Optus, Telstra clash over broadband leadership claims

Optus is the true champion of broadband in Australia -- not Telstra, which found narrowband to be a "nice earner", says Optus chief executive officer Paul O'Sullivan.

Speaking at a luncheon hosted by the Committee for Economic Development of Australia, O'Sullivan launched a major broadside at Telstra, claiming the telco had enjoyed a "regulatory holiday", and that Optus' entry into the DSL market early last year was the main spark that ignited broadband take-up.

O'Sullivan said current regulation should be to create open competition, but it was instead backing Telstra as the "means to achieve national outcomes."

"Yet Telstra is trying to position itself as some kind of national champion -- and wriggle out of its clear legal obligations," he said.

"The law says that if you own a so-called bottleneck facility -- such as the telecommunications network owned by Telstra -- then you must provide 'access' to that network so that your competitors can use it."

O'Sullivan made specific reference to an interview with Telstra's outgoing chief Ziggy Switkowski, which suggested Telstra "is all about leading Australia into the sunlit uplands of ubiquitous high speed broadband access."

"Well, excuse me. Telstra might describe such a world, but based on their track record, if we leave it to Telstra we're going to be waiting a very long time before they deliver such a world," O'Sullivan said.

"Australia's household penetration of broadband services today is one of the poorest in the OECD. And a big reason that this has happened is because Telstra deliberately kept broadband prices high -- with the aim of keeping its customers on narrowband Internet for as long as possible."

O'Sullivan said this was because dial-up Internet had been a nice earner for Telstra, mainly owing to users taking out a second line for it, and which they tended to drop when they switched over to broadband.

"The fact is, Telstra has effectively enjoyed a regulatory holiday on broadband since its inception," he said.

O'Sullivan determined that the broadband tide changed because of Optus, not because of any regulation.

"Broadband penetration only took off when Optus entered the DSL market in early 2004," he said.

"Telstra responded with sharp price cuts. The result: total broadband services jumped to 1.5 million in December 2004 -- more than doubling in 12 months. If Optus had not acted decisively in early 2004, I would suggest to you that broadband penetration would still be stalled."

Telstra had a different take on O'Sullivan's remarks.

"What the Optus CEO has admitted today is that Telstra and other smaller competitors have taken the lead with DSL and Optus has missed the bus (beginning their roll out too late in March last year), now hoping to catch up by way of a regulatory helping hand from the government," reads a Telstra statement in response.

"Telstra believes Optus wants favourable treatment from the Government as a short cut way to overcome its own performance in the DSL market."

According to Telstra, Optus is whinging because it arrived "late on DSL roll out."

iiNet's managing director Michael Malone echoed this sentiments. Optus' terribly belated entry into the market doesn't appear to have had any visible impact on overall growth of broadband in Australia. Did it really take them four years to realise that ADSL was here?"

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Howard Dahdah

PC World
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