opinion Telstra’s response so far to concerns about its Structural Separation Undertaking has been conciliatory by its own standards; but has not yet come anywhere near to substantially addressing issues with the document expressed by its rivals and the competition regulator over the past several months.
From the outset, let’s get one thing clear about this issue: Although it hasn’t gotten as much fanfare as its multi-billion dollar contract with NBN Co, Telstra’s Structural Separation Undertaking is the single most important document or agreement guiding the future of Australia’s telecommunications sector over the next decade.
Sure, as the National Broadband Network is gradually rolled out over that period (assuming the Coalition doesn’t take power and substantially modify the project), its infrastructure will increasingly create a more level playing field for rival telcos to provide services to Australians. But it will take a decade to roll out the NBN. In the meantime, Australia’s telecommunications sector will continue to be dominated by its existing market structure: With rival telcos providing services over Telstra’s copper infrastructure, and mobile and HFC cable in the mix as well.
Up until now, access to Telstra’s copper infrastructure has been governed by a patchwork of regulatory controls: Some underlying legislation, along with other regulations and a series of judgements and adjudications by the industry’s sturdy umpire, the Australian Competition and Consumer Commission.
All this will change as Telstra’s SSU agreement comes into force. For the first time, the telecommunications sector at large will have a streamlined way of dealing with the uncompetitive situations that Telstra has repeatedly foisted on it over the years, such as the outrageous broadband retail price cuts back in 2004 which resulted in the ACCC slugging the big T with a formal competition notice, or the current ridiculous situation in South Brisbane, where Telstra virtually has its customers up against a wall as it rips out the existing copper loop.
Telstra’s fixed-line broadband rivals — principally, Optus, iiNet, TPG and Internode — are well aware of this.
They know that the composition of Telstra’s SSU document will determine how and under what terms they deal with Telstra over the next ten years. This is why (with the exception of TPG, which normally keeps its mouth wired shut in public when it comes to regulation), they have all filed comprehensive and detailed responses (read them all here) to Telstra’s initial Structural Separation Plan lodged in early August with the ACCC, and have all loudly voiced their displeasure with the document in public as well.
The ISPs’ concerns range from flaws in Telstra’s proposed Independent Telecommunications Adjudicator scheme, insufficient oversight power for the ACCC, inadequate wholesale ADSL provisions, problems even obtaining wholesale rate card prices from Telstra, access to telephone exchanges, ineffective ring-fencing provisions between Telstra’s different divisions and overall, a lack of commitment by Telstra to treating its wholesale customers the same way it does its own retail division. And that’s not even counting the ACCC’s own objections to Telstra’s proposal, which range along the same lines but add complaints about the relationship between Telstra and NBN Co and even the controversial wireless anti-sledging provisions in the pair’s contract.
To say Telstra has failed to address most of these complaints in its first, extremely limited response published yesterday (PDF) is to make a colossal understatement. Most of a 16 page statement published by the telco yesterday on the matter is composed of the purest, highest-level conciliatory-sounding guff. Take this paragraph.
“The ACCC could be given a parallel power to act as the adjudicator, with the same powers under the SSU to make directions as the ITA. This would mean wholesale customers could choose whether to refer disputes to the ACCC or to the ITA (under both the SSU and the relevant dispute provisions under the Migration Plan, that also provide for reference of disputes to the ITA process). In effect, if a wholesale customer has concerns about the independence of the ITA, this would make the ACCC available as an alternative. Having the ACCC as the alternative would also provide a powerful incentive for Telstra to ensure that the person appointed as the ITA is credible, well-qualified and truly independent.”
What a pile of complicated hogwash. Instead of doing that, what about simply setting up an independent telecommunications dispute adjudicator chosen by a government-appointed panel of experts? Doesn’t that sound more sensible? Or what about this similar pile of guff, where Telstra is defining how to ensure employees from separate divisions don’t collude:
“This approach would require a definition of ‘line management responsibilities’ such as accountability for a business unit meeting its objectives and the associated authority to make decisions about its management and operation, but a role will not have line management responsibility simply because it undertakes functions for or makes decisions relating to that business unit as part of group-wide responsibilities (for example, a person who works in the human resources business unit will undertake functions for or make decisions that will impact other business units, but will not be considered to have ‘line management responsibility’ for those business units).”
Crikey. Why can’t we just say that someone who works in Telstra Wholesale, can’t also work in Telstra’s retail arm, no matter what their title? I’m sure the role of cross-division HR personnel is not in dispute.
