Telstra: Split or be split

[Lazlow]

Legislation introduced today to the Australia parliament delivers Telstra an ultimatum: split, or get forceably split.

For Telecom’s Australian operation, which claims Telstra's network monopoly cost Gen-i its largest customer - the Commonweath Bank of Australia - the move marks a victory.

The Australian government wants its national carrier to split into wholesale and retail divisions, mirroring the operational separation that the New Zealand government wrought on Telecom in March 2008.

Legislation introduced to the Australian federal parliament this afternoon effectively delivers Telstra an ultimatum.

In a post on The Department of Broadband, Communications and the Digital Economy website today, federal communications minister Senator Stephen Conroy writes:

“The legislation will allow Telstra to voluntarily submit an enforceable undertaking to the Australian Competition and Consumer Commission to structurally separate.

“If Telstra chooses not to structurally separate, the legislation provides for the Government to impose a strong functional separation framework on Telstra. This Bill proposes implementing a functional separation regime by altering the Telecommunications Act 1997 to require that:

- Telstra conducts its network operations and wholesale functions at arm’s length from the rest of Telstra;
- Telstra provides equivalent price and non-price terms to its retail business and non-Telstra wholesale customers; and
- this equivalence of treatment is made transparent to the regulator and competitors via strong internal governance structures.”

If Telstra takes the voluntary option, its plan will have be overseen and agreed by the minister and the ACCC (the Australian equivalent to the Commerce Commission).

Senator Conroy’s central aim in introducing the legislation is to break Telstra’s vertical integration, and the long-standing, concomitant monopoly issues (Telstra is privatised, but the government is still the largest shareholder).

And there’s also a major upside for the telco - the legislation is broadly seen as clearing the way for Telstra to participate in the government’s $A43 billion fibre-to-the-home project.

Telecom New Zealand will be quietly applauding the move, however, and it Australian operations should benefit.

Earlier this year, Telecom’s ICT services division, Gen-i, lost its largest Australasian customer, the Commonwealth Bank of Australia.

On April 23, the CBA announced Telstra had won its $A1 billion, 10-year telco services contract.

Winning the monster contract would have cemented CBA's position as Gen-i's largest Australian customer, and made it the division's largest account full stop.

Yet despite being the eight-year incumbent, Gen-i chose to not even bid for the new contract.

"For the pure telco component of that business - which is what was put back on the table - with the Australian conditions such as they are we didn’t think we could provide better value and make a fair return in reselling a telco service because there isn’t operational separation; there isn’t regulation around wholesale that allows you to compete for those sorts of services in the enterprise accounts.

"Telstra and Optus have massive buying power and we can’t compete with that directly."

So as a smaller player in Australia, you’d like to see Telstra operationally separated?, NBR asked Mr Quin.

“Yes, we’ve said that - no, we haven’t said that we want Telstra operationally separated, because there are a number of models, but we would like to see regulation in Australia that allows competition in networks.”

This afternoon, Senator Conroy granted Telecom’s wish.



Discuss.

[AranchineD]

Hooray?

To be honest I don't even know what this all means but it sounds positive. >_<

[Lazlow]

From my limited understanding, it means that Telstra's retail arm (NextG, Bigpond, etc) will have to compete on equal grounds with other telco retailers, as the infrastructure will now be owned independently.

In theory a win for consumers, as Testra will now have to lease its infrstructure to competitors at a fair price. Everyone has equal access to the networks available.

[igotnewsuper8systemWRONG!]

So can I get porn faster?

[AranchineD]

Ah, I see.

Well if it means Telstra stop being pricks with internet services that'd certainly make me happy!

[sausage]

Telstra was only working the system that was decreed it by the government so that means the whole process was flawed from the start.

What a surprise.

[Araenel]

From my limited understanding, it means that Telstra's retail arm (NextG, Bigpond, etc) will have to compete on equal grounds with other telco retailers, as the infrastructure will now be owned independently.

In theory a win for consumers, as Testra will now have to lease its infrstructure to competitors at a fair price. Everyone has equal access to the networks available.

I've always felt that public utilities/infrastructure should never be privately owned, so it should be a good thing.

[Lazlow]

Remembering of course that these are the initial stages of the legislation being put forward. I don't think it'll be smooth sailing.

[Azzaman]

That was hard to read, but I see telstra being split as a good thing. For one Telstra will need to clean up it's act to survive when it doesn't have the advantage of wholesaling to itself. Hopefully this will lead to better infrastructure as well, but that part will still be a little bit iffy.

