Strangling the data flow

One of the things that's always rankled me about the Australian broadband market is the way the big operators are determined to strangle demand in order to make a quick buck.

Alan Kohler picks up this point in his Fairfax column, he found he started copping a fat bill when his kids discovered the joys of Limewire.

I've always maintained these "cheap" Telstra Bigpond plans are dangerous as they mean you are writing a blank cheque to Telstra. A cheque that almost certainly will be cashed when someone in your family discovers file sharing or video downloads.

But that risk is a smaller issue. A slightly bigger issue is how the Internet providers have messed the whole market up by offering too many complex plans. My guess this was inevitable given theboth Telco and IT industries love complexity and the Internet combines the worst of the two.

The biggest issue of all though is how the providers use data pricing and limits to strangle demand.

While Telstra is the obvious bad guy with it's consumer and wholesale pricing policies, Alan identifies the underseas cable operators as the biggest villains. Despite their only operating at 25% capacity, their charges are outrageous.

In my view, this is where the problem really lies. We can roll out as many high speed domestic networks as we like, we can put WiMax in every village, ADSL 2 in every phone exchange and fibre to every home but it makes a spit of difference is the data is strangled under the Pacific.

This is a classic example of how successive Federal governments have misunderstood communications.

The Keating government screwed up seriously when they allowed the old Overseas Telecommuncations Corporation to merge with Telecom to create Telstra.

They then compounded the problem by creating a Telstra competitor out of a bunch of cronies who were more interested in building high rise monuments to themselves rather than provide a real alternative for Australian telcoms consumers.

The following Howard government further compounded the problem by privatising Telstra and allowing the existing operators to consolidate their power.

One of the beauties of the capitalist system is that big profits attract competitors. Telstra is planning to build it's own cable to Hawaii and PIPE networks has their own proposal as well.

I hope the proposal by PIPE networks get up. The Telstra cable will only increase their dominance and the only surprise is that taken Telstra so long to get around to do this. We need as much competition as possible in the market place.

It would be good to see the Federal and state governments support the PIPE proposal by committing to using some of their capacity. It seems to me the economics of the PIPE proposal rely on the goodwill of the smaller Internet Service Providers which is a risky proposition at best.

Hopefully our leaders will see the benefits and importance of these proposals.