Not only is broadband expensive in Australia, but it is also slow. Slow, as in painfully-slow. In comparison to other developed countries like America, Sweden, Japan, South Korea and so on, it is appalling. But what is really annoying about all of this is that it is not necessary — our Internet connection speeds are stuck in the 90′s because Telstra has a near complete monopoly on Australia’s broadband infrastructure and they aren’t afraid to use that advantage for profit and anti-competitive purposes.
As Stilgherrian explains in today’s Crikey, Telstra has the means to provide faster and cheaper broadband, but unless someone tries to compete with them, they won’t increase speeds or lower prices — without real competition, they have no incentive to.
How does Telstra do it quicker? By quietly stashing away its secret weapons, ready to be unleashed when a competitor tried to deploy their own big guns. Remember how Telstra didn’t sell ADSL2+ broadband, even from exchanges where equipment was already installed, until ISPs like iiNet started selling their own ADSL2+?
Confused about Australia’s broadband infrastructure? From the Telstra entry Wikipedia:
Due to Telstra’s position as Australia’s incumbent telecommunications provider, Telstra Wholesale is the incumbent and dominant wholesaler of ADSL services to other Internet Service Providers. Telstra installed the first DSLAMs in exchanges prior to 2000, and began wholesaling access in late 2000.[21] Telstra Wholesale has a comprehensive network of ADSL DSLAMs (the largest in Australia) and allows competitors access to each Telstra DSLAM at ADSL1 speeds.
So because Telstra owns the broadband infrastructure they can wholesale sell access to it to other companies — other companies which then sell the broadband connections to retail customers — but, not content with simple wholesale sales, Telstra has another division which sells these same broadband connections directly to the same retail customers. Which raises the question, how do you compete in a market where the biggest player owns all of the pieces on the board?
As Duncan Riley suggests, Telstra’s retail and wholesale arms must be separated for the common good.
Structural separation, as I’ve always argued is the only solution. Telstra retail and wholesