Optus chief executive Paul O’Sullivan has warned of new “dangerous” players in the telecommunications market that could create monopolies in the field of content and applications, flagging iconic US technology giants Google and Apple specifically as being worthy of attention.
In a wide-ranging speech delivered at the Kickstart Forum on the Gold Coast this week, O’Sullivan said the multi-billion dollar investment the Federal Government was ploughing into the National Broadband Network, with the aim of boosting broadband and competition in the telco sector, would be limited in its return if the areas of content and applications online were not addressed as well.
“In fact we’ve seen similar developments in the US, where the US government has been tackling some of the issues around Apple, and the limitations it places on developers being able to work with that software, and with their app store,” he said.
O’Sullivan said device manufacturers like Apple were “trying to create closed ecosystems”, or extending their domain out beyond the initial applications which they had become famous for. Google’s Voice application, which is not yet available in Australia but is acting as an intermediary for mobile telcos in the US, was one example, he said.
O’Sullivan said such issues were relatively new to the telecommunications industry in Australia, which for the past twenty to thirty years had focused on regulations around providing open, competitive access at the network infrastructure layer – for example, gaining access to Telstra’s copper network. “We are not used to, nor have we applied the resources, to develop the thinking around content and apps. I would expect that you’re going to see a big shift in this territory over the next couple of years,” the Optus chief said.
In addition, O’Sullivan claimed that companies like Google and eBay had achieved a “winner take all” dominance over the internet.
“There is a huge cliff edge for any second entrant which wants to be a challenger in those application areas,” he said, highlighting the problems being suffered by Telstra advertising and search division Sensis – which has recently revealed it’s suffering sharply as a result of the decline in interest in print advertising.
O’Sullivan suggested that “hyperlinks” could be placed on the websites of companies like Google and eBay, linking to competitors – or even that the traffic for such sites could be auctioned to provide access for “others who might bid to hold that auction, or for providing that search at a better price”.
The Optus chief’s comments go some way to echoing concerns raised by his counterpart at Telstra, David Thodey, who last year criticised Apple for what he described as its “quite contained” iPhone ecosystem and “walled garden” approach. 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.
The issue of content being provided over telco’s networks also hit headlines last week with the news that iiNet had prevailed in an appeal by the Australian Federation Against Copyright Theft in its high-profile case against the ISP for allowing its users to download copyrighted films and TV shows via the BitTorrent file-sharing platform.
O’Sullivan was asked whether Optus was up to taking the fight to the various companies – such as the Time Warner empire. “You do know the content people are much nastier than Telstra, don’t you?” one journalist asked.
“You can say that and I can’t,” laughed O’Sullivan in reply.
This guy is a nutter. It’s like he’s trying to summon the ghost of Sol to power Optus. I would be a lot more afraid of a telco holding me captive in a silo than google or apple.
I have to say, as much as I really hate Apple’s walled garden approach, I have to agree — I would trust Apple more than a local telco.
Two words: Optus Zoo. Failed attempt at a rubbish walled garden. And if you are unfortunate enough to get a Samsung Galaxy S from Optus, it comes pre-loaded with Optus Crapware.
The people are voting with their feet, Optus. We just want you to be a dumb pipe. Stay out of our way. Sure Apple poses a threat with their closed approach, but hearing Optus complain about it is pot calling the kettle black.
Geez – has someone lit a fire under O’Sullivan the last few days or what? More out of him than the last three or four years combined!
Seriously though – (back on topic) – why complain about Apple and Google? Why – because they’ve developed their products, made them attractive to people, made them work, and marketed them right?
Tsk, tsk, tsk.
Make a better product Paul! It’s the market – people only spend their money where they want to – give them somewhere else better to spend it, and they’ll come.
Only problem you might face is that the horse has already bolted! That’s what you get for sitting on your hands for three or four years – “irrelevance”.
Optus is not much more than a carriage provider these days…when they could have been anything.
heh it all stems from one landmark speech he gave at the Kickstart Forum on Sunday — he spoke on quite a few different areas, in front of a captive audience consisting of journalists from almost every technology media outlet in Australia. Result == widespread and diverse coverage :)
To be honest, I can see why Optus and others such as Telstra would complain about Google and Apple, because the telcos are continually trying to build services on top of their network stack so they don’t get commoditised. But this doesn’t mean that users want it. Users want to be able to run whatever applications and view whatever content they want — on any network and on any platform. That inherently disintermediates telcos.
There’s nothing wrong with that, however. Instead of seeing Apple and Google as a threat, Optus needs to acknowledge that without those two massive mobile operating system giants, their mobile traffic (and mobile revenue) wouldn’t be growing continuously. Telcos like Optus need to start accepting their inevitable role and focus on making their network the best it can be — instead of continuously trying to bolt irrelevant services (like the aforementioned Optus Zoo) onto it.
Hmm. This rant was almost long enough to be a blog post. Maybe I will extend later on :)
Heh, a lot of my posts develop from thoughts I’ve spilt out in comments… ;)
It’s a good thing! :) Thinking out loud.
“Closed Ecosystem” “walled gardens” .. Geesus! Call it for what it is VENDOR LOCKIN. Just like the 80’s and early 90’s. We whined then about it and protocols and standards were introduced. Apple are just making us start that whole argument again
+1 vendor lock-in is indeed the correct term.
Dear Optus, you know what the greatest threat to your company is?
It’s your SHITTY NETWORK and your SHITTY SERVICE.
I have to say, Optus’ network is getting better, and it’s better than Vodafone’s, but it’s still not up to speed with Telstra’s Next G. I know this by the amount of irate readers who contact us on a weekly basis about it. Personally I dumped Optus for Next G about 4 months ago — out of sheer necessity. If you can’t get good 3G coverage in the Sydney CBD, then it’s hard to see why you’re with a provider.
Yeah, I dumped Optus for Telstra this week. I’ve been an Optus mobile customer since September 1999. That’s the longest I’ve stuck with any provider of any service in any industry. But I’m tired of having 1 bar of– no, 3 bars of 3G– no, wait, 1 bar of 2G– um, 1 bar of 3G– err, 3 bars of 2G– make that 1 bar of 3G– err, no service at all. And I’m tired of having to go through my bill line by line every month to find the mistake that Optus has made and work out how much I’ve been overcharged. Because there’s always a mistake, somewhere. And then I have to spend an hour on the phone arguing about it with an Indian callcentre operator who doesn’t care.
This experience seems fairly identical to most of those complaining about Optus :) But whenever we ask them about it, they just say “we’re investing in the network” or something similar. I just don’t think they understand how customers feel about them atm.
Optus was unusable for data in the inner west yesterday- just didn’t work properly.
We definitely need to develop a net neutrality policy if Optus is thinking of pulling a stunt like this. I went to Google because I prefer to search with Google, I do not want to be redirected to Bing because Microsoft paid more money to my ISP.
This was precisely what O’Sullivan’s comments brought to mind for me. The whole point of the internet is to abstract the network from the applications and content which run on it — I don’t want Optus or anybody else to have a say in what I’m doing online. O’Sullivan is fighting — like every telco — against becoming just another “dumb pipes” provider. But, unfortunately for them, there really is no other future for telcos.
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