voice calls over IP and then fall back to legacy fixed line if their VoIP drops out and the SIP standard is supported. Users can have up to 20 VoIP/SIP accounts through the Fritz!Box and up to three phone calls simultaneously. The device incorporates fax to email and a TAPI interface for integrating telephony and software (such as Microsoft’s Outlook/Exchange platform). The only feature not supported by the Fritz!Box 7270 is gigabit Ethernet, as it is restricted to 10/100 connections. The higher model of the device, Fritz!Box 7390 supports gigabit Ethernet.

Image credits: Delimiter

news Internode managing director Simon Hackett has strongly defended the pre-Christmas deal in which rival iiNet bought out his company Internode, stressing the strength and duration of his long-term relationship with iiNet’s management team in two outspoken forum posts published last week.

The transaction is expected to be completed by 29 February, 2012. Following the acquisition, Internode will trade as a separate business unit and Hackett will continue as the managing director with his existing team, although he will also hold approximately 7.5 percent of iiNet’s shares, making him one of the company’s major shareholders. Hackett has acknowledged that the Internode sellout to iiNet was partly triggered by Internode’s inability to gain enough scale to compete in a National Broadband Network (NBN) world.

Some online critics had speculated that Hackett would shortly take a seat on the iiNet board, despite Malone saying that Hackett would join the iiNet board only after relinquishing his executive responsibilities with Internode. “It’s just a little crazy to have me reporting to Michael Malone and the board and also being on the same board at the same time,” Hackett wrote on Whirlpool in response last week.

“Meanwhile you seem to be framing this as me turning into an inflexibly driven supplicant of Michael Malone, and that framing indicates that you completely fail to appreciate how business works at this sort of high level. It’s a relationship based on trust, not one based on my being a mindless puppet.”

Hackett said that he wasn’t finished with his current goals of finding new ways to drive interesting new strategic outcomes for Internode and its staff and customers. Referring to a potential future position on the iiNet board, Hackett said that it would definitely make him a key decision-maker in the company group.

Hackett expressed his frustration over forum commenters implying that everything he said since the announcement of the buyout was suspect: “So I make a business decision and now I’ve turned into a professional liar? I find that pretty insulting.” He also appeared angry about statements concerning Internode’s customer base being part of the assets he’d sold to iiNet and the possibility that Hackett and Malone would lie to the Internode customer base.

In response to a comment that the announcement of the deal gave no concrete information about the future of the company group, Hackett pointed out that the transaction was still incomplete. He called the board members of iiNet and Malone himself “very smart people who I enjoy working with.” He also directed commenters to the Internode blog for significant information. He termed the deal as an exercise in combining the strengths of two major companies in the market which would in turn, combine the strengths of the leaders of the two companies. “It’s exciting, and it’s got a lot of positive potential as a result. Will it all be perfect? Obviously not,” Hackett said.

Hackett also responded to a statement that Internode’s customers had always paid extra for a higher quality service which was alien to iiNet, providing statistics to indicate actual customer opinion.

Reacting to a suggestion that he would face pressure to make changes to Internode, Hackett said: “You may not appreciate how little respect for my own skills and abilities, or that of my large and capable staff, the above implies.” Hackett also emphasised upcoming positive changes, sarcastically saying, “You don’t seem to consider the potential that some of these unspecified changes forced upon the small and impressionable Mr Hackett by the big bad Michael Malone and his board might be good things. Internode does not begin and end with me.”

The Internode chief quoted examples such as “thriving as a national NBN leader, having the largest direct DSLAM footprint in Australia, and remaining in the marketplace as a sustainable and capable innovator instead of being slowly choked to death in a saturated market by larger players … these are things that don’t seem like bad things, at face value, to me at least!”

Following his statements, the executive signed off from Whirlpool by asking that commenters refrain from framing conspiracy theories. “I will now stop responding to your posts on this topic now because they’re solidly circular in their nature (as, by extension, are my replies to it),” he said.

Image credit: J. D. Hancock, Creative Commons

blog One interesting view on iiNet’s likely acquisition of TransACT has come today from maverick (we normally describe him as ‘rogue) analyst Paul Budde, who says that not only does the sale make sense, but more such buyouts should take place. Budde told the ABC:

“One of the things is that absolutely more consolidation is needed in the market. Even this possibility of TransACT and iiNet merging will not be enough, we will see more.”

Budde doesn’t completely explain his comment in the ABC story, which is distinguished for his brevity. But I’m sure his argument would go that true competition emerges when ISPs get enough scale to challenge the incumbents in the sector — Telstra and Optus. It’s the same argument the ACCC used when it allowed the merger of Hutchison and 3 Mobile.

Personally, as I wrote earlier on today, I disagree strongly with Budde. A market with more players is a market with stronger competition. But everyone’s entitled to their view. What do you think of Budde’s?

Image credit: BuddeComm

opinion In one of the greatest disappointments of Australia’s telecommunications debate this year, Malcolm Turnbull has done virtually nothing to flesh out the details or address criticisms of his rival draft National Broadband Network policy since it was unveiled in August.

