NBN BUZZ: Telstra's new clothes

NBN Buzz is a weekly wrap up of everthing that's going on with Australia's biggest ever infrastructure project. For previous editions go to our NBN Buzz page.

The new Telstra says hello

Telstra has given us the closest look yet at what it will look like in the post-NBN world. The latest restructure of the telco is “consistent” with its long-term strategy of prioritising customer service says chief executive David Thodey – now that he doesn't have a copper network to lean on.

Telstra named Gordon Ballantyne as head of customer sales, a department which will amalgamate the sales and service for consumer, business enterprise and government customers, making Ballantyne responsible for $18 billion of Telstra's revenue. The telco's marketing will be centralised to its chief marketing officer Mark Buckman and high-profile Telstra executive Deena Shiff will head a new applications group.

First out of the block was Business Spectator's Stephen Bartholomeusz: “Unlike previous restructurings, while there might be some reduction in headcount as a consequence of the latest changes, that isn't the main objective. Thodey is seeking to create a simpler, more centralised and customer-focused approach to his customer-facing operations... Thodey would no doubt hope that the final step in the creation of Telstra's operating model for its post-NBN future enables the group to be even more responsive and effective in defending its own vast customer base and attacking its rivals' to create a new dominance in an environment where it will, once the NBN displaces its fixed line network, eventually be free of the intense regulation it has been subjected to over the past decade and a half.”

Next was The Australian's John Durie with this offering where he takes particular notice of Shiff's appointment, something he expands on this morning (Thursday): “Telstra boss David Thodey yesterday underlined his intention to extend his domination of the telecom market by creating an in-house venture capital team to develop new applications and IT for his customers. The NBN may have removed one competition bottleneck in the industry by structurally dividing Telstra, but its real competitive advantage is its balance sheet and Thodey intends to use that to ram home his advantage.”

And finally, Fairfax's Malcolm Maiden says Ballantyne has effectively been anointed as Thodey's successor: "It's fair to assume that, with the management changes he unveiled yesterday, Telstra chief David Thodey also revealed who he expects eventually will replace him. It's Gordon Ballantyne, who joined Telstra from Britain a scant year ago: in the new management structure, he sits on top of businesses that account for 75¢ in every dollar that comes through Telstra's door."

Anyone who isn't Telstra

Telstra made it unmistakably clear during its presentation to analysts on June 23 that it could either co-operate with the government over broadband policy or suffer the enormous consequences – in this light the deal was seen as a good one.

The Competitive Carriers Coalition sees it somewhat differently according to this report in The Australian. “Why do we need a 20-year requirement of maintenance on copper when NBN Co is rolling out new . . . technologies that are capable of delivering these essential voice services?" asked CCC head of regulatory affairs Matt Healy. "NBN Co is using taxpayer funds to roll out 21st century broadband technology at the same time that taxpayers are paying for the maintenance of an ageing copper network. It's an absurd situation and it's pulling government policy in two opposite directions." Tell that to the Telstra shareholders who are being asked to give up infrastructure they paid their bottom dollar for on the government's encouragement.

Choice chief executive Nick Stace, a former special advisor to the British Prime Minister, encourages onlookers to take a long-term view when it comes to debates about cost with this piece in UK's The Telegraph: “The cost overruns have obscured any debate about the benefits of the NBN, leaving the Labor government on the defensive. Money has to be spent wisely but with the unrelenting focus on cost, Australians risk falling into the trap that Oscar Wilde described so well, of knowing the price of everything and the value of nothing.”

The Canberra Times expressed similar sentiments in this editorial: “There are risks, but little is ever achieved if we are not prepared to take reasonable risks for major benefits.” The point of contention is the definition of “reasonable risks”.

Debates about that definition could be improving, if ZDNet's David Braue is to be believed: “An increasingly introspective media this week seemed willing to step away from its incessant Labor-bashing, and instead explore the curious situation in which Abbott has been able to sway public opinion based solely on the power of his own rhetoric.” We can only hope.

Optus – the dark horse

Now that we've had time to digest the deal between Telstra and the government support appears to be emerging from Telstra shareholders, and reassurances that taxpayers are being short-changed aren't meeting the same objections. Curiously, it's the deal with Optus that's generating the most compelling antagonistic arguments.

Last week, it was Kevin Morgan, who represented the ACTU on Kim Beazley's ministerial committee on telecommunications reform, this week it's Delimiter's Renai LeMay who offers the most impassioned protest: “Optus' $800 million National Broadband Network deal is an unnecessary and unsavoury sweetheart arrangement which smacks of favouritism and will deliver Optus a war chest with which to attack smaller rivals like iiNet, TPG and Internode; rivals which will not be paid to migrate their customers onto the NBN.”

At least $100 million of that deal can explained by this story in The Australian, which details how Optus will incur significant termination payments as it unstrings the cables from telegraph poles operated by utility companies.

Filtered out

Optus joined Telstra this week by announcing that it will implement the voluntary filter that the Internet Industry Association has developed, but NBN Co and Internode will not.

NBN Co's reason is pretty simple, the technology is incompatible with its network, but Internode managing director Simon Hackett says in a post on Whirlpool that his company will only implement the filter if forced to by law: “Bottom line is this; if an existing or new law is used to legally demand that we act in a specific way, we will have no choice to comply with that legal direction, and we will. Until that occurs, it's hard to understand the merits of over-reaching ahead of such a legal direction, and engaging in security theatre for the sake of it, without any legal direction (or protection) provided for us doing so.”

The self policing system is a more moderate approach than the government's filter which has been lampooned for the potential to quash freedom of expression while doing little to stop the spread of child pornography (the primary target) amongst P2P networks.

While we're on regulation, the Australian Competition and Consumer Commission (ACCC) has made it clear to ISPs that they will be free to advertise broadband speeds of between 40-100 Mbps like NBN Co, but it will be up to them to guarantee those speeds, not the wholesaler.

Wrap up

NBN Co announced the launch of its rural satellite service last week, with products initially offered by Bordernet, Clear Networks, Habour IT and Skymesh, but the NSW Farmers Federation says people living in the country might not take up the service as swiftly as the government might like, unless more education is provided. And even if you've been hooked up to the fibre network, don't expect the entire world to be at your beck and call. That's the message from PCRange chief executive Raaj Menon who moved suburbs in Adelaide to gain access to the NBN (this is a plea to NBN Co chief executive Mike Quigley to personally connect Menon's old house to the NBN, just for a bit of a laugh). Stage two of the fibre rollout has commenced in Tasmania, though the mayor of two towns says the cables are likely to be overhead rather than underground thanks to the town's layout. Meanwhile, industry leaders in Gladstone (550km north of Brisbane, the site of Santos' LNG project) have put their case to have early access to the NBN. Deakin University is urging the government to push ahead with the NBN as it seeks to enhance its distance education program. With the new financial year came the ability for Australians to claim internet consultations under Medicare. The NBN could also provide a massive boost to GDP, according to figure from the OECD, says this article from the Australian Financial Review. And finally, someone had the courage to stand before the Australian people and say, without judgement, that pornography could be a major driver in the early uptake of the NBN. Congratulations, Jennifer Wilson, director of The Project Factory, you win this week's NBN Buzz award for telling it like it is.