[AranchineD]

Oh, Telstra, if you support our internet filter, we won't make you split up!

[Lazlow]

That was hard to read

sorry, it did come from a new zealand website afterall :p

[sausage]

Yeah, we speak English over here; not some quaint criminal dialect.

[aubergine]

I can't wait for this to happen, the telstra monopoly is screwing with me all the time.

Added bonus - if this keeps Conroy busy and away from his more stupid plans for the country then awesome.

[Halt, Hammerzeit]

May I just say ABOUT ****ING TIME! This should have been done when Telstra were being sold off. One company should not own the majority of the infracstructure. This should be good for the country people, as it should open up the all the current Telstra only services there to any provider willing to pay the new Telstra Wholesaler to get there (and Telstra Retail will have to pay the same).

$10 says that this decision came about from the politicians looking at how much it's going to cost for the NBN and saying "Gee we could sure use some already existing infrastructure".

[TAT]

One company should not own the majority of the infracstructure.
But lets ignore the fact that their money put the infrastructure in place.

Regardless of whether or not Telecom was govt owned when that took place, it's hardly Telstra's fault they were privatised.

Oh, and actually you have a point:

In March 2008, all 7 judges in the High Court of Australia (http://en.wikipedia.org/wiki/High_Court_of_Australia), the highest court of appeal in Australia, ruled that Telstra has the right to use the telephone lines, but does not own them.

[Azzaman]

But lets ignore the fact that they put the infrastructure in to start with...

Testra the private corp didn't put it in, Telstra the govt owned public company did, then it got given to the private entity.

[Halt, Hammerzeit]

Regardless, the company that was Telstra owned the infrastructure and THEN got sold off so they do own the lines, as Liberals like to do (sell of the assets, get a big injection of cash and say "Look at the surplus we have"). The problem I have with it is that, when Telstra was government owned, they could keep the 'rental' costs to other companies low, but now the privately owned Telstra wants to keep raising prices to try and price their opposition out of the market, which is a big reason why lots of companies seriously developed their own networks (like how Optus and Vodafone got together and shared 3G networks when it was being developed). The problem with that is that, obviously, costs are very high.

For the record, I don't mind that Telstra has retail, I just don't think that Telstra Retail should be able to set the price for Wholesale elements, which would then be a business decision on behalf of Telstra Retail and give them a way to offer cheaper calls than their rivals (even with the anti-competition watchdog looking after it). The retail arm of Telstra should have nothing to do with the infrastructure arm.

[Lazlow]

$10 says that this decision came about from the politicians looking at how much it's going to cost for the NBN and saying "Gee we could sure use some already existing infrastructure".

Well technically the NBN is going to be a separate network running parallel to Telstra's existing one. However, they still need to access the ducts Telstra's lines run through.

Testra the private corp didn't put it in, Telstra the govt owned public company did, then it got given to the private entity.

Hope you can elaborate. As far as I'm aware it was part of the Postmaster General's Department till the mid 70s where it was separated into Telecom Australia and Australia Post. Then in '92 it merged with another government department that handled wireless and international communications to become Telstra Corp in '93. Then from 97 - 06 Telstra Corp was sold off in 3 separate pieces with the Government retaining 17% ownership.

So to me it seems that Telstra Corp has always owned the fixed lines, and the fixed lines came with the privatisation deal.

[Super Mario]

I miss socialism.

[Azzaman]

Hope you can elaborate. As far as I'm aware it was part of the Postmaster General's Department till the mid 70s where it was separated into Telecom Australia and Australia Post. Then in '92 it merged with another government department that handled wireless and international communications to become Telstra Corp in '93. Then from 97 - 06 Telstra Corp was sold off in 3 separate pieces with the Government retaining 17% ownership.

So to me it seems that Telstra Corp has always owned the fixed lines, and the fixed lines came with the privatisation deal.

I meant that most of the copper was laid out before it's privatisation.

[Halt, Hammerzeit]

I meant that most of the copper was laid out before it's privatisation.

So if you owned a car yard and decided to sell the business, you'd expect to keep the cars and just sell the business itself would you? Because that's basically what you're suggesting should have happened with Telstra. You can't sell a business and not include its main asset in the transaction.

[Azzaman]

The govt should never have sold the infrastructure. To use your example if the car yard was vital to the national interest then yes, the cars should remain the sellers property.

[Lazlow]

Indeed. What Conroy is putting forward now is what they should have done when they sold off Telstra. Split and sell the retail arm.

