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Issue # 1403      18 March 2009

Parting shots from Telstra’s Trujillo

Outgoing Telstra CEO Sol Trujillo has fired off a couple of parting shots at low-income earners and those living in remote parts of Australia as he packs to go home to the US. The previously government-owned telco will upgrade its cable internet network beginning with the 500,000 Melbourne households with access to its hybrid fibre coaxial cable network. Users in the other mainland state capitals would then be upgraded and be targeted with an aggressive marketing campaign to lock in customers.

The cherry-picking exercise would make it harder for the successful tenderer for the $4.7 billion National Broadband Network (NBN) to provide high speed internet to 98 percent of the population as promised by Prime Minister Rudd in the lead-up to the 2007 federal election. Meanwhile, users making STD and international calls of less than 30 seconds will all be slugged the full half-minute charge in a move that will disadvantage the elderly and others unable to access cheaper net-based alternatives such as Skype or VOIP.

Some analysts say Telstra’s upgrade announcement with its promise of download speeds of up to 100 megabits per second is one in the eye to the Rudd government and the telecommunications bureaucracy. Last December Telstra was excluded from the race to roll out the fibre-to-the-node network. It was judged not to have submitted a valid tender. Others say it is one last bit of Trujillo-style brinkmanship designed to get Telstra a seat back at the table where the plans for the national network are decided.

“Is this essentially a tacit admission that we are out of the [national broadband network] or we don’t care about it? The answer is no. We’ve never said we weren’t interested,” Trujillo said last week.

Whatever the case, the move casts a fairly long shadow over the viability of the NBN. The future for current and potential users in rural and regional Australia is looking less assured. “You can bet in regional areas they’ll leave us alone and let us whither on the vine,” Nationals Senator Barnaby Joyce said of Telstra’s plans and their possible knock-on effects. “They are crowding out the market. It’s a corporate decision to basically say wherever it’s worthwhile going, we’ll make sure they won’t, and wherever it’s not worthwhile, we won’t go there and they won’t go there either.”

Regional Telecommunications Independent Review Board chair Bill Glasson is also concerned at the proposal to “build two bridges over the same river five metres apart.”

“Governments need to step in and say, if you’re going to play in this market, you’ve got a responsibility to play across the whole of this network,” Glasson said. He went on to note that the adverse developments like the Telstra plan are a “reality of the free market.”

Communications Minister Stephen Conroy is due to announce the successful bidder for the high-speed broadband network by the end of the month. Sing Tel-owned Optus is favourite to get the job of building the vast network of fibre connections. Optus claims Telstra’s announcement is designed to cause doubt and fear about the NBN but that it has taken such a challenge from competitors into account.

Telstra’s other announcement – about charges for STD and international calls – has also gone down very badly with customers. Under the new schedule to operate from the end of this month, users making calls of a few seconds will be charged for a full 30-second block. With the proliferation of voice mail and answering machines, it is estimated that between 20 and 30 percent of all calls are currently being charged for the few seconds it takes to leave a message or hang up. Charging for a 30 second call rather than the time it actually takes would rake in a tidy sum for the dominant telco.

Under current arrangements, a customer paying 20 cents a minute for an STD call would pay 5 cents for a 15 second call. The new system would mean a minimum charge of 10 cents. A 35 second call costing about 12 cents would jump to 20 cents. Telecommunications analyst Paul Budde is not persuaded by Telstra’s argument that the change brings landline charges into line with mobile billing. “It’s just another way for Telstra to boost revenue; there’s no other explanation for it,” he told The Age last week.

The five-beep signal warning at the beginning that you are making or receiving an STD or international call will be abolished at the end of the financial year.

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