If you read a major newspaper on Tuesday, the chances are that you came across a full page ad from Telstra asking “So why is the ACCC still allowed to say ‘NO’?”. If you happened to miss it, a copy can be viewed here.

In the full page ads Telstra outlines its “broadband plan for Australia“, indicates that the only obstacle in their way is the ACCC and encourages the reader to “Tell the ACCC today to stop saying ‘NO’ to high-speed broadband.”. What is interesting, although perhaps not surprising, is that price is not mentioned at all and no explanation is given of why the ACCC is saying ‘NO’.

Judging by the following excerpt from Tuesday night’s 7:30 Report on the ABC, it appears as though Telstra hasn’t actually outlined to the ACCC what price they would like to charge for the service. It seems pretty tough to ask the ACCC to make a ruling on whether Telstra’s proposal is fair for the Australian consumer when such a critical piece of information has not even been tabled.

GRAEME SAMUEL, ACCC CHAIRMAN: I would simply ask one question of Telstra: what price? And it’s the question we’ve been asking all the time. Telstra, tell us, tell 20 million Australians what price it is that you’re proposing to charge for broadband and then let us, as the watchdog of the Australian consumer, let us assess whether that price provides a fair return to Telstra, a fair return to Telstra’s competitors, and above all, a fair price for Australian consumers.

PHIL BURGESS, TELSTRA GROUP MANAGING DIRECTOR: We have given the prices to the Government, and that’s who we’re negotiating with. If the ACCC wants to know the prices, they will know them as soon as the Government agrees to the plan. If the Government doesn’t agree to the plan, if they decide the plan is not good for Australia, we understand that, they have the … number one, they have the power to make that decision, they have the right to make that decision.

Full transcript available here.

The average monthly price Telstra is proposing has been speculated in the media as around $85 per month which would push the retail price well into three figures per month. When there is an offer from another consortium to build a network with access prices around half of what Telstra is requesting you can certainly understand why Mr Samuel would like to have those details before making a decision.

What I found most alarming about the comments on the 7:30 Report though was Telstra’s apparent insistence that it is the Government that they have to make a deal with, not the ACCC. The ACCC is the watchdog for the Australian consumer. If Telstra were confident that the network and access price they are proposing is in the best interests of the Australian consumer, I can’t see why Telstra would be so reluctant to let the ACCC fulfil their responsibilities to the Australian consumer.

Telstra knows that our Communications Minister Helen Coonan is under pressure to trump Labor’s broadband plan prior to the election and Telstra will extract as much mileage as possible (in the form of pricing it appears) to capitalise on that. Telstra made it quite clear in their ad that they are capable of enabling ADSL2+ (speeds of up to 20Mbps) to 100 outer metropolitan and regional exchanges within 14 days. Why are these exchanges not enabled now? What does ADSL2+ have to do with the debate surrounding building a new broadband network? Surely Telstra aren’t withholding this higher speed broadband from Australia that they are already capable of delivering simply as a bargaining chip in their negotiations with the Government?

What I fear most about this debate is that a decision will be made based on political grounds and what is best for the Government (or what is most likely to keep them in Government) rather than what is truly best for Australia. Higher prices, less competition and therefore less innovation is not best for Australia and I sincerely hope that our Communications Minister Helen Coonan shares that view.

I figured it was worth a very quick post to try to clarify some of the confusion surrounding the G9 and the Tell Truth Telstra (T4) campaign. The only link between the two groups is that they share some common members. The two groups have different objectives and different motives for coming together.

• The G9 is a consortium of carriers who are proposing to build a national broadband network that will offer equitable wholesale access to all telcos (including Telstra).
• The group of telcos behind the Tell The Truth Telstra campaign have come together to encourage honest debate in the telco industry.

This point seems to have been widely misunderstood and has unfortunately diverted much needed attention away from the real issues at hand.

As you may have read recently Westnet is an active supporter of the Tell The Truth Telstra (T4) campaign. This is an initiative that Westnet believes is necessary and I would like to take the opportunity that this blog affords to spell out why Westnet has chosen to become involved.