[aubergine]

I agree, the Libs really ****ed that one up. Sadly, the Telstra shareholders are going to lose out again; but then they should be used to that.

Still, getting the separation done now is better than never.

[Halt, Hammerzeit]

The govt should never have sold the infrastructure. To use your example if the car yard was vital to the national interest then yes, the cars should remain the sellers property.

You're right, it never should have been. Just as Lazlow said, this split should have happened when Telstra was sold off, but it was, which means all the assests (including the infrastructure) went with Telstra.

[Azzaman]

You're right, it never should have been. Just as Lazlow said, this split should have happened when Telstra was sold off, but it was, which means all the assests (including the infrastructure) went with Telstra.

It's unfortunate, but in my opinion (and likely the governments as well) too bad, they've had their chance and stuffed it up.

[Zan]

There is an inherent risk in investing in shares, even through super. The people claiming that the government should be buying back the company are being unreasonable.

Nothing against the shareholders, I hope they get looked after. Customers and industry come first though.

[Zan]

blahhhh

[Halt, Hammerzeit]

It's unfortunate, but in my opinion (and likely the governments as well) too bad, they've had their chance and stuffed it up.

Oh yeah, I'm happy that the government is making moves to split Telstra, should be been done before Telstra was sold IMO. I was just making the point that, in the state Telstra was when it was sold, the infrastructure came with it.

[Azzaman]

Yes it did and I'm glad this govt has the brass balls to make a change.

[Fenrir]

I agree, the Libs really ****ed that one up. Sadly, the Telstra shareholders are going to lose out again; but then they should be used to that.
What? Surely the shareholders have been swimming in dividends under Sol's command?

[Lazlow]

What? Surely the shareholders have been swimming in dividends under Sol's command?

Nope, Telstra shares have barely been worth shit since being privatised. And by the report I heard the 14c drop they took yesterday was tamer than predicted.

[Azzaman]

Fenrir needs to add /sarcasm to his post ;)

[Lazlow]

Goddamn >_<

[Halt, Hammerzeit]

See, this is a another reason we need pep back.

[Lazlow]

and why I shouldn't post at work >_>

[Munky]

So if you owned a car yard and decided to sell the business, you'd expect to keep the cars and just sell the business itself would you? Because that's basically what you're suggesting should have happened with Telstra. You can't sell a business and not include its main asset in the transaction.

Demergers happen all the time.

AGL & Alinta.

Pacific Dunlop.

Telstra isn't a suburban car yard and could easily be split in many business units.

[Fenrir]

Goddamn >_<
Actually, no sarcasm, at all. I just assumed that, with the amount I'm paying for internet compared to offerings from the competition, and how far $20 of prepaid mobile phone credit gets me (compared to competing prepaid services, not far), and the state of disrepair the ducts in my area are in, someone must be pocketing ludicrous amounts of cash.


Hey, seemed true for David Jones. >_>

[Lazlow]

Telstra shares peaked between $8-9 about 10 years ago. Been hovering between $4-6 for the last 8 years, plunging to $3 in March 09.

[Azzaman]

Sorry, I assumed because Sol was the biggest shithead going around and the way he made Telsta enemies of everyone in the industry couldn't have been good for the share price.

[Halt, Hammerzeit]

Demergers happen all the time.

AGL & Alinta.

Pacific Dunlop.

Telstra isn't a suburban car yard and could easily be split in many business units.

The sale of Telstra wasn't a demerger though. It was the sale of government assets. No merging was involved.

[Fenrir]

Telstra shares peaked between $8-9 about 10 years ago. Been hovering between $4-6 for the last 8 years, plunging to $3 in March 09.
Well if they've been price-gouging on everything, leaving infrastructure in a state of disrepair, and blowing off shareholders, then where's all the ****ing money?

[Lazlow]

Currently giving Sol a reach around.

[Azzaman]

Currently giving Sol a reach around.

oh for the love of God we need to bring back pep!

[aubergine]

Telstra appear to be defrauding my current share-household by claiming we are using vast amounts of internet, so far as much as 8 gigs in a day. They actually said on the phone that WOW uses 1-4 gigs per hour. I've rarely heard a more brazen lie. They follow this with the suggestion that you upgrade your usage account.

We've all put data-metering software on our computers to catch the ****ers at it after spending nearly a whole month "shaped". It's been hell here.

The more Telstra can suffer right now the happier I'll be.

[Araenel]

They actually said on the phone that WOW uses 1-4 gigs per hour.

