Once more, Telstra demonstrates its appalling arrogance. They’ve just been excluded from bidding for Australia’s National Broadband Network for submitting a non-compliant bid, and now try to deny it despite their own clear evidence.
The Australian IT reports today:
In a statement to the stock exchange, Telstra said it had been excluded from the bidding process because its proposal submitted on November 26 did not include a plan on how to involve small and medium-sized enterprises in the building of the network.
26 November was the closing date for submissions, published well in advance. And yet:
Telstra chairman Donald McGauchie said the reason for its exclusion was “trivial”…
“Telstra provided its SME plan to the Government in early December and, in Telstra’s view, in accordance with the RFP (request for proposals),” said Mr McGauchie.
No, you fuckwit. The closing date was 26 November. Supplying information in “early December” means your submission was missing key elements. Morons.
Did you ask the teacher for an extension? Did you have a note from your mother? FFS! I stand by what I wrote in October: Get over yourself, Telstra!
If you can’t even provide your goddam submission on time, why the hell would we be stupid enough to give you $4.7B of our money?
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Tags: broadband, donald mcgauchie, telstra
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Smart move by the Gov’t.
Telstra has enough capital to continue to invest in their own network. As witnessed by the “instant” ADSL2+ turn on across Australia: they have been investing and will continue to invest to remain competitive.
The NBN and the fibre-to-the-node (whilst other parts of the world go that extra and install fibre-to-the-home) adds another, competitive glass that should drive prices down. As much as duopolies have done this in Australia.
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What Nick fails to mention re “As witnessed by the “instant” ADSL2+ turn on across Australia: they have been investing and will continue to invest to remain competitive” is that for years Telstra refused to activate ADSL2+ at any exchange until a competitor came along and did it.
That’s right — Telstra had a corporate policy to deny ADSL2+ services to customers (even though they could “flick the switch” if they wanted to) until competition forced their hand. In my opinion that was corporate bastardry of the highest order. Breathtaking arrogance and contempt.
Telstra has an impressive track record of doing what it wants, when it wants. I remember when I finally cut myself free from them a few years ago, they sent me a glossy pamphlet titled “Let’s try doing things your way…” the clear subtext being, we do things our way until we start to lose business. And I bet they never even twigged to the irony of it.
Their NBN “proposal” is a mere continuation of that kind of entrenched attitude.
Well Telstra, the Government has called your bluff, your shares are down 12% in one day, and the amigos will soon be saying “adios”.
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It would indeed appear that there’s already a lot of “dark fibre” out there — that is, fibre optic cable which has been laid but not yet turned on. That makes sense. If you’re digging trenches to run one cable, then it’s not much more cost to run another half dozen to cover future needs.
As David Boxall says on Link today:
Five years ago I was told that, when replacing old copper in my area,
Telstra installed both new copper and fibre. For details, see
http://david.boxall.name/Phone1.html. The fibre’s still dark.While any business must and should focus on its profits and the interests of its shareholders, Telstra’s behaviour continues to cross into arrogance and, yes, bastardry. There’s no need for it. They’re demonstrably the best network engineers amongst Australian telcos, and they could just get on with their job without being such cunts.
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Ummm… “That’s right — Telstra had a corporate policy to deny ADSL2+ services to customers (even though they could “flick the switch” if they wanted to) until competition forced their hand. In my opinion that was corporate bastardry of the highest order. Breathtaking arrogance and contempt.”
I think you need to understand something before you comment.
Telstra has did not turn on ADSL2+ because the ACCC had not guaranteed that they would not declare the service. Meaning no competitors would invest because they knew that if the ACCC did declare the service they could buy it wholesale at prices that would have been below cost. Why invest when you can spung. This is just bad regulation.
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How COULD the government had taken their submission?
they said “closes 26th November” and they submitted “early december”.
“sorry, that deadline was just for fun. We’ll it’s good ol’ Telstra, we’ll be nice to them.”
the rules are the rules.
It would be seen as preferential treatment.
On top of that, weren’t they demanding conditions RE the wholesale/retail split?
So to summarise:
- They were late
- Their submission was incomplete
- They have far more demands
hmmmmmmmmm… I think that deserves a big fat “No”.
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Stilgherrian I think you are a very angry man.
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@meh: Yes, I’m angry. I’m watching Australia’s national infrastructure being fucked around by what I consider to be self-centred, unprofessional business decisions — witness the 12% drop in Telstra’s share price today. Now, would you care to address any of the actual issues rather than just making unrelated insulting personal comments from behind an obviously fictitious identity? Seriously, I would really like to understand why Telstra is doing things this way, because it seems counter-productive.
