Structural Separation

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Austar Axia NetMedia and Telstra to share NBN roles

Split into Retail and Wholesale divisions and we’ll give you the option to buy 49% of the NBN. Maybe not quite that easy, however it’s been stated that Communications Minister Stephen Conroy and the Federal Government will offer Telstra the option to buy a 49% stake in the National Broadband Network if they structurally separate, or should I say functionally separate.

Dangling a lucrative NBN carrot such as the opportunity to own 49 percent of Australia’s next big thing since the Snowy Hydro Hydro Electricity Project will give incoming Telstra CEO David Thodey and the Telstra Board something to think about. It’s not just separation that they will need to consider, moreover this could very well mean that Telstra may have to hand over its existing fibre network among other goodies.

In other related NBN news, it appears that AUSTAR is also vying for a piece of the action. The regional Pay TV Provider has indicated that they have already held informal talks with the Federal Government regarding their wireless communication spectrum and how it could become a vital instrument for the National Broadband Network program.

AUSTAR currently holds a 2.3Ghz and 3.5Ghz band radio spectrum licence for regional Australia until 2015 which they purchased back in 2000 for $140 million. A Wireless and WiMax solution for many rural sectors of Australia could play a pivotal role in delivering high speed broadband Internet, voice and high definition TV services to these regions, especially using the soon to be obsolete analogue TV towers that are left behind.

Meanwhile, failed NBN bidding participant, Axia NetMedia, might not be out of the race just yet. In a Request For Proposals debriefing held recently, Axia NetMedia Global Development and Marketing Vice President ‘Mark Blake’ did not strike out his company’s potential inclusion into, at least, some of the NBN’s construction.

Although tight lipped on outcomes of the debriefing, Mr Blake did suggest that citing certain elements of their recent NBN proposal, he remained confident that specific parts could be used in the upcoming $43 Billion NBN. Furthermore, he admitted that the opportunity for participation had now become more possible, opposed to less.

Could it be likely that Axia NetMedia, like AUSTAR and Telstra, play a major role in the upcoming NBN construction process? From the sounds of Mark Blake, you’d be likely to think as much.

Keep informed with all the important news on the upcoming 100Mbps National Broadband Network right here at the Youcompare Blogs.

Telstra NBN Litigation Backdown

Telstra’s public policy and communications representative ‘David Quilty’ has stated that the telco is not considering legal action against the Federal Government after being booted from the NBN tender process.

Speculation has emerged stating that Telstra would seek compensation claims in excess of $80 billion from the Government if another proponent was to win the rights to build a national broadband network which accessed Telstra’s existing copper network.

Senator Conroy has withdrawn from making any hypothetical remark on the possibility of compensation claims by Telstra, although he did point out that Telstra had already brought the access issue before the courts (unsuccessfully). 

“In fact, Telstra decided to take this matter all the way to the High Court,”

“Even (chief justice) Michael Kirby joined the other six members to say that when Telstra purchased the network, they purchased it with an access regime in place. Get used to it,”

Telstra is certainly showing signs of backing down, however Mr Quilty once again stood behind his company’s ongoing broken record excuse that ‘puts their shareholders first’  by saying that Telstra were unable to submit an extensive NBN proposal through fear of vertical separation which is something that Telstra cannot contemplate.

Quilty also played down any possibility that the board, including chief executive ‘Sol Trujillo’, faced uncertain futures following their ballsup with the whole NBN process that witnessed billions wiped from Telstra share prices which infuriated Telstra shareholders.

Times Up… Telstra NBN Bid submitted!

Telstra has left their NBN bid submission go until literally the eleventh hour before lodging a ‘non compliant’ proposal. In what seemed like an eternity, the NBN bidding deadline is now closed. 

Industry analysts say that it comes as no surprise that Telstra lodged a bid, even after they continuously said they would not do so until they obtained reassurance from the government that the successful applicant would be separated (Structurally or Functionally). Funnily enough, it is believed that Telstra shares would of plummeted significantly, almost to the tune of $10 billion dollars, if Telstra didn’t commit to the NBN tender process.

