NBN: Why Optus Is Wrong And Telstra Will Cut A Deal

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COMMENT: The recent comments by Optus CEO, Paul O’Sullivan raises serious questions about the intent of Optus and, more importantly, their understanding of basic telecommunication costs relating to the roll out of the proposed National Broadband Network.

Optus is a foreign owned company that has a mobile network that is badly in need of a major overall. Unlike Telstra who have tipped billions into their NextG Network Optus has failed to invest in their network with the Company now being sued by both business and Governments around Australia because of the failure of their network.

Yet despite this, the company’s CEO is trying to spin doctor Telstra right out of the market in the best interests of Optus and not the people of Australia. He is also trying to tell the Federal Government how the NBN should be run when he is struggling to run his own network up against the likes of Telstra and Vodafone.

Optus CEO Paul O’Sullivan works for a Singapore owned company. He claims that to be affordable and financially viable Australia’s National Broadband Network will have to become the only connection to Australian homes, and this is best achieved by breaking up Telstra.

Really Mr O’Sullivan? How do you propose to fund the last few metres between a brand new NBN fibre cable in the street and most Australian homes which already have a Telstra copper cable  connection that can already already carry the network into the home and into devices attached to the network?

How many gardens do you propose to dig up to lay the new connection into homes Mr O’Sullivan? Or maybe you prefer more visual pollution such as yet more cable strung down a street so that homes can be connected for a few billion dollars less than digging up a driveway.

For example, if you take a suburb like Camberwell in Victoria, or Cremorne in NSW you will find literally thousands of existing homes that already have a broadband connection via  Telstra. They also have lawns and driveways that would have to be dug up to lay new fibre cable into a home under your proposal.

The two options are, overhead cables that clutter a landscape, or in ground cable that in most cases will mean the digging up of a drive or lawn.

The cheapest option is overhead cables which many local Council’s are trying to get rid off because of visual pollution. At a recent briefing, senior executives of a cable laying company said that the cost of laying new fibre optic cable to a home could be as high as $20,000 per household if it has to go through the ground.

 

According to Stuart Corner at ITWire, O’Sullivan said recently “First we are convinced that the NBN can be economically viable. Second, to achieve this outcome, the NBN must be the only network delivering broadband services around Australia. Third, the best way to get there is to structurally separate Telstra so its access network becomes the foundation of the new NBN…Optus believes that if the NBN is the only network it should achieve commercial viability. But if there are two competing access networks around the country, Telstra’s and the NBN, then we think the NBN business case becomes a very challenging one.”

I don’t know who O’Sullivan is trying to kid. Remember, he is the CEO who got handed $900Million dollars by the Federal Government to supply broadband to rural Australia and after 12 months and not one single home being connected, the Federal Government took most of the money back and sacked Optus and Elders – their partners in the project.

Optus knows that Telstra is a real threat and O’Sullivan also knows that the Singapore owners of Optus have failed time and time again to invest in Optus, leaving the company’s network exposed and Optus lacking the resources that Telstra is able to deliver in the form of service personnel, call centres and physical infrastructure on the ground.

Telstra can be a real pain in the backside and at times their service is terrible, as I have written about in the past, but at the end of the day they have to be a part of the new National Broadband Network because they not only they have the resources and scope of services to deliver this network but connectivity to most Australian homes. Including Telstra in the plan will save Australians billions, while also allowing for significantly cheaper connectivity than what is being proposed by Optus boss, Paul O’Sullivan.

For the National Broadband Network to be successful, Telstra does have to be split between Wholesale services and retail, and I believe this will happen. I also believe that David Thodey, who is a very level headed business executive for several years running IBM Australia, will negotiate a win/win deal with the Federal Government and the backers of the NBN where Telstra will deliver their existing copper network into the consortium.

 

I also believe that Telstra, who have resources scattered right across Australia, are an ideal organisation to actually build out the new network and they should be allowed to tender for the building of this network.

They are an Australian company who employs tens of thousands of skilled Australians that have the knowledge to deliver this network quicker and faster than any new or foreign company.

O’Sullivan knows that what he is proposing will cost billions to implement and that every Australian will be forced to fund this network way beyond the $43 billion already being discussed, when there is an alternative cheaper option in partnership with Telstra.

What O’Sullivan should be worrying about right now is how much market share Vodafone with their new 3G network is set to strip from Optus as they both compete for 3G customers. Vodafone are smart in that they are targeting Optus customers instead of Telstra’s NextG customers, who Vodafone knows will have less network problems than an Optus customer.
 
O’Sullivan needs to spend less on spin doctors and more on his own network if he is to be taken seriously.

Right now the Federal Government is talking to Telstra and it’s all about how they can work with Telstra moving forward in the best interests of every Australian.

The Federal Government realise that a level playing field has to be built first if the whole concept of a fast National Broadband Network is going to be realised.

They also realise that without Telstra, this network will cost a lot more than the $43 Billion already being discussed and a failure to include Telstra will bog the whole concept down in a legal bunfight that could go on for years.

 

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