John Linton
The third of the top three US telephone cariers filed their quarterly report with the NYSE yesterday:
http://online.wsj.com/article/SB123307214837119815.html
re-iterating the messages from Verizon and Sprint's filings - that the only growth is in mobile data and wire line services continue to decline.
The US is a truly deregulated communications market in most realistic senses of that word with 30 years of competition in the wire line provisioning to end users so there isn't, as in Australia, a monopoly wire line provider that has artificially continued to keep the line rental and call charges at exorbitant levels simply "because it could". Nevertheless the sheer 'weight' of technology progress makes it inevitable that wire line based services simply don't 'cut it' in the 21st century even when decades of fierce competition deliver as low priced service as exist throughout the US.
In Australia, Telecom/Telstra had no competition and for all of its existence operated totally inefficiently and with poor to very poor to appallingly bad management (something that remains virtually unchanged today except you can add "even more vastly overpaid" to the other string of adjectives describing Teltsra's operational performances in every area of wire line service delivery.
So Australia only has 'world class' communications in two areas:
1) Mobile telephony
2) Business data services
and the ONLY reason for this is that in those two areas there is competition from other companies that have invested in their own infrastructures that run (end to end) without paying Telstra's exhorbitant prices for one millimeter of cable/wire/fibre nor use one square centimeter of any Telstra 'real estate'.
What happens to a service when there is more than one supplier and those suppliers have determined their own costs by investing in their own facilities to provide the services and Telstra isn't involved?
It means the service is offered at a fraction of the cost the identically specified service from Telstra is offered.
This has been happening for around 20 years now and it must be obvious to anyone who spends even a few moments looking at comparative pricing of, say, business data services, that if Telstra is involved in ANY way in the supply of a service then the cost of that service is much higher than it is anywhere else in the world.
The overwhelming reason why HSPA will replace wire line based broad band services is that Telstra is not involved in ensuring the pricing of those service is as high as only a monopoly, with its massive operational and management inefficiencies, chooses to make them to continue to over reward its grossly inefficient and incompetent management.
Telstra would, and does, argue that they are hugely efficient with fantastically competent management who continually exceed their very toughly set KPIs.
If this is the case how is it that where other communications companies offer the identical (non-Telstra wire line based)services over their own infrastructures the price of the competitive services is seldom less than half of the Telstra price and often far less?
The only reason offered by Telstra that is hard to determine is because Telstra's pricing has to include "averaging' as it has to offer the same services in 'regional/rural Australia?
That doesn't seem to apply to mobile and now HSPA. So this means that, assuming Telstra's argument is true, that wire line services simply can't be offered at a reasonable price and therefore wire line services (including ADSL) will not survive as offerings beyond the time HSPA is able to be delivered in 'quantity' and at 10 mbps plus speeds throughout Australia.
I looked at these scenarios some 4 years ago and, while I would be the first to admit that my technical knowledge is slight to the point of non-existence my business knowledge is only very slight, the proverbial 'blind Freddie' could see that as long as a monopoly incumbent is involved in pricing only its over paid directors and managers will benefit - everyone else in Australia will pay through the nose so that the Telstra money trough continues to be full to the brim to continue to make mediocre employees wealthy and to ensure they never actually have to do a day's work to accumulate that wealth.
It was concomitantly clear that only different technologies that ran over non-Telstra owned infrastructures could change that situation and that no amount of ACCC activity and other companies basing services on anything owned and priced by Telstra could never deliver sensibly priced services to Australians.
So in my limited mind, some four years ago, I came to the conclusion that the then sparsely deployed data technology then emerging using 2G/3G/4G/LTE or whatever would, because they used already established mobile telephone networks, would in fact be the real answer to offering communications services in Australia that didn't depend, in any way. on Telstra and nor could they become the Telstra monopoly replacement because there was, at least, three companies that would deploy the new technology.
Only with strong, independently owned infrastructures, can there be competition that will produce realistic end user prices - wire line based products priced by the Telstra monopoly can never meet that basic criterion.
ERGO: HSPA will replace ADSL.
Telstra Delenda Est.(continued apologies to Scipio the Elder)
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