John Linton
Every once in a while I think that I've completely lost any ability to comprehend what is happening in the Australian telecommunications industry and that I should have gone on to something I had a better chance of understanding decades ago. This usually coincides with a 'Telstra Visit' to some Exetel employee or some report in the press of Telstra's views of some aspect of communications in Australia. These incidents have been increasing in frequency since El Sol and the creepy McGaughie have been making their pronouncements on how things should operate in this benighted and backward country to ensure that a bunch of Telstra executives and board members can gouge exorbitant amounts of personal payments out of the monopoly that none of them contributed a single thing to create.
The latest bout of mind numbing dizziness struck me while reading this:
http://www.itwire.com/content/view/22678/127/
earlier this morning and I waited until after 'breakfast' to attempt to get my head around just how demented a senior executive or legal counsel of a giant corporation would have to be to allow the views contained in that article (and I'm assuming the article is factual which it may not be of course because it is so far fetched) to see the light of day.
Unless I'm reading the article incorrectly it seems to be saying that Telstra believe that the correct price to rent a copper pair between a subscriber's home and their closest exchange should increase from the current cost of around $16.00 to $30.00 immediately and then, some time later in 2009, to $48.00:
"Telstra wants to increase the $30 to $48 later this year."
Now my knowledge of Telstra's various retail pricing is by no means complete - I seldom bother to look into it as Exetel doesn't 're-bill' telephone land lines - but I'm aware that Telstra RETAILS land line services for between around $21 to low $30s with an exception for pensioners at sub $20.00. I'm also aware that Telstra makes North of $A4 billion profit a year so it would appear that it's current retail pricing isn't exactly sending it broke - but I do understand that I have absolutely no understanding of how much profit Telstra makes from land line rental in its total business - though I very much doubt that it makes a standalone 'loss' which, I would have thought, would be the only justification of ANY price increase let alone a price increase of 200%.
What I do understand is that new investment in/maintenance of the copper network is extremely unlikely to add very much in terms of cost to the overall copper network maintenance and wear and tear replacement and therefore it's very hard to see how the copper network is becoming so much MORE EXPENSIVE to operate moving forward than it is today - it MUST be less expensive unless the usual rules of depreciation have ceased to apply to aspects of Telstra's business compared to every other commercial entity's in Australia and the rest of the Western world.
Be that as it may - El Sol's recent presentations in the USA contained a statement that Wholesale revenue amounted to less than 4% of Telstra's total revenue - hardly a bottom line impacting percentage irrespective of the business mix that makes up that figure.
So what does it all mean? Only one thing springs to mind. El Sol and mealy mouthed McGaughie want to ensure that the current competitor's ADSL2 deployments are strangled to financial death before they can grow widespread enough to provide any semblance of ongoing competition to the Telstra monopoly. This would only be part of the concept of course. The real reason would be to demonstrate that the cost of the 'old' copper network (which only incidentally is being used by all Telstra's competitors) is so expensive that Telstra will be able to move all of its own customers onto its cable networks, those that exist now and those it is preparing to build, thus stranding all competitors on hyper-expensive lines that both make a huge amount of money for Telstra and, double whammy, make all 'competitors' unable to compete. Now there's why this country needs a telecommunications monopoly like a dose of the black death.
It's interesting to remember that shortly before the 'de-regulation' of the Australian telecommunications industry a residential land line cost $A9.95 a month and here we are 20 years later facing the possibility that Telstra believes a reasonable WHOLESALE monthly cost for that same line should be $48.00 a month - and I thought I lived in Australia and not in Mugabe's hyper inflated country. But in those days, of course, the head of Telecom didn't get paid $A15+ million a year nor did he have a bunch of 'advisors' who averaged being paid more than $A5 million each. I guess someone has to pay for these genii (and their hundreds of lawyers) who are doing so much for Australian telecommunications.
Who better to do that than people who have no choice but to pay through the nose or get cut off?
I guess if El Sol's machinations mean that all ADSL2 competitors have to pay an additional $30.00 a month for their broad band it will begin to make BigPond's "list" prices look very attractive.