WoW or not, I'm not sure that's even physically possible on a telstra connection.

[aubergine]

Exactly what I said. We're in a semi rural area and the
speed is terrible compared to say in Brisbane. I was shocked by how quickly I DLed stuff to my 360 in Brisbane after 5 years of Sunshine Coast.

[TAT]

Man if I had an internet connection that could pull 4Gb an hour I'd be through my monthly quota in an afternoon

[Vindik8or]

Hahaha, WoW uses more like 5-10 megabytes per hour. 25 tops.

[Halt, Hammerzeit]

Man if I had an internet connection that could pull 4Gb an hour I'd be through my monthly quota in an afternoon

If I had a connection that could pull 4GB a day I'd be estatic!

[Azzaman]

Telstra appear to be defrauding my current share-household by claiming we are using vast amounts of internet, so far as much as 8 gigs in a day. They actually said on the phone that WOW uses 1-4 gigs per hour. I've rarely heard a more brazen lie. They follow this with the suggestion that you upgrade your usage account.

We've all put data-metering software on our computers to catch the ****ers at it after spending nearly a whole month "shaped". It's been hell here.

The more Telstra can suffer right now the happier I'll be.

Unless one of your housemates is a blatant liar and has ripped a ton of porn that would be fraud. I'd complain to an obudsmen at the very least.

[aubergine]

Ombudsman has been brought in. We used about 200mb today and telstra called it 3.2 gigs.

[REQUIEM]

Telstra are a bunch of incompetant twats. Dont get me started on the loss I have made on Telstra 2 shares.

[Stevorooni]

Ombudsman has been brought in. We used about 200mb today and telstra called it 3.2 gigs.

You got unprotected wireless that someone could be stealing?

[aubergine]

There's a passcode on it and the only nearby neighbours are old religious people.

[Hotaru_oz]

Ugh don't get me started on Telstra.
When we tried to disconnect my grandmother's phone, they kept sending us monthly bills and claimed they never received a death certificate or a request to disconnect the phone.
They even had the nerve to ask to speak to the account holder who by then had been dead for 2 months.
and there's plenty more bullshit they've managed to put my entire family through.

I'm so glad this is happening, maybe they'll clean up their bloody act once the split is complete.

[Stevorooni]

Stupid Telstra, I just got one of their "How's it going?" calls where they look at your account and secretly try to sell you more stuff.

The poor woman, she was really trying but there wasn't much to go on.

I don't make many calls from my mobile and just stick to sms or use a landline so I'm on the cheapest plan possible. Nothing to upsell me on there.
I'm on the budget home plan for the house phone because it's basically there for just my internet.
Then she tried to sell me a Foxtel and Internet bundle they have going but there's no way I'd ever sign up with bigpond for my internet and I don't even think I can get Foxtel where I am, and even if I could I wouldn't want it.

Most difficult sales call ever!

[Queenie]

yeah if you live in the country or something you'd get a similar thing called austar. via satellite.


ON the subject of this, after a read-through of the thread, I think we've been jipped by telstra too. After looking at massive charges for a month, she got rung up by telstra about our plan. She got told in an average day of playing wow (2-3 hours), the same thing as above- wow uses 1-2 gigs an hour. I knew nothing of how much wow used and subsequently got blamed, but worse, we stayed on our shaped plan.

I thought someone was stealing our wireless, and put a password on it, but to no avail. Our bill was just as high next month.


So what have you done, aub? what's the next part of this saga from you? have you guys been paying the obscene bills, or telling them to **** off?

Also, do you think there is any possibility of legal action, or reprimand against telstra because I'd say that It's certainly likely that telstra does this sort of thing to a lot of people.

[aubergine]

yeah if you live in the country or something you'd get a similar thing called austar. via satellite.


ON the subject of this, after a read-through of the thread, I think we've been jipped by telstra too. After looking at massive charges for a month, she got rung up by telstra about our plan. She got told in an average day of playing wow (2-3 hours), the same thing as above- wow uses 1-2 gigs an hour. I knew nothing of how much wow used and subsequently got blamed, but worse, we stayed on our shaped plan.

The thing about WOW usage is an outright and outrageous lie. They are just trying to get you to pay more for more bandwidth that you are not, subsequently, actually getting anyway!

I thought someone was stealing our wireless, and put a password on it, but to no avail. Our bill was just as high next month.

So what have you done, aub? what's the next part of this saga from you? have you guys been paying the obscene bills, or telling them to **** off?

