Broadband Australia 2007

I was fortunate enough to be invited to the Broadband Australia conference and managed to get to the first morning session. It proved to be an interesting window on where broadband is in Australia at present.

The list of speakers featured the big players in the field, specifically Telstra, Optus and the government. Senator Coonan, the minister for telecommunications, kicked off with the keynote.

Helen Coonan

I quite like the minister, but this wasn't one of her strong performances. Rather than giving us a run down of the government's broadband policies and how broadband can help the country, she spent her time scoring points off the Labor opposition.

The only good thing about her speech was the repeating of the words "strength" and "experience" give a fairly good idea of what the Federal government's re-election slogan will be.

Phil Burgess

Phil can always be counted on for an entertaining talk. Apparently he didn't know people lived in Iceland until he went looking for a country as disadvantaged as Australia in rolling out a new network.

Phil made some very good points; the fact is 1Gb to the home and office is not the future, it's now, his teleconferencing software requires a 40Mb/s link on it's own.

One had to laugh out loud at his point about 256kbit connections not being considered broadband. This is quite true, but Phil still markets them as such and with a crappy 200Mb monthly data limit to boot.

Most of Phil's presentation was focussed on kicking the ACCC and their pricing policies. An interesting accusation he made was that the access price for ULL has just been pulled from the UK OFCOM with no allowance for Australian differences.

A good performance by Phil, but he was preaching to an audience of sceptics. Particularly enjoyable were his anecdote of visiting Birdsville and their struggles with phone and Internet access.

Warren Hardy
I haven't heard Warren speak before and he gave a credible corporate speech on Optus' broadband position. He wasn't as lively as Phil Burgess and this may not be a bad thing.

He rebutted a number of points Phil made about the OPEL network. There's no doubt this proposal and the government funding for it has struck a nerve with Telstra and Optus can't help but rub it in.

I've been scathing of Optus' performance in this market and nothing Warren said changed my mind, but he at least raised a laugh by pointing out to Phil Burgess that he could get broadband in Birdsville from the Optus satellite.

David Kennedy
It was good to hear from someone prepared to admit to have been involved in setting up the mess we currently find ourselves in. David put his hand up as being a ministerial advisor at the time of the 1997 reforms to the telco industry.

His historical perspective was that a few core countries dominate new technologies such as the UK with railways, the UK and Germany with steel production. In his view, Australia will not be one of those core countries in the Internet revolution. I'd have to agree.

Panel Discussion
The panel topic was Broadband in Australia; what do we want? How do we get it? The three panelist were Derek Francis from UBS, John Stanton from People Telecom and Anne Hurley from the Communications Alliance.

Anne Hurley: I feel sorry industry lobbyists, they often have to juggle different competing interests of their members and the lowest common denominator often turns out to be bland. The problem for the Communications Alliance is the industry is dominated by Telstra with Optus paddling in it's wake and the rest making up numbers. Anne tried hard, but really couldn't add much.

John Stanton: It was good to get a reseller's view. But the main topic of the morning was infrastructure so John's experience is somewhat limited. We did get a view of some of the economics of the industry and a glimpse of how vulnerable service providers are when the market is dominated by two or three large players.

Derek Francis: Derek was by far the most interesting panel member. He came to the debate with the position that we should let the market rip. The simple application of "comparative parity rules" to stop incumbents from protecting their own operations.

The problem is this has been tried and doesn't work; Telstra will be able to confound any such rules with transfer pricing and other tactics.

I also found Derek's claim that the OPEL consortium should be paying $300 per line to use the existing copper network as being misleading. This is the replacement cost of the copper lines and no way represents the current value.

While I'm sure a lot of the merchant bankers and hedge funds would love "open slather" as it would generate lots of fee income through a bigger Telstra, I'm certain it's not in the nation's best interest to deregulate when the market is dominated by one player.

My observations
From the first day, I'd have to say the case for splitting Telstra into at least wholesale and retail companies is compelling. Do this and most arguments about regulation and market dominance disappear.

One of the most disappointing aspects of the morning was the nit picking and point scoring, whether it's the minister scoring points off Labor, Telstra scoring points off the ACCC or Optus scoring points off Telstra.

It's clear the industry is bogged down in distrust between almost all the players. In this light, it's not surprising we're in the breakdown lane of the Information Superhighway.

An interesting morning, but I can't help but think we need some leadership in this field.