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Numerous sites quote a previous high court challenge which was thrown out as saying telstra ‘only has the right to use the wire, not ownership to it’ or something to that effect, so based on that, f**k ‘em. Telstra hasn’t received a single cent from me in over a year since I switched to naked DSL, and I don’t plan on contributing to their bottom line at all in the future if I can avoid it. I figure it’s wishful thinking to expect the demise of telstra any time soon, but it’d be a welcome change to see telstra’s infrastructure redundant as a result of competition, and more welcome if it meant that they were FORCED onto the NBN infrastructure…
Telstra is welcome to prove me wrong by actually offering price competitive products, and I’ll happily eat my words if they offer better value than my 8+8GB NDSL plan for sub $60 (in 2008 dollars) on FTTN/FTTH
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@Adrian: Yes, the Fairfax sites/papers are mentioning that legal point today:
If Senator Conroy accepts its recommendation that a bidder other than Telstra build the network, the winner will apparently have the right to disconnect the telephone wires that run into most Australian homes and businesses and then reconnect them there to an optic fibre that bypasses Telstra’s network.
Unjust confiscation of Telstra’s property? Telstra believes so. But it has already argued that to the High Court and lost. In March, all seven judges rejected its argument in part because they believed that when the Government sold Telstra it gave it the right only to use the wires, not own them.
Telstra’s form suggests it will go to the High Court again, and much more. In the 1980s it dealt with a threat to its television signal distribution business from the Government-owned Aussat by massively expanding and competitively pricing its optic fibre links. Aussat went broke.
The article ends…
Telstra is used to winning, and has the resources to do it again.
… and yet yesterday Business Spectator pointed out:
Trujillo’s final dramatic quote to the analysts was “Nothing Stops Telstra”.
But so far, it has to be said, that whenever Telstra has taken on the government it has lost.
This will run and run.
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“In March, all seven judges rejected its argument in part because they believed that when the Government sold Telstra it gave it the right only to use the wires, not own them.”
So then tell me why does Telstra pay the costs of maintenance for the wires and not the government? Well ok Telstra uses them….so then why don’t Telstra’s competitors who purchase wholesale ULL lines from Telstra pay for maintenance, testing, fault detection?
The asset was sold to telstra, pure and simple. The issue is what is a “fair and justified compensation”. Not whether Telstra owns it.
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@aloha: I don’t own the house I rent either, but I still have to pay (or otherwise take care of) cleaning, gardening and routine maintenance. Ownership and responsibility for maintenance are two different things.
If all seven High Court judges reckon Telstra don’t own the wires, then maybe we should check their reasoning? They’ve probably put more thought into it than either of us.
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Smart move by the government you can t be serious!! there are so many reasons as to why the government should not be taking this road moving forward……… again Telstra being shined as the bad guy here there is absolutely no doubt that there is no other Telecommunications company within Australia with the same performance or structural capabilities that Telstra are in a position to offer.
Telstra does not want to expose all her goodies to the competition why would they they shouldn’t have too, the right people in the right position know what Telstra wants to do for Australia with this NBN but it’s politicians and other marketing Media players with outside of Australia interests who continue to undermine and limit Telstra’s offering, you say Telstra is arrogant and bastardly but can you blame them considering the extra rules and regulations they are under they are there own company not Government owned any more yet all the restrictions still apply!?? Telstra makes billions of profit every year (this wont be going backwards any time soon) theres a reason for that “quality of serviceable product” and if given the ability too I am confident Telstra would become more competitive for the everyday consumer.
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@Jason: “There is no other telecommunications company within Australia with the same performance or structural capabilities that Telstra are in a position to offer” is a furphy.
Yes, Telstra is currently the biggest player, but so what? It doesn’t necessarily follow that they’re the only firm capable of building the NBN. Indeed, maybe building from a clean slate would produce a leaner, more efficient organisation than trying to work within Telstra’s legacy structure.
Telstra keeps asserting that it’s the only firm capable of doing the job, but that’s just marketing assertion. If Telstra is indeed the only firm capable of building the NBN then that’ll be clear from the analysis of the other bids.
However, if Telstra was really so certain it was the only firm for the job, then they could have just submitted a compliant bid and won, yeah? Why the 13-page incomplete submission?
Ian Verrender’s analysis in Business Day makes sense to me:
Ever since Sol Trujillo was installed as chief executive, Telstra has employed a three-step strategy to muscle out any competition.
It can be neatly condensed into three words: Bluster, Belligerence and Obfuscation…
Telstra does not want a national broadband network, particularly one that involves anyone else. That includes taxpayers.
And if one has to be built, Telstra will do everything in its power to delay or kill the process. Yesterday marked stage one in a protracted war, ultimately designed to defeat one of Prime Minister Kevin Rudd’s key election promises.
Trujillo claimed yesterday that Telstra had been unfairly excluded from the process on a technicality. That’s just rubbish.
I’ve just been told that communications minister Senator Stephen Conroy will be on The 7.30 Report tonight. For once I agree with him: there was nothing stopping Telstra submitting a conforming bid. They chose to play another game, and have been tossed out.
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You really have to wonder what kind of game Telstra is playing — by eliminating themselves from the game this early (way before the bids have been properly considered!), they face further erosion of their monopolistic power and profits. Their competitors are going to get a nice government subsidy to build their own network and no doubt they will leverage more infrastructure and business off the back of that. The increased competition will drive down prices and I’m sure all the existing disgruntled on-sellers of Telstra’s services will be happy to consider the alternative. Well played Telstra, well played…
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After 15 years as a Telstra employee i now know that everything and i mean everything that Telstra does is completely calculated. Dont think for one minute that Telstra wanted the broadband contract. If they had wanted it they would have submitted a blistering proposal.
