Govt letting Telstra off the hook

JUST when the arrogant Telstra appeared to have shot itself in the foot, along comes the Government and foolishly lets it off the hook.

Communications Minister Stephen Conroy said the Government’s expert panel would consider Telstra’s 13-page bid for the Australia-wide broadband internet project for which the taxpayer is forking out $4.7 billion.

Worse, the Government has stepped into a legal minefield. It should have said, “Sorry, Telstra, your bid for rolling out nationwide internet broadband does not meet the criteria set out in the bidding process. You’re out.”

It could have then assessed the other bids and said none of them were up to scratch. It could have then abandoned the whole silly, wasteful electioneering project, breathed a big sigh of relief, and started again.

If Telstra is in, the other bidders could easily head to court against the Government for changing criteria mid-stream. Bidding processes often give rise to legal action, just ask Canberra Airport and the Direct Factory Outlet.

Why should Telstra get special privileges? It is no longer the Post Master General. It is just another private company.

Perhaps the Government can still count Telstra out. After all, the scrappy back-of-an-envelope Telstra bid is to cover only between 80 and 90 per cent of Australian households. The Government’s bidding requirement is for 12 megabits per second for 98 per cent of households. (12 megabites is about one or two fairly high-definition photos per second or about a minute of speech per second or about three seconds of quality vision a minute.)

The Government should have called Telstra’s bluff. But like its predecessors it appears beholden to big media and telecommunications interests to the detriment of Australian consumers.

Australia is far behind other developed nations on digital television, digital radio and broadband internet because of the pressure put on governments by big corporations. We are 29th on the internet league tables.

Telstra should have been busted apart at the time of privatisation. And certainly should be broken up if it has anything to do with the broadband network.

Does anyone not have a Telstra-abusing-its-monopoly story? Hours on la-la lines. Utter unresponsiveness to consumer complaints and requests. Imperviousness to queries over bills and mobile coverage. Tardiness in dealing with technological difficulties. Sneaky and horrifically high charges for broadband overruns. And so on.

Well if Telstra gets the broadband contract it will continue. It will charge other carriers uncompetitive fees for access to the network so it can exploit favourable access for itself.

Few Australians understand what we are dealing with here. Apparently even Telstra appears to misunderstand the risk it has taken with its contemptuous response to the Government’s broadband tender.

We are not talking solely about a broadband internet network. We are talking about the wholesale redundancy of the copper-wire telephone network. Even at 12 megabits, you can easily do fairly high-quality phone conversations. Even at the 4 megabits I have, I can have a reasonable phone conversation to family in other parts of the world at less than 2 cents a minute. Bye, bye fat, monopolistic Telstra phone charges.

If a non-Telstra bidder wins the broadband bid Telstra’s telephony stranglehold ends. The revenue will dry up in no time.

From a consumer’s point of view that would be terrific.

Better would be a total rethink of the Government’s hasty election promise which had been driven by politics rather than economics.

The promise was directed at people in rural and regional Australia who felt they had poor internet coverage compared to people in the cities.

The speed requirement was far too low and the spread requirement was far too wide. The promise followed the lines of the old Telstra community-service approach under which everyone is entitled to a land line at the same rental cost whether you were in Woop Woop or Woollhara.

But the internet is different. The Government should have asked questions like what speeds do we want, where do we want them, and why do we want them?

If you ask those questions you do not get the answer 12 megabits a second across almost the whole of Australia.

The economic gains come with tele-medicine, tele-conferencing and the like. Most of that is done in cities or at least large towns. But to be workable you need more than 12 megabits.

Some big consumer gains can come with high quality vision, which Japan has now. But you need more than 12 megabits.

A rethink of broadband strategy would break Telstra into retail and network arms. The network arm (which might have some government ownership in return for the $4.7 billion investment) would run the network and all retailers would have equal access and be very competitive and good for consumers.

The network would deliver 100 megabytes a second – enough for television – to the major centres. Watch out networks. It would deliver, say, a minimum of four megabytes (what most Canberrans have now) elsewhere. It would wait for two major technological developments: the closing of the analog television network and the possibility of using that for wireless internet into remote areas and photonics which could crank up speeds on the existing network to perhaps 60 megabytes – what most people in Japan have now.

The break-up of Telstra would not involve any compulsory acquisition of property requiring compensation – just a standard break up of a monopoly.

But alas, the Government did not seize the wonderful opportunity presented by Telstra’s arrogant response to the bidding process. Telstra put its lucrative monopoly over Australia’s telephony network on the chopping block and the Government was too stupid not to smite the axe down on Telstra’s neck.