Telstra now joins the likes of Terria, Optus, Axia Netmedia, Acacia and TransACT along with the Tasmanian Government  who have also lodged bids as proponents for the upcoming $4.7 billion dollar tax payer funded National Broadband Network project.

The successful applicant is expected to be announced by March 2009 and will have a 5 year window to roll out the entire broadband network. With the NBN bidding process already delayed by several months, and with who knows what type of obstacles (both legal and otherwise) around the corner, the NBN might take longer to implement than we think. 


Estimates on NBN costs down says Conroy

Although the current global financial downturn has witnessed the fall of the Australian dollar, Communication Minister Stephen Conroy has rejected claims by Telstra chief financial officer that it would increase costs for the proposed development of the new national broadband network.

Mr Conroy argues that some of the estimates have actually come down to between 10 and $15 billion, and that it wasn’t that long ago when there was speculation that suggested the NBN would cost around $25 billion.

With proponents having until the 26th November to enter bidding submissions, Mr Conroy remarked that there will be a lot more public commentary surrounding the $4.7 billion project that the government will not be buying into.

Many industry analysts are now suggesting that Telstra has tightened up as a favourite to win the broadband network tender rights due to the unsteadiness of the financial market along with the fact that the Terria consortium is now finding it difficult to secure funding. It’s also been stated that it would not come as any surprise to see the government relax regulatory guidelines that could of potentially seen Telstra structurally separated.

The current eventuations certainly do make it appear that the government wants the NBN project put to bed and commenced ASAP! I guess it’s only a matter of a few months until we see an outcome (finally!).

Message Loud & Clear – Split Telstra!

The demand for the functional, or structural separation, of Telstra has been a very precariously debated and wide spread topic over recent months. If these calls weren’t made loud and clear enough back then, you can bet you’re bottom dollar that almost everyone who reads online technology news will know about them now as regulatory submissions for the new national broadband network have now been made public by the government.

These submissions came from a variety of sources ranging from internet service providers, individuals, business and corporate entities including the likes of Google and Intel, through to state government departments. Funnily enough, the majority of the submissions all shared a common theme (or should I say suggestion), separate Telstra  either operationally or structurally. The respective submissions (including two from Telstra), will make for interesting reading, especially for those who wish to be further informed on the issues surrounding the national broadband network process and it’s regulations.

Industry and public interest groups were invited to provide submissions on regulatory issues associated with the National Broadband Network process.

The Government has reserved the right to not publish submissions or parts of submissions where it considers it appropriate to do so for confidentiality or other reasons.

The views contained in the submissions are those of its authors, and may not represent the views of the Commonwealth or its officers. The Government continues to reserve all of its rights in respect of the Request for Proposals.

Read the Regulatory Submissions at the DBCE

Telstra back flip on wholesale ADSL2+

In a contradictory announcement made by Telstra, the telecommunication giant revealed that it’s now planning to offer wholesale ADSL2+ services to competitors. This statement comes only after several months of rolling out ADSL2+ services to over 900 new exchanges.

The remarkable turn-around of policy has left industry experts scratching their heads. Coincidently, Telstra has also simultaneously called on the government to end speculation over a possible structural separation split into retail and wholesale sectors.

Is it possible that Telstra is preparing a contingency plan with this latest ADSL2+ wholesale announcement on the chance that it doesn’t win the NBN or is structurally separated? Perhaps this latest ADSL2+ wholesale policy back flip is part of a bigger picture such as a network upgrade? Afterall, its puzzling to witness a change of heart like this from telstra after such a short stint, and why at this particular point during the NBN process?