So why didnt they bid? Many Telstra employees believe the following. For years all we have heard is how much money it takes to maintain the landline network and exchanges. Since the advent of wireless broadband and Voip the profits, especially from consumer landlines are falling and will continue to do so. We have also heard from management in a non official way over the past 5 years how eventually Telstra will just want its mobile network…. hence big investments in the 3g network. As i work in an area that deals with mostly new business i have noticed a distinct trend towards people not connecting a landline at all… just working off the mobile network. This is definitely the way of the future.
This is just a theory but it makes sense.
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Telstra says it serves the Australian people and drapes itself in the flag, using spunks on beaches, mums at the soccer, economic refugees in the regions and anyone else that regularly eats Vegemite to portray itself in public.
But all its managers talk about is serving shareholders (some of whom include the above) even if it means denying (the above) better products at decent prices.
Australia has sniffed out this disgusting discrepancy and is fighting back, from the top down. As is proper in the networked age.
Trujillo will one day be bracketed with Al ‘Chainsaw’ Dunlap as a septic who came over and pretty much failed.
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@Snarky Platypus: Telstra’s going high-stakes with what Stephen Collins called the big swinging dicks approach. They’ve misjudged, it seems — though maybe not, as just turning the whole bidding process into a drawn-out legal battle generates an expensive diversion for everyone else while Telstra quietly rolls out a network of their own with their dark fibre, existing exchanges, magic fairy dust etc.
@iamtheantigeek: Are you the Anti-Geek who sometimes writes for Crikey?
As it happens, Telstra’s only responsibility is to its shareholders, and indeed it is illegal for a company director to do anything other than “increase shareholder value” — within the law, of course. It would seem that we’re finally realising that the nation’s nervous system probably isn’t something we should leave to “market forces”.
As an aside, there’s another interesting analysis by Paul Budde in New Matilda.
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I am reminded of the old days when I worked at Telstra Wholesale. I have passive memories of folks being thrown from the 41st floor of 242 Exhibition Street in Melbourne at the mere thought of operational separation of Wholesale (Access) and Retail (Customer Marketing).
Telstra has NEVER believed that a second on-the-ground (terrestrial) network would ever be built without massive amounts of corporate welfare from the government and took the punt that the Howard administration would never undermine good old fashioned Capitalism. Or Monopolism. Telstra’s biggest fear was having it’s national network (albeit twisted copper) off their books before / during their privatisation process. That process is now comfortably out of the way. But they always knew the government would change.
Telstra Wholesale in the late nineties was all about infrastructure. Telstra’s NDC division was so busy installing that new fangled ‘Fibre’ thing that companies like John Holland and (was it?) VisionStream were contracted to keep up with the ‘anticipated demand’. There’s nothing imaginary about the many hundreds of kilometres of Dark Fibre out there.
Then there’s the start-ups like Comindico (whatever happened to them?) and the like who just started rolling out fibre optic cable while having bugger-all customers. Lots went broke. What happened to their ‘networks’?. From the Pilbara to Perth and Kalgoorlie, Warrnambool to Geelong and Melbourne. Even Mt Gambier has fibre optic cable sitting there. It’s kind of like rats. There’s bound to be some fibre optic cable within about six feet of you…
Telstra’s exchanges were also overhauled and the old analogue AKE / ARF / ARM were removed allowing for a SHITLOAD of digital nodes and switches. Heaps went unused for years. At some point (in order to get some kind of usage (= billing) out of some quite expensive dust-gatherers) Telstra started offering some kind of high end data exchange service to multi-site Corporate customers. Either ColesMyer or Woolworths had threatened to take their accounts to a quickly hobbled together consortium of second-tier players. Suddenly Telstra could do that, but not Broadband for poor people.
So, Telstra leveraged off the network ‘We the People’ owned during it’s sale process to get a pretty good share price and whopping cash injection. Took that cash, installed fibre optic cable til it was dangling out of it’s trousers, looked the other way hoping someone would come along and pay for their new network. Again.
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I think its hilarious that Telstra has come out in the media saying that it was a government red tape issue…. didnt they used to be all about government red tape???? being owned by the government? lol… give it to someone who will build it, and build it QUICKLY!!!
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Four weeks ago, my original post here characterised Telstra’s non-compliant bid as stupid and arrogant. I and most of the commenters simply didn’t understand what Telstra was doing. But by the time I’d written today’s Crikey contribution, Telstra holds back broadband speeds. Again., I’d managed to figure out the strategy. Maybe.
This process of discussion which leads to further understanding is the most joyous part of writing for this interactive environment called a blog. I hate the word blog, but I love the process.
Thank you all — even the people who disagree with me, because you force me to re-examine my own thinking. Sometimes that leads me to change my mind. Sometimes it helps me find the right words, the right explanation for why I was right after all.
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