Westnet has traditionally, and still does to this day, have a very positive relationship with Telstra Wholesale. On the whole they complement our business quite well and the relationship has been mutually beneficial for a number of years now. We have never criticised Telstra publicly because:

a) we value the relationship we have with Telstra Wholesale
b) we felt there has been no reason to

Both of these reasons are still accurate and current so we have not become involved in “Tell The Truth Telstra” in any sort of attempt to attack or discredit Telstra.

Similarly we have no issues at all with Telstra wanting to defend the value of the company or communicating with their shareholders and members on industry and regulatory issues with the potential to affect the value of their company. We do have an issue however when this communication does not represent the full truth or can easily be misconstrued by the general public.

This is the sole reason why Westnet is involved in the “Tell The Truth Telstra” campaign. We think a public debate surrounding the issues of regulation and a new national broadband network is a positive exercise, however all sides of the debate must communicate the full truth free of excessive spin. Doing otherwise only serves to confuse the real issues even further and we feel a number of statements from Telstra have unfortunately fallen into this category. I have included a couple of examples below.

Telstra provided a media release to the ASX on the 24th of January which contained the following quote from Dr Phil Burgess, Telstra’s Group Managing Director of Public Policy and Communications.

“The most recent decision of the ACCC….allows Telstra’s competitors to buy broadband infrastructure for just $3.20 per month, and then re-sell it for around ten times that amount, forcing our shareholders to pay money from their back packets to fund largely foreign-owned competitors.”

Now if I didn’t know better I would think that Dr Burgess is suggesting that companies like Westnet purchase broadband infrastructure from Telstra Wholesale for just $3.20 per month. I am fortunate enough to know that $3.20 would be lucky to be 10% of what Westnet pays to Telstra Wholesale (forgetting international bandwidth, e-mail services, billing systems, customer service, network operations staff etc) for the average ADSL connection. What I know is pretty irrelevant though, as the average person with only a passing interest in this debate could hardly be blamed for thinking that ISPs are rolling around in 900% profit margins at the expense of Telstra. At least he didn’t label us (a 100% Australian owned business for the record) “foreign leeches” I guess.

The Managing Director of Bigpond, Justin Milne, also sent an e-mail to Bigpond members which contained the following statement which in our opinion at least, deserved greater clarity and/or more thought on how the general public would interpret this comment.

“…..But under the current regulations we would have to provide access to foreign-owned competitors at below our cost.”

This sounds to me like there are currently regulations in place which require Telstra to provide access to foreign-owned competitors (yes, that word “foreign” manages to sneak in again) to it’s infrastructure at below cost as a matter of fact. This of course is not the case. Many pieces of Telstra’s existing network are not offered as a wholesale product and there is no evidence to support the suggestion that the Government or the ACCC forces Telstra to sell access below cost.

Then there is of course the Telstra sponsored website www.nowwearetalking.com.au which in my opinion has done more to confuse the general public and media on the issues at hand than anything else. If you are a student of, or interested in Public Relations and ’spin’ you can not help but admire the skill and creativity that has gone into the creation of this website. There is little doubt that Telstra does this type of work as well, if not better, than any company in Australia.

Rather than provide direct examples from the www.nowwearetalking.com.au website I’ll just comment on one of the common messages of the website that I personally find some ironic amusement in. What I am talking about is of course the notion that a company run by foreigners is so keen to push the “foreign” angle in their Australian communications at the same time they are fighting the incumbent in New Zealand for greater access to their network despite the fact that in that country they are a foreign-owned company. This all seems a little strange to me.

In an effort to try to summarise, Westnet feels that a public debate about the issues surrounding regulation and a new national broadband network is a great exercise on the proviso that all parties present their information and opinions in a clear manner that is unlikely to be misconstrued by the general public. We feel that a number of statements from Telstra have missed the mark in this regard which unfortunately has resulted in some noise which has not contributed to achieving the end goal of improving broadband services in Australia. Hopefully in the future we’ll see a little less noise and more signal from all parties but only time will tell.