There’s so many unnecessary complexities like this in Telstra’s brief document that it’s not funny. And then there’s things which still seem grossly unfair. Like Telstra’s statement that it may reserve capacity in its exchanges where it has ‘bona fide’ plans to use the space — up to three years in advance. Or the bit where it doesn’t quite appear to understand the ACCC’s concern that Telstra’s wholesale division may disclose to its retail division nationally aggregated information which could allow the identity of a certain wholesale customer to be discerned. Or the section where Telstra explains that it would only be in breach of service quality and equivalence measures to other ISPs if there was a pattern of non-compliance with a material result (instead of just a few incidents).
Now I’m sure most of company’s previous chief executives (particularly Sol Trujillo and his merry band of amigos) would be appalled at the level of detail which Telstra is giving up here in its talks with wholesale customers and the ACCC about how its wholesale operations should be run in future. They would start attacking the regulator and the government, ranting and raving and threatening all kinds of disastrous future situations if Telstra didn’t get its way.
And I’m also sure that Telstra’s current management believes that it is being extremely open and cooperative with the Federal Government, its rivals and the regulator in disclosing and debating what points it has so far; even talking about the issue in public at all.
However, the fact remains that if you read all the submissions which have been filed on the matter with the ACCC, it is clear that telcos like iiNet and Internode (as well as, often the regulator itself) are speaking a brand of English which Telstra appears unable to decipher, making simple demands for basic future rules which the telco just can’t interpret (Optus, a sizable bureaucracy itself, is somewhere in the middle).
If you read Telstra’s submission yesterday and compare it to those of its rivals, it is plain that the big T fundamentally does not really want to go through the structural separation process, has little interest in meeting the sort of outcomes that the ACCC and rival telcos want from the initiative, and will be digging in its heels at every little clause, sub-clause and sub-sub-clause in the agreement. And even then it may only stick to the letter of its SSU when the document is eventually ratified.
Telstra would have a different view on this. Telstra’s view would be that right now, it is being extremely cooperative. And to some extent that’s true … for a company with an unlimited legal budget, all the time in the world and with monopoly ownership over a national fixed-line telecommunications network, it is being very helpful, and far more so than it has been in the past. But objectively, from an independent standpoint, Telstra is right now behaving like a cranky prima donna opera singer who’s had her glass forcibly taken away from them after one too many champagnes.
I recommend that its rivals and the ACCC continue to put as much pressure on the big T as possible. Its lacklustre attempts at a SSU so far, coupled with its heavy-handed tactics in South Brisbane, indicate that the company has not yet completely learnt from the lessons of the past.
The difference, in 2011, is that for once, with every single body in Australia’s telecommunications sector arrayed against it — the regulator, its rivals, the Government and even the Coalition, which currently also supports separation — it really has no choice. It’s do, or slowly die.
It is Telstra that invested all the money in the network, it was repayed to the government. Why not all the other companies pay to take over all the assets owned by Telstra shareholders. Optus always look for a free ride at other peoples expence.
I don’t expect to have somebody else get the use of my home because they don’t own one.
It is Telstra that invested all the money in the network, it was repayed to the government. Why not all the other companies pay to take over all the assets owned by Telstra shareholders. Optus always look for a free ride at other peoples expence.
Some points on this, first off the last mile infrastructure that is currently in place can’t be realistically duplicated, so all other carriers have to pay access to Telstra to use it. On that note, they “pay” for access, there is no “free ride” for any carrier. And of course Optus no longer resells services off Telstra DSLAMs, unlike iiNet, Internode, TPG, etc but that’s just a different form of access that is paid for anyway.
I always find it funny when people stoop to comments like this, firstly because structural separation is vital and should have happened when Telstra was sold originally, and because it’s so naive in it’s misunderstanding of what telcos actually pay Telstra.
*On that note, they “pay” for access…. there is no “free ride” for any carrier.*
it’s not a question of whether they *pay*, it’s a question of *how much* is being paid.
*And of course Optus no longer resells services off Telstra DSLAMs, unlike iiNet, Internode, TPG, etc but that’s just a different form of access that is paid for anyway.*
a much cheaper form of access. again, it’s not a question of whether they *pay*, it’s a question of *how much* is being paid.
*firstly because structural separation is vital and should have happened when Telstra was sold originally*
how come none of the major telcos in overseas markets are structurally separated? how come Singtel, the parent company of your employer (Singtel Optus), has steadfastly resisted structural separation in its home market of Singapore?
