John Linton ......about Australia's long term communications future.
It was an OK week at Exetel in terms of sales with most targets being met and the first 12 days of August running slightly above target. Another of our long term supplier account managers 'said goodbye' to us after five years of association and was unable to tell us who would be replacing him. As I have mentioned before, it seems that most of our suppliers are reducing their staff and if you had bothered to read the Optus/Singtel Q1 presentation:
http://www.asx.com.au/asxpdf/20110811/pdf/420b7pwrdlc5r3.pdf
you may have noticed (on slide 20) that it is casually mentioned that personnel costs have reduced by 11%. It doesn't mention any time frame over which this has happened but as the rest of the report is a quarterly analysis you might be inclined to think this personnel reduction has happened over the three months ending June 30th. If that's the case it is one of the more 'savage' personnel cost reductions I have seen since the bad old days. I would have thought such a significant policy would deserve some more detailed explanation.
It would seem from the Telstra annual report and the Optus Q1 report that the two major Australian communications companies continue to find markets tougher than expected and both signal no change to that in the coming year....nothing new there. In both these companies cases they operate on a decade or more planning time frame and blips such as are currently being experienced are no more than that - minor inconveniences that are already simply a 'memory'. Telstra has solved their problem of a transition from a copper network to a fibre network by simply getting the federal government (via NBNCo) to pay them for it without obliging them to make the huge investment in a replacement network - well done them. Both Telstra and Optus make it very clear that the future of their businesses (and all of their investments) are in mobile technologies with their only interests in 'land lines' of any sort being in large cities for business users.
How interested either Telstra or Optus will be in re-selling NBNCo fibre residential services is not going to be determined for many years but it's difficult to see why they would have any interest at all - it simply has no strategic value at all and almost no medium term value. Which raises the issue that if Optus and Telstra don't re-sell the new monopoly's fibre service what will really happen over the coming years? As that's years into the future (the planning time frame for owners of high technology companies like communications infrastructures) no politician or their advisers seems to have considered such a scenario - it is far beyond the time of the next election. So, it's conceivable, that there may be three choices of future communications providers - a government monopoly and two LTE+ mobile companies.....fighting for a share of a market that previously only supported one infrastructure provider (Telstra).
Pie in the sky fantasy? Just ask yourself this question - "if you were chief of long term planning at Telstra or Optus would you have a service strategy based on re-selling services dependent on a government monopoly in your future options?" Or you could consider this:
http://www.theage.com.au/national/treasury-warned-of-risk-to-taxpayers-on-broadband-20110812-1ir23.html
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