Google-friendly Telstra CEO pans Apple’s “walled garden”


Telstra chief executive David Thodey last week said there were problems in the telco’s relationship with notoriously demanding manufacturer Apple and criticised what he called the company’s lack of openness, in a speech in which he praised Google and demonstrated Telstra’s upcoming Android tablets built by Chinese vendor Huawei.

“We are Apple’s largest customer in Australia, yet with Apple we are still working through some areas in how to work,” Thodey told a lunch held by the Australia-Israel Business Council last week. “We need to be more sophisticated in our view of our relationship with a lot of companies,”

Thodey added that the iPhone ecosystem was “quite contained”, describing it as a “walled garden”.

Apple is known to set stringent conditions on the way that it works with telcos globally and in Australia. For example, whenever the US giant has launched one of its iPhone devices in Australia over the past several years — or this year, the iPad — Apple is believed to have prevented Australian telco partners from releasing any details of pricing until the last couple of days before the launch.

In Australia, Apple also insists on servicing all of its hardware defects itself – which has led to telcos like Telstra leaving the company’s handsets out of their normal warranty processes. And the company does not allow telcos to take a cut of software sales through its App Store or to customise its handsets as other manufacturers do.

Telstra sells plans for the iPad, but last week it also revealed it was planning to sell a line-up of Android-based tablets known as the “T-Touch” in Australia.

At the lunch, Thodey asked the audience who currently had an iPad, receiving confirmation from several dozen attending executives, including Fujitsu Australia chief Rod Vawdrey and Alcatel-Lucent’s local leader Andrew Butterworth.

The Telstra CEO then held up one of the telco’s T-Touch devices, confirming it was manufactured by Huawei. “I think you’ll see quite a few of these coming out,” he said.

In comparison with Apple’s ecosystem, Thodey said Google was more open, although it still had some way to go. “I won’t say Google is open – I would wash my mouth out if I said it was open – but it’s more open than an Apple world,” he said.

Thodey said over the past 18 months, the biggest changes in consumer technology had come from Apple devices – the iPhone and iPad. However, he said that within a year he expected Google’s Android platform to have caught up. “It will probably be equal,” he said.

In comparison with his company’s difficult relationship with Apple, the Telstra chief said his company had a more multi-faceted relationship with Google – dealing with the company from an advertising side with its Sensis directories division, for example, as well as on the Android platform and so on.

“We are working through that, and trying to work out how to best position [ourselves],” he said, noting that Telstra itself needed to be more flexible, but that it would be “very, very dangerous” to ignore how the developing dynamics of the market.

In a wider sense, Thodey said the idea that Telstra was just a provider of “dumb pipes” which would deliver other people’s applications over its network was false.

“One of the things that people say to me is that David, you’re just the dumb pipes of the world,” he said, nothing there were “people in our industry who want the internet to be free” and were building platforms on top of the internet. But Thodey said Telstra had calculated there was more compute power in its networks than in any corporation in Australia.

“Wash your mouth out if you say ‘Telstra is just dumb pipes’,” he said. “We are very creative – innovative.”

Image credit: Telstra


  1. I’d rather have Apple’s idea of not allowing telco’s putting bloatware on their phones. How many of us really use any of those apps that telco’s put in by default? And make it impossible to delete them? Not many if any!

    I’d rather have Apple’s way of doing things, don’t forget Google has given up on Android’s ideologies and openness.

    Who needs 15 different App stores like the Android has?

    • True with respect to the telcos, but whether he’s a hypocrite or not, there is no doubting that both Google and Apple do create walled gardens on their phones — and that’s not a good thing. We need to make our mobile phone and tablet platforms as open as our desktops are. Would you accept a locked down Mac OS X desktop where you could only install certain applications? No. And we shouldn’t accept that in a mobile environment either.

  2. Hi Stuart,

    Firstly there are many applications available that allow you to remove the applications that telcos preinstall on the phones, such as Androidmate and Root Explorer. Obviously it’s not as easy as most applications but it’s certainly not impossible. It’s a downside, if you like, to Google’s openness, that they’ve made the source code freely available so that Telcos can know how to install applications at a lower level.

    I’m interested in why you believe that Google has given up on Android’s ideologies and openness – it seems just as open as it ever was to me. As long as they’re still releasing the source code openly I’d consider it open! Plus by all accounts their move towards Android 3.0 and the defragmentation of Android should prove to make it an even more flexible OS.

    Also you say Google has 15 different app stores – I find this interesting as well, I’ve only even known of one, and I’d love to find the others. I do have a meta-application called AppBrain that provides more details about items in the market, but it ultimately redirects me to the market itself.

