New International Cables- something good from Telstra perhaps?

Just a short post on this bit now, the Now We Are Talking site, I’m putting to the test. I read this BlogToon here. The author is basically stating that SingTel is the new tax man.

I’ve put the following reply through, I find this response to be accurate, and reasonable, considering the topic of the post is suggesting that SingTel is the new tax man.

I suppose you should look at it this way.

I would much rather SingTel’s lower “tax rates” than Telstra and Bigpond’s “Excessive Tax Rates”.

Allow me to put an example here:

For a 1GB at 256k with Bigpond, the two tax years Bigpond requires you as a customer is: $3598.80 (based on the 200MB 256k ADSL plan, no phone line bundled).

For a 1GB at 256k with another ISP, the two tax years that you don’t have to stay a member for are: $865.00 (inc. Installation).

So, if you are the “tax payer” in the above scenario, would you really want to be paying the Telstra tax man, or the Exetel tax man?

Both provide the same service. Both provide consistent reliability.

I’m sure there are other examples, but I couldn’t compare to Optus, as the plans they have are all faster, and more data than Telstra’s plan, for example:

24576kb down, and 820kb up for the 1GB data area is $39.95 a month (or $958.80 over the same 2 year tax period that Telstra’s tax man requires you for).

I would start taking bets on the probability that this comment would be censored, but now we know Syd Lawrence, the friendly Telstra Shareholder in Brisbane, reads, it’s got every oppourtunity that the bets would not produce a favourable outcome.

Anyway, the post is here, and we can all certainly test the waters to see if they will go about censoring what I think is a fairly reasonable response to the topic posted.

Back to other news.

Telstra might actually be doing some good soon, they plan to build a cable to the USA. This news is great news.

Why? Well, a few reasons.

1. There are only 2 cables keeping Australia connected to the international areas, one to Japan, one to the USA. They are both in a duopoly state, and don’t generally lower prices to compete, and instead just basically price at or around each other so that they don’t get in each others faces and both make respectable high profits.

2. Introducing a new cable has the effects of:
a. Increasing competition. Telstra can go in, and get competitors signed up to use the cable at a price that is 10 – 20% lower than the current charges.
b. The above scenario would force prices on the other two to come down, to regain marketshare.
c. The duopoly situation will be broken, as Telstra, will hopefully be as an aggressive competitor as they are a aggressive body attacking the government.
d. An extra cable, even if from Telstra, will still provide more redundancy for the national network.
e. Future proofing. Capacity issues that aren’t likely to be reached in the next 10 years will be eliminated for a longer time frame.

3. The flow on effect of encouraging more to build cables: If the small $4 share price company that is Telstra can get an international cable built, the other ISPs out there getting similar dough can do the same, and heck, it might even encourage more private investment in that area.

4. Cheaper consumer services. By pushing those down to rock bottom prices (they all want to keep the business coming), consumers benefit with cheaper prices, because competition in the ISP marketplace will heat up as ISPs find better deals and can use that as a competitive advantage.

The end result of the above is a fight, or a “competition” for ISPs to find the cheapest, yet most valued deal, and pass savings on to consumers to increase profits and market share.

We likely can start to picture the situation of good quality ISPs having links by multiple suppliers at that point, so if the international link is ever broken at one point, there are certainly others to keep the traffic flowing on.

In the same related news, PIPE networks is gaining on getting its International Cable to Guam worked on. In around 2 months we’ll have a newer announcement on the project they propose.

I wonder if OPEL would be prepared to help that out? Actually, the fact is, Optus, a part of OPEL own part of the Sothern Cross network, helping PIPE get a competing cable isn’t on the agenda.

But they price it at just $200 million. That’s pretty cheap from a cable point of view. Amazingly cheap. I hope that goes ahead, because it’s certainly a great deal to get connected to VSNL, who have a keen stake in the international networking business, and will likely want to leverage that cable more to enhance it’s own international agenda.

It’s a great project from the point of view that the international network we all so much depend on gets made more redundant, with backup, and prices come crashing down.

Oh, and Sydney Lawrence hasn’t responded to my questions as yet, it’d be nice to get a response to those questions, as they are as I had said, a hot topic for a shareholder in the industry right now, and I’d be keen to know why, when you consider all those factors and the uncertainty that surrounds the issues, you’d keep such a stake in the company that could be facing a major revenue cut if things turned out bad.

I suppose they do have the PSTN network, so either way they’ll have some asset they can profit off, but still.. There are more certain areas to invest in, like Banking. I started a test portfolio on NineMSN’s site a while back, and I’m kicking myself I didn’t actually buy CBA at that point in time, they rose something like $10 odd a share in just a few months (not likely to happen a second time, but I’m no real investor, was simply playing).That was truly incredible.


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