Also, do you think there is any possibility of legal action, or reprimand against telstra because I'd say that It's certainly likely that telstra does this sort of thing to a lot of people.One thing I can recommend is turning your modem off for a few hours every now and then. I can't be bothered trying to explain why it is a good thing right now, it sort of resets your connection with the ISP in a way that frustrates potential hackers or something. I used to do it once a week at my old house.

The deal here is that the account is not in my name and so I'm not able to actually chase up the action, other than nagging the only-sometimes-energetic housemate who has to do it.

Interestingly, for the first few days of the period we were being slugged the "bonus" extra 3 gigs per day. We then, as an experiment, turned the modem off for a full 24 hour period to see if it would register any movement. It didn't, and the following day our downloads registered as actually LESS than what we downloaded!

The lesson seems to be that teltra's metering system is completely bonkers. All we want is to get what we are paying for and, likewise, pay for what we get.

I'm particularly shat off though because I'd just paid M$ $80 for Gold and have not been able to use it for a month+!

[Azzaman]

Speaking of which, I got pulled aside at work the other day and had a chat about my phone usage (company provided phone), my monthly bills for the qtr went from $70, to $200 to $300. My manager went with the assumption I must've been calling china and iran or something and told me I need to look over my usage and basically pull my head in.

Looking over the stats I found that Telstra have suddently jumped our rates significantly. Turns out our head office now agree with me. Hopefully they will now rip telstra a new butthole.

[REQUIEM]

I actually called up a morning radio show this morning that had the new Telstra CEO David Thodey on to discuss the state of Telstra's customer service and got the oppertunity to speak with him about a problem that my father has had when he ordered ADSL2 and is getting only ADSL and so far its taken 7 weeks of BS phonecalls and waiting for callbacks that dont happen and it was quite funny that he wanted my details and this afternoon the nicest lady phoned me up and within 3 hours problem sorted. It proves that its who you talk to that makes the difference..

[Azzaman]

wish he was on call for everyone else ;)

[Shorty]

I've seen similar things following Consumerist articles.

[REQUIEM]

Recieved a follow up call today from the executive complaint department of telstra today and they out down themselves (thats a 1st) they are even re inbursing the last 2 bills that my dad recieved as a token of apology. I must say that was unasked for and well recieved. Its good to see that David Thodey wasnt all mouth and NO action when it came to resolving my issues with Telstra.

[Halt, Hammerzeit]

I actually called up a morning radio show this morning that had the new Telstra CEO David Thodey on to discuss the state of Telstra's customer service and got the oppertunity to speak with him about a problem that my father has had when he ordered ADSL2 and is getting only ADSL and so far its taken 7 weeks of BS phonecalls and waiting for callbacks that dont happen and it was quite funny that he wanted my details and this afternoon the nicest lady phoned me up and within 3 hours problem sorted. It proves that its who you talk to that makes the difference..

I always laugh a bit at these situations. In public forums (like radio) the person speaking is always going to take your details. Then they're going to get handed on to the customer service staff anyway, only difference is that this one particular case has been given to them by the CEO, which means it's going to get attention from straight away, which is great from a personal point of view (which is all most people care about), but still doesn't really affect the machine as a whole.

That said, David Thodey has only been CEO for a little while so he hasn't had much of a chance to make policy changes that would have filtered down to the customer service level by now.

As I've said before, this can only be a good thing for competition, but Telstra shares are going to dive.

[REQUIEM]

As I've said before, this can only be a good thing for competition, but Telstra shares are going to dive.

What you mean going?? lol I have lost SO much (over 50%) on those stupid Government recommended Telstra 2 shares...

Edit: Telstra 1 not so much.

[banjoeskimo]

Any way you cut it, Telstra have really dug their own grave on this one. Regardless of where you stand on the issue of privatisation, the reality is so many customers hate Telstra that it's likely anything that screws them (or at least provides a shot at lower prices / more competition) will be viewed as a boon by the public. So, smart politics from Labor. Now fingers crossed they don't screw up the NBN.

[Halt, Hammerzeit]

Any way you cut it, Telstra have really dug their own grave on this one. Regardless of where you stand on the issue of privatisation, the reality is so many customers hate Telstra that it's likely anything that screws them (or at least provides a shot at lower prices / more competition) will be viewed as a boon by the public. So, smart politics from Labor. Now fingers crossed they don't screw up the NBN.

You mean with the 'extra speed' that they're going to give us just so they can take it away with their internet filter?