With increased conjecture mounting around a structural separation along with the additional pressure placed on the government by Telstra, its certainly leading to interesting times ahead.

source: Telstra tells govt: end speculation
source: Telstra’s reversal: now it plans to wholesale ADSL2+

Structural Separation building momentum for Telstra Split

The 2020 Summit was a success for many various reasons such as it raised concerns, sprouted ideas and addressed important issues challenging Australia and it’s future prosperity. In the final report of the Summit, Prime Minister Kevin Rudd was urged to split the wholesale and retail elements of Telstra in order to obtain a competitive market for the Broadband Industry.

It appears that Telstra has fallen heavily into the structural separation line of fire. What makes a possible separation more evident is the fact that not only are Telstra’s competitors calling for a split, highly influential and prominent business people (some of which were in the Summit group) are now also urging the government to perform a structural severing.     

The government should assess the case for vertical separation of the network owner from retail carriers and carriage service providers to promote access,” the group’s recommendation in the report said.


Australia’s Economy worse under Telstra NBN

In a damning report recently conducted by the Centre for International Economics it was revealed that a Telstra built and managed National Broadband Network would burden the economy by lowering wages, increasing inflation, reducing national growth and raising broadband prices by 15% in which our nation would be $897 million worse off.

Telstra was quick to reply by dismissing the report as ‘bogus’ although Telstra Wholesale managing director ‘Kate McKenzie’ failed to note a crucial sentence in the report that read “However, obtaining precision is not the main objective of this analysis. The main point is to show that it is likely that a significant margin exists between Telstra’s required return from the FTTN network and the return that an alternative supplier would require for the same asset, and this margin will translate into hardship for the economy and the community.”

Report Conclusions:
– Australian consumers and the economy would be $897 million worse off under a Telstra owned and operated National Broadband Network;
– Telstra’s targeted return on its capital investment was relatively high and “may be consistent with the abuse of market or monopoly power”;
– The build-cost scenarios for Telstra’s broadband network would increase inflation, reduce national growth, lower wages and reduce national consumption;
– The impact of Telstra’s network would “lead to a general contraction of the Australian economy.”


Telstra Structural Separation looms

Competition or no competition, that is the answer! The deconstruction of Telstra as a vertically integrated Telecommunication company could be nigh as the push for it’s structural separation gains momentum. In a report released by ‘Competition Economists Group’, who were commissioned by Telstra’s arch rival Optus, key findings suggested that Telstra (if not structurally separated) would have very powerful incentives to damage competition in the Telecommunication Industry if it were to win the National Broadband Network bid.

As reported back on April 1st, the Structural Separation of monolithic Telco companies in the UK, Europe and now New Zealand are solving anti competition dilemmas. But what about Telstra and it’s shareholders? Well it seems that conjecture and speculation cause investors to be weary and that structurally separating Telstra into retail and wholesale divisions could actually ease the uncertainties behind Telstra’s future and  restore or even improve market confidence.

“This means that if the NBN is owned by a vertically integrated Telstra, then discrimination — and damage to competition — will be a much bigger problem under the NBN than today.”

Today’s report is expected to be the first step in a concerted campaign led by Optus to lobby the Government for a forced split of Telstra.



TERRiA Firma – G9 adopt new name

Although not made from earth, the name TERRiA is rock solid and has been adopted (less the Firma of course) as the new name for the group of carriers formerly known as the ‘G9’ (or should I say the G8).

The consortium is made up from Optus, AAPT, iiNet, Internode, Primus, Macquarie Telecom,  SOUL and TransACT with the the ninth member ‘PowerTel’ now owned by AAPT, and to avoid further discrepencies down the track, it makes timely sense that the group come up with the new name of TERRiA. 

Michael Egan recently announced the new name, which is a contraction of ‘Terra Australis’, and said that it also phonetically the same as a terrier which eludes to tenacity and energy.  TERRiA also took the opportunity by saying they will develop a structurally separated model, however, had not yet responded to the current version of the NBN RFP.

“We …like the fact that it’s phonetically the same as terrier which hints at the energy and tenacity which will be needed to win the best communication outcome. In a word it sums up both our determination and the scale of the National Broadband Network with the commitment of coverage across the land.”

source: itwire

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