*because it’s so naive in it’s misunderstanding of what telcos actually pay Telstra.*
$16 ULL and $2.50 LSS? not much at all.
it’s not a question of whether they *pay*, it’s a question of *how much* is being paid.
Absolutely right, and this …
$16 ULL and $2.50 LSS? not much at all.
… is only a part of what is being paid.
To quote myself for you, it’s so naive in it’s misunderstanding of what telcos actually pay Telstra.
By the way Tosh, you are right in that I work for Optus, I disclosed this quite a while back (unlike yourself, we don’t know who you work for, not that it matters if you’re willing to have an open discussion), however everything I post here is my personal opinion and is not representative of the company.
That said, I don’t believe I’ve ever promoted or viral marketed the company, or blatantly attacked any opposing company either, if you look through some of the posters there are others who work in the industry too and I can quite safely say none of them have one the this either.
Now if you want to have a discussion then fine, but remember the discussion is with me, not who I work for.
glamourising glassing is totally unacceptable.
you can say what you really think Renai …. :D
the non PC term i think you wanted to use in the article was ‘baffle ’em with bullshit’. and thats some highfalutin’ bullshit language i see there in those two quotes you used – as you say, unnecessarily complex. but thats standard MO for Telstra, in yet another sphere – make things as time consuming and complex to work through for anyone not-telstra. its a particularly binary view of the world and while it isnt prevalent to level it was when Sol was running the show, there is still a significant streak of it in the way it is run….
so Telstra is offering people the ‘parallel’ option (maybe that should be in quotes too..) i have to wonder just how smoothly these two bodies will work, and if its a good idea to have two in the first place. its obvious Telstra has some power they are unwilling to give up or otherwise they wouldnt be fighting it so hard.
whatever SSU agreement made is worth scrutinising carefully, though i have to agree… i cant see it happening quickly.
Oh Renai what a tangled web we weave when first we practice to deceive. I know you wish (the reason I am not sure) to assist Telstra opponents but please be a little sensible and realistic with your deception.
The agreement with Government, NBN Co and Telstra states that if Telstra agrees to remove its ownership of the Wholesale Division then the extremely costly operation of structural separation is unnecessary and wasteful. Renai to what depths of subterfuge and gobbledigook will you sink (to advantage your friends) when Senator Conroy has created a perfectly level playing field with his NBN roll-out?
*ineffective ring-fencing provisions between Telstra’s different divisions and overall, a lack of commitment by Telstra to treating its wholesale customers the same way it does its own retail division.*
“structural separation”, or the complete ring-fencing of Telstra’s “wholesale operations” from “retail operations”, is not something as simple as members of the Competitive Carriers Coalition like to make it out to be. even Mike Quigley has been quoted in the press as saying that, “separating wholesale from retail is not simple or straightforward…. the model is yet unproven”.
Telstra is not just another nimble, fly-by-night, reseller ISP that can cherry-pick where they offer services. Telstra has a USO and offers fixed-line services in every corner of the country. if Telstra’s “wholesale division” was unable to “co-ordinate” with the “retail division”, but has to maintain arms-length dealings in the same way with (for example) Optus, how would the USO be fulfilled?
i/ Telstra Wholesale may well offer wholesale connectivity in all regions, but it’s clearly impossible for it to fulfill the USO purely in its restricted role as a “wholesale-only” operator;
ii/ the USO mandates the provision of fixed-line services at the retail level. if Telstra’s retail arm is be treated as just “another ISP”, surely Telstra Retail would also be free to “cherry-pick” where they provide services and the types of services they wish to offer? trying to reduce the status of Telstra Retail to the status of just “another retail player” is pure nonsense;
iii/ if we assume that Telstra Retail is arbitrarily saddled with the USO obligations, how can Telstra Retail be indirectly compensated for its USO obligations (which disadvantages it relative to other ISPs) unless it receives “special deals” from Telstra Wholesale?;
iv/ given the ACCC’s insistence on maintaining a steep ULL pricing curve for different regions, how will the long-standing principle of “retail pricing parity” be maintained if Telstra’s “wholesale arm” is unable to “co-ordinate” with the “retail arm” to cross-subsidise the different regions? an independent, arms-length Telstra Retail with its own separate balance sheet and financial objectives would immediately join the fold of the band 2 ESA cherry-pickers. regional consumers would have to pay astronomical prices for internet access, and that’s assuming these regions are serviced at all.
hence, historically, there are many important reasons why Telstra’s “wholesale arm” and “retail arm” are closely-integrated in their operations. it’s something that one should be cautious about disparaging without comprehending the full significance and implications. it’s not the simple devil’s conspiracy that Telstra’s cherry-picking competitors enjoy portraying.
