wonk v3.0

Watchdog snaps at Telstra’s fees (The Age / Lisa Murray)

The ACCC has considered the $90 connection & disconnection fee Telstra charges on its Line Sharing Service (LSS) is “not reasonable”. Telstra are apparently calculating the charge on the basis that they have to send a technician out to the exchange to perform only this one specific task. The ACCC argues that technicians visit exchanges frequently to perform other tasks and could do the LSS work at the same time. I agree with the ACCC on this one - it’s not appropriate for other telcos to pay Telstra extra for inefficiencies in their business, false or otherwise.

Yahoo, ninemsn tackle telcos (Australian IT / Michael Sainsbury and John Lehmann)

From the article: “LOCAL internet joint ventures Yahoo!7 and ninemsn are gearing up to inflict more pain on the ailing $33 billion telco sector, with the launch of cut-price internet-based voice services (VOIP) later this year.

The two groups join eBay’s ground-breaking Skype service as the latest threat to fixed-line revenues that last year earned Telstra $8 billion.”

Customer VoIP uptake is a major threat to the revenue base of the major telcos, especially when the consumer accesses the internet via Wireless or other alternative technologies. The startup costs for a VoIP provider are tiny relative to a traditional phone service provider so I think we’ll be seeing a lot of competition over the next couple of years.

They’ve lost their Sensis ( The Age / Edward Mandla)

I won’t quote from the article, but it is a good summary of whats lacking from Telstra’s Sensis operation. In summary - everything.

ACMA proposes new number range for VoIP services (ACMA press release)

From the release: “ACMA is proposing to introduce a new service definition, ‘emerging communications service’, to accommodate VoIP and other emerging services. A new number range for emerging communications services (0550) is proposed. Emerging communications services may be fixed, somewhat nomadic or wholly nomadic but the numbers allocated to them will have no geographic significance.”

I see the creation of a dedicated number range for services which are not geographically fixed to be a good thing. Those of us who run our own VoIP switches or ATAs will be able to easily route this range to a particular destination without needing to guess what is VoIP and what is not. I’m not sure how the fixed line telcos will react to this from a pricing perspective. They may want to price PSTN to VoIP calls at a fairly high rate to try to discourage people from abandoning the legacy networks, but this could just as easily have the opposite effect as being the final straw in what people will put up with from the existing pricing models. Other people are speculating the cost of all fixed line calls will be coming down to a rate closer to what is being charged by VoIP providers. We will have to wait and see what eventuates.

The ACMA is accepting comments on their proposal until 14 February 2006.

Defections erode sales at Telstra (International Herald Tribune / Fergus Maguire)

From the article: “The fixed-line unit, which generated more than a third of Telstra’s 22.2 billion dollars in sales last year, is headed for a “meltdown,” Trujillo said in a presentation to government ministers in August.

Fixed-line sales may fall as much as 6.8 percent this business year, following a 3.4 percent decline to 7.7 billion dollars the previous year, the chief financial officer, John Stanhope, said last month. Last year’s sales decline was the unit’s first.”

The article goes on to mention how the increasing monthly line rental costs for fixed line services and the constant price reductions of mobile services are causing people to turn away from fixed line services. The sort of call quality you get from mobiles is not quite up to the same standard as a fixed line but the suite of services being offered by networks such as 3 more than make up for the reduced voice quality. Once you factor in things like capped mobile plans it is clear for most people a fixed line service is no longer good value.

I’m curious to see how Telstra will react to the changing market. The only thing that could stop people moving off fixed line services is to drop the monthly line rental back down below $20 per month, or even under $15/month. Whether they can make a profit of that level of revenue is questionable, but it may well be better than no revenue at all.

Telstra in need of a big technological fix to stay in the game (Sydney Morning Herald / Rod Myer and Garry Barker)

From the article: “New chief executive Sol Trujillo will release his strategy to transform the telecom next month. The transformation could take three to five years to really pay off but timidity and slow movement are no longer an option as Telstra struggles to re-engineer itself to meet the realities of technological change.

The old copper network yields Telstra a whopping 60 per cent profit margin but customers are deserting it. Ian Martin, telecom analyst with ABN Amro, expects land-line revenue, which fell from $8 billion in 2003-04 to $7.5 billion last year, will drop a further 7 per cent this year to $7 billion.”

The last mile copper network is Telstra’s biggest asset by a long shot. Virtually all DSL based connections sold in Australia rely on Telstra’s copper to reach into the household of office of the customers. The high wholesale cost charged to ISPs and other carriers for the use of the copper is driving them towards alternative technologies such as wireless. Some of the newer wireless providers such as iBurst and Unwired have no such dependencies on Telstra for reaching their customers enabling them to provide services at a lower cost. If Telstra does nothing to address this trend their largest asset will become irrelevant.

Network ‘plagued with faults’ (Australian IT / Michael Sainsbury and Steve Lewis)

From the article: “TELSTRA’S copper network is suffering record fault rates because the telco has withheld up to $3 billion worth of crucial investment, according to the document at the centre of an investigation into the company.

The company revealed for the first time that the state of its copper network was much worse that expected. In a slide it outlined the problems with its network. Heading the list of bad news was that Telstra had “received 14.3 million fault calls (more than 14 per cent of all lines have faults);”

That is indeed a lot of faults.

Telstra to be split (Australian IT / Michael Sainsbury)

From the article: “TELSTRA will be split in two in an effort to boost competition in the $30billion telecommunications industry as part of a package of reforms ahead of its full privatisation.

The terms would be available to regulators, ensuring Telstra was not hurting competition by charging competitors too much.”

This is great news for competition, but not for Telstra shareholders. Being forced to complete on a more level playing field will almost certainly reduce Telstra’s massive profits seen over the past couple of years. Regardless of this; I still don’t think they’re any any sort of a position to be asking for government handouts to build up their infrastructure. It seems Sol Trujillo still has a lot to learn about the local Telco environment.

Telstra hastens ADSL2+ (Australian IT / Andrew Colley)

From the article: “ Telstra has not announced a launch date for its high-speed DSL service, but The Australian understands that the carrier plans to make them available to its retail and wholesale customers across 400 exchanges in late September.

The Australian understands the carrier has taken a conservative approach with its ADSL2+ access plans, offering speeds of 3Mbps and 6Mbps.”

Personally I doubt Telstra will do very well in the market place with such low speed plans. The current ADSL1 spec is capable of speeds up to 8Mbps downstream which makes me wonder why Telstra would commit to such a large capital expenditure if they’re not going to offer higher speeds than their current infrastructure can deliver.

Telstra stalls on DSLAM migrations (Whirlpool / Phil Sweeney)

The article above described some of the difficulties faced by ISPs when trying to move customers from Telstra Wholesale ADSL services over to their own DSLAMs. According to Simon Hackett of Internode Telstra have inflated the costs of performing the migrations and are not allowing ISPs to have their own technicians perform the work. The ACCC is looking into the issue.