On Monday last week, I, and many other Australians, had the chance to catch Turnbull in scintillating form live on national television on the ABC’s excellent Q&A program.

All of the Member for Wentworth’s strengths were on display for the occasion. His humour — poking lightly at “lean as a whippet” Tony Abbott and describing Paul Keating as “the Kim Kardashian of politics”; his charisma — charming the audience with his deflections of the difference between official Coalition policy and his own views and making self-referential jokes to his leather jacket fetish — and his classical liberalism; turning the Qantas’ grounding debacle into an argument for the free markets.

“The obligation of a front bencher in the Westminster System, when addressed with a question like the one you just asked me, is to squirm uncomfortably for a few minutes,” Turnbull told host Tony Jones at one point, to general laughter.

This virtuoso performance — which won the hearts of the audience — culminated in a passionate plea by one audience member to return to leading the Coalition once more; because Turnbull was the leader he wanted to vote for as Prime Minister. “I’ll take that as a compliment or a come on, if not a comment,” Turnbull replied.

After watching and highly enjoying the cut and thrust of Turnbull’s engagement in the Q&A debate, I was reminded once again why Turnbull is one of Australia’s finest political leaders — passionate, authentic, highly educated, erudite and charming. However, one little issue niggled around in the back of my mind once the program had finished. Why, I wondered had Turnbull neglected to take the opportunity offered by the Q&A audience to push an angle — any angle at all — from the portfolio which he purports to hold, that of Communications?

On the night, we heard nothing from the Shadow Communications Minister about the National Broadband Network. Nothing about the digital economy. Nothing about Labor’s Internet filter project. Nothing about fibre to the node, spectrum allocation, broadband pricing, HFC competition in Korea. Nothing at all. And I realised that this has become a bit of a trend with Turnbull recently.

Appearing on Seven’s Sunrise show on the fifth of November, Turnbull discussed politics, climate change and gay marriage. Appearing on ABC News 24 several days later, he discussed the carbon price and the Australia Network tender. The subjects on ABC Radio National several days later were the same. And on Meet the Press on 13 November, again, it was the carbon tax, the Government’s media inquiry, and even problem gambling.

Nowhere in all of these media appearances over the past month was the subject of the NBN discussed.

Now normally this wouldn’t be a problem. Over three-year term in Opposition, Shadow Ministers always get a bit tired of opposition for opposition’s sake. There are quiet periods where they discuss other matters. They must sometimes leave their portfolio issues by the wayside as they pump the broader party line (recently, for Turnbull, the carbon tax). And sometimes, as with the NBN over the past month, there haven’t been that many issues to discuss.

However, what I am disturbed about at the moment is that Turnbull is not using the opportunity offered him by the media at the moment to advance the Coalition’s alternative NBN policy.

In August, the Shadow Communications Minister unveiled a significant new approach from the Coalition in the portfolio. Should it take Government in the 2013 election, he suggested, the Coalition would focus on upgrading Australia’s existing HFC cable networks, separating Telstra, investing in fibre to the node technology and conducting analysis into the future of the existing NBN.
As I wrote at the time, that policy represents a solid liberal alternative to Labor’s big-spending NBN project, and Turnbull had gotten most of the policy planks right.

However, as I also wrote at the time, it faced some significant obstacles. Explaining to the population why a half-complete NBN project should be substantially modified. Bringing Telstra to the table yet again for another mammoth negotiation exercise. And, of course, Turnbull’s own divided loyalties and ambitions beyond the Communications portfolio.

As it happens, I’m not the only one who foresaw these difficulties for Turnbull’s policy. The exact same problems were detailed in a report by Citigroup published last week, which demonstrated just how elongated some of the dates associated with Turnbull’s policy could be. Completing a cost/benefit analysis by 2014? Completing negotiations with Telstra by the start of 2016? Implementing Telstra’s separation by the end of 2018?

Frankly, by that stage, the existing NBN project would already have been almost completed.

After my initial burst of enthusiasm for Turnbull’s plan, the Shadow Communications Minister’s behaviour over the succeeding months — in which he has done virtually nothing to address its criticism or expound its merits in public — has done much to sour me on it. Watching Turnbull in action in that period, I often find it hard to believe that he has the energy and determination to see his rival proposal through, should he be appointed Communications Minister in a Coalition Government.

What lies at the heart of this issue is one problem: Turnbull is, frankly, not humble enough to settle for the task of reforming Australia’s telecommunications sector over the better part of the next decade.

Unlike Conroy, he is a man with a much greater vision and ambition than that. He has very diverse policy interests, a widespread popularity and a charisma which constantly leads onlookers to describe him as “a statesman”. Turnbull, it is apparent to everyone, is destined for greater things than debating National Broadband Network policy over and over again.

And yet, I wonder if there is a question the Member for Wentworth might ask himself. That question might be something like: What is it that Australia needs most right now? Is it a stable, well-argued and coherent Coalition telecommunications policy which could be enacted from 2013 with a stable and determined Communications Minister?

Or does Australia need a former Opposition Leader, who constantly seems on the verge of greater things, debating almost anything but the policy he has envisioned in his own Shadow Ministry?

I know which one of the two I would prefer.