*Instead of doing that, what about simply setting up an independent telecommunications dispute adjudicator chosen by a government-appointed panel of experts?*
the same “government-appointed panel of experts” that shafted Telstra’s bid for NBN Mk I? ;)
*If you read Telstra’s submission yesterday and compare it to those of its rivals, it is plain that the big T fundamentally does not really want to go through the structural separation process, has little interest in meeting the sort of outcomes that the ACCC and rival telcos want from the initiative, and will be digging in its heels at every little clause, sub-clause and sub-sub-clause in the agreement. And even then it may only stick to the letter of its SSU when the document is eventually ratified.*
despite the official pronouncements emanating from DBCDE, the future broadband landscape remains uncertain. early in its privatisation, Telstra jettisoned Networks Design & Construction because it’s a non-core operation. also, they have since sub-contracted out all the network maintenance and repair works to independent, private companies. clearly, Telstra is not a company that likes to hang on to bits and pieces of non-core assets or operations.
if the future does indeed belong to NBNco with its new, gleaming fibre monopoly covering 90% of the population, why would Telstra want to hang on to all the non-core (access) network assets such as the ducts and pits, etc and take on the obligation of maintaining them in usable state for the coming decades in its deal with NBNco…… unless Telstra management are just playing along and believe that the NBN project will eventually fail?
similarly, as with the NBNco deal, the SSU has to be negotiated against this uncertain backdrop where the new wholesale-only, NBNco fibre regime may eventually become aborted before the start of the second trimester (when the incoming Government pulls the life support of ongoing taxpayer cash infusion).
*The difference, in 2011, is that for once, with every single body in Australia’s telecommunications sector arrayed against it — the regulator, its rivals, the Government and even the Coalition, which currently also supports separation — it really has no choice. It’s do, or slowly die.*
Telstra’s rivals have always called for structural separation — there’s nothing new or surprising there (it benefits them to “diminish” their main retail competitor). similarly, the ACCC has never been against structural separation (however, they clearly do not have the legal powers to mandate it). when it comes to the political parties, it’s a much more complicated story.
Labor’s NBN Mk I tender did not mandate structural separation or the creation of a wholesale-only entity. the NBN Implementation Study modelled various fibre wholesale pricing scenarios on the basis of head-on competition with the copper network and a gradual leeching of customers from the CAN. somewhere along the way, it was decided (wisely) that the only chance NBNco had of surviving financially was if Telstra was bribed to shutdown its copper network entirely and not compete with the NBN.
hence, the current provisions for the “structural separation” of Telstra (or, in essence, the direct migration of CAN wholesale customers to the NBN) are really an indirect by-product of the political decision to entrench NBNco as a fixed-line monopoly with no competition. maximising the chances of NBNco’s survival was the primary aim; “structural separation” was merely a convenient ruse. under Labor policy, “structural separation” was merely a means to an end.
as for the Coalition, they have no detailed policy yet on broadband because it’s impossible to chart a new course without firstly getting into office and having access to all the detailed information on NBNco contracts, internal operating data, etc, in order to have a solid handle on the existing parameters they have to deal with. the Liberals have never been in support of structural separation and a single speech by the Opposition spokesman casually canvassing the possibility of “voluntary separation” does not necessarily mark a definite change in direction. as with Labor, the structural separation issue will take a back seat to other more important considerations, e.g. a vertically-integrated Telstra building FTTN would obviate the need to “pay compensation”.
so, let’s not jump ahead of ourselves ;)
…”structural separation” was merely a means to an end…. and on that note tosh, your subjective view just became largely biased opinion..
everyone
notice how renai refused to do a story how iinet and internode are not innocent
come on renai if you want any one to take you seriously
http://forums.whirlpool.net.au/forum-replies.cfm?t=1788037&p=2
http://forums.whirlpool.net.au/forum-replies.cfm?t=1787792#r13
Read those links particular the iinet one when iinet claims the wholesaler they are using is higher then the nbn, yet the wholesaler comes out and states iinet is not telling the facts
Renai will duck this because he can not say anything negative about his favoritism towards
Actually I had been meaning to write that story but had lost the links on Whirlpool. I’ll write it today :)
lol ok
then i take what i said back , about the favoritism etc :)
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