    I quite easily and happily install applications that I download from outside of the market, without issue.

    • Hi Tom,

      I’d personally consider the fact that Google only opened up its application store to Australians to sell apps last week as one example of how the company is not exactly “open”. Frankly, that was a joke. There should be no technical barrier to Australians selling apps through the store when other countries could. The fact that Google couldn’t get this right speaks volumes.

      Secondly, Android won’t exactly be “open” until users can simply upgrade the operating system on their handsets in a transparent way. At the moment, unless you want to use some dirty hacks, there’s no way for users to hit the upgrade button to the latest version (Froyo).

      Given that Android is based on Linux, and given that on Ubuntu an upgrade is as easy as typing in “sudo apt-get upgrade” — or “sudo apt-get dist-upgrade” for those anal people amongst us — this is a complete joke. With mobile phone hardware becoming increasingly standardised, there is no excuse for Google to let the phone companies get away with this bollocks. It should be insisting on openness by design.

      Just my 2c.

      • Hi Renai,

        About opening the store for Australians to sell, I don’t know why there was a delay and I’d be curious to know, but I understood the issue purely to be that Google had not set up processing of Australian currency within Australia. There were Android developers in Australia happily selling their applications, however it was through other stores, and therefore they had the overhead of dealing with currency conversions. I am sure it was nothing sinister by Google, they just have a tendency to push out the technology first and mop up the business related transactions later. Are Apple better at this? Absolutely. Does it point to Google not being open? I’m not sold.

        Also, the failure of handsets to update smoothly cannot be placed at the feet of Google. My handset updated smoothly and transparently from Android 2.1 to Android 2.2. The update was pushed to it, I received a notification and install it with a single press. This took place about a month or so after the release of Android 2.2. I have a Nexus One. Other handsets that have not updated are usually due to either the Telco provider not yet updating the own layer on top of the OS, or the handset itself not running hardware spec’d high enough to be able to run the latest version of Android. I don’t feel Google can be held responsible for either of these issues.

        • Hmm I see your points Tom. Let me respond:

          1. Google never gave a reason for not switching on this functionality in Australia. For a supposedly open operating system they seemed pretty “closed” whenever I called them for comment about it.

          2. In my opinion, this is a technical problem, not an organisational one. It seems to me that Google has obfuscated the technical situation sufficiently with Android that it’s not a simple matter for someone to download an update for their phone. I feel it should be. I’d be curious to know why it’s not. Surely phone-specific customisation is just about config files slipped into the base Android operating system? If not, I’d be keen to know why. I do think this speaks to the platform’s openness.

          • The Android store is still limited by odd restrictions that even Apple has mostly moved past- like restrictions on streaming video apps! For a company claiming to be open, why does that restriction even exist? It was annoying when Apple did it & its annoying that Google still does.

  3. I see what he’s trying to do, and his first duty is to shareholders, but David should prepare for the idea that Telstra is (or will be one day) a dumb pipe. His focus should be on providing world-class services, and he should leave the software and hardware to those companies who specialize in those areas. Have you tried a T-hub? Can you imagine if Apple said they were going to build a wireless network? And yet it is somehow ok for Telstra to provide consumer hardware. The T-touch line will go nowhere until gingerbread is here, everything I’ve seen in Android tablets is either vaporware or unable to run marketplace, which is the whole point of a blank slate type device.

    • I wouldn’t say all of Telstra’s efforts in this line are going nowhere, and I don’t agree the future of telcos is just to be completely a dumb pipe — but yes, Jeff, I agree with your sentiments broadly ;)

      • well, perhaps I came off a little strong but I am yet to see a (consumer focused) vertical integration that appeals to me. I think that network engineering and consumer software design are two very different and very difficult areas to excel in, there is little skill overlap. To competently operate in both fields would be quite hard and Telstra is yet to crack the code. Time will tell I guess.

  4. “Apple also insists on servicing all of its hardware defects itself – which has led to telcos like Telstra leaving the company’s handsets out of their normal warranty processes”

    Anyone who has had a phone fixed by Apple compared to their carrier, will know there is no comparison. I don’t know why anyone would possibly want their carrier to fix their phone (aka send to an outsourced repair place for weeks), compared to Apple’s on the spot service at Genius Bars.

    “And the company does not allow telcos to take a cut of software sales through its App Store or to customise its handsets as other manufacturers do.”

    Why should the carrier get a cut? They get paid for the data. And I sure don’t want a spinning 3 logo every time I start my phone, nor a whole bunch of Bigpond apps preinstalled. I can install a white pages or yellow pages app if I’m interested, thanks.

    Telstra – you’re looking out of touch. Or just putting on a brave face for investors.

    • Hi R5000, my iPhone 3G died about a year ago unexpectedly. I took it back and forth between the Apple Store and the Optus store for about a month before Apple finally admitted responsibility for it and replaced it. The fact that Apple does not work well with others is a big deal for customers when things go wrong.

      And I agree — the carrier shouldn’t get a cut. And yes, I agree that they should keep their dirty customised app hands off my phone. But that’s not the way the carriers see it ;)

      The thing here is that Thodey isn’t out of touch — he’s actually very much in touch. His savvy-ness about the market is scary. But he is definitely, as some other posters have suggested, looking out for Telstra’s interests.

      • Was your iPhone 3G in warranty? If so, Apple will simply replace it..I’m not sure why you had to go back & forth? Did you go to an Apple reseller or the Apple Store?

        Carriers hate handsets they can’t control- its why Telstra’s initial response to the iPhone was lacklustre. I think Telstra’s efforts to be more then “dumb pipes” will for the most part fail. The T-Hub, T-Touch Tab etc etc will simply vanish in a couple of years. The T-Box has slightly more potential, but even it will struggle I think.

  5. All I want from Telstra is a great network. I don’t want their T-Hubs, or their T-Touches, their mobile phone apps or any other rubbish. Telstra is a good telecommunications carrier – but just get out of my way if you’re going to try to sell me anything else!

    As for Thodey’s comment that “within a year he expected Google’s Android platform to have caught up (with the Apple iOS platform), my goodness, is he now a prognosticator? Google’s Android may very well catch up…but only to where Apple is now. In a year’s time, Apple will be that much further ahead. Remember, Apple designed the iPad even before the iPhone, and they already have a roadmap stretching way beyond the next 12 months. Thodey will be ex-CEO of Telstra before Google even gets close!

    Again, I come back to my main point: Why is even Thodey commenting on any of this? He should be concentrating on working out a roadmap for the Telstra network, that is: how Telstra is going to survive in an NBN world; or how is it going to compete with the NBN. It’s not Apple you should be talking about, Mr Thodey. Put simply: It’s the network, stupid!

  6. Interesting observation from Gruber today following up on Thodey’s comment:

    Thodey: “We are Apple’s largest customer in Australia, yet with Apple we are still working through some areas in how to work.”

    There you go. He thinks his carrier is Apple’s customer. Thus the conflict, because Apple treats iPhone owners as its customers.

  7. Beware what issues forth from the mouths of Telstra executives. They have a wagon of their own to push.

    Telstra is fuming at the amount of power and control the iPhone has sucked out of the hands of Carriers. Telstra (and Verizon in the USA) are desperate to lock consumers in to their own “value-added” services such as Bigpond Music, Movies, apps, VCAST etc. The success of the iPhone, the iTunes Music, TV, Movie and App Stores have proved however that the carriers should stick to their knitting and be resigned to being big dumb pipes.  Telstra is trying to be AOL and look what happened to them. 

    As a result, it is not surprising Telstra and Verizon are pushing Android for all it’s worth as it is a Carrier’s dream – they can install as much crapware as they desire, bastardise the user interface for their own purposes and funnel users through their own walled-garden pay channels.  And they have the gall to call Apple “closed”!

    The iPhone actually has 40% market share here in Australia while Android has only 2.1% according to IDC. iOS has a far larger installed base worldwide of over 120 million devices vs 15-25 million for Android and Apple is selling 230,000 iOS devices every day worldwide versus 200,000 Android activations.

    From a business perspective, the iPhone has far better Exchange support, hardware encryption, ease of use, manageability, better security and far larger developer support.

    With iPad sales going off the charts and enormous corporate buy-in, the iPhone fits in like a glove.

    The iPhone is a data guzzler, so Telstra should be happy selling customers nice big data plans and stop criticising the golden goose that is finally giving their customers a multitude of reasons to use (and pay for) Telstra’s expensive NextG network.


  8. I find it interesting that David is panning apple for a closed ecosystem, when telstra’s entire fixed and mobile environment is a walled garden. Want to watch bp movies, or listen to p music, no bandwidth charge, want to use something else, charge. There’s a term for this in the telco community, it is called “walled garden” must be how David knew what term to use,

    • So true! I think Thodey does believe in openness ultimately though — it’s just that he has to work within the Telstra constraints ;)

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