Telstra NOT to blame on HIGH regional backhaul prices?

Apparently, according to one Now We Are Talking user, it’s not Telstra’s fault they price their Regional Backhaul at the excessively high rates that they do price them at.

It seems, the real blame isn’t Telstra.

Jason Torrento has it occurred to you that perhaps the reason the regional backhaul pricing is high is that no one other than Telstra has been prepared to invest? In no way do I appreciate my tax dollar being spent to subsidise a competitors that was given a head start on full deregulation. Have we all forgotten Optus was given an opportunity to enter the Australian market prior to full deregulation? I am sure the folk at Telstra would like the best part of billion Singapore tax dollars to compete with Singtel in their home market!!

So, based on that logic, Telstra don’t control their own pricing decisions, the competitors do?

Competitors control the price, if they invest, Telstra drop their prices.

If competitors don’t invest in an area, Telstra go with the, sweet, it’s party time, High price motto?

Let’s just think for a minute about the invest decision competitors face.

Telstra were government owned and government funded. So, if Telstra needed a telephone exchange in popular town Warrangamba, they’d be able to build it, and run a fibre optic cable (backhaul) back to the nearest regional centre, and taxpayers, through Telstra’s government ownership and legislated monopoly would be footing the bill.

No other competitors have that ability, they don’t have the government ownership, government backing that Telstra had. They don’t enjoy the low risk monopoly decisions Telstra made.

They face investing with their OWN money, and not that of the governments.
They face Telstra dropping prices in the area they invest (and only in the area they invest) to squish them and squeeze all life out of them before they get to make a return on that investment.

They have to tackle Telstra’s pre-existing brand mindset that is set in many people’s minds (but is decreasing! :)).

They have to basically take all the risk, because if Telstra force them out of business by pricing them out, that’s it for them. They sit there, out of business, broke.

Telstra DID NOT face this. They were government owned. The risk was all on the taxpayers, if a link was too costly to operate and would take 3 years to make a return, it was the taxpayer that would foot the bill for that via Telstra’s government ownership.

And when Telstra didn’t see it viable to roll out infrastructure, they got government funding for it to make it worthwhile.

They built their entire network off the backs of hardworking taxpaying Australian’s. The entire network. Built off Australian taxpayers.

This network was sold off by the Howard Government for $60 billion.

Whilst it might be true over time the government was paid back, it doesn’t change many of the facts above.

Investment decisions carry large risk when you can’t just dump a bad investment decision back on the government. You have to foot the costs.

The risk is only greatly increased when you have a pig infested giant at the top, doing all it can to ensure you don’t exist as a competitor.

Losing keys to exchanges, and high priced backhaul. Two of the common tactics used.

And where you are the only competitor, they’ll price lower than you to ensure you can’t maintain market share and make a return, forcing you out of business.

So, how do you win in that situation?

How do you get “real competition”, like we all so much desire, when the pigs at the top won’t let anyone have a fair go at it, unless multiple companies invest and their power to squish is therefore removed from them?

It’s also believed that Telstra will sell at or below cost to force a competitor out of the market.

Here’s the real kicker though:

It costs the same to transmit data from Sydney to Brisbane as it does to transmit data from Sydney to any where else in the state.

However, the prices are significantly different. The reason why? A monopoly is all that exists in the areas that aren’t competitively priced.

Telstra have no motivation to drop prices, no company has the balls to invest in these areas purely because of the huge threat presented by Telstra.

It’s a strong reason to regulate the backhaul network, to encourage investment.

After investment is reaching levels such as those in many metro areas, drop the regulations. It’s not that hard to encourage investment..

Telstra could encourage it, or the ACCC can force it, or, as the case is, the government will fund Optus Australia and Elders as a consortium to deliver an alternative and put a stop to the pigs pickpocketing everyone for all they can get.

That’s why I support OPEL. That’s why I support G9. It puts an end to the greed.

Enjoy!

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One Response to Telstra NOT to blame on HIGH regional backhaul prices?

  1. Jakob says:

    This is exactly what I expected to find out after reading the title Telstra NOT to blame on HIGH regional backhaul prices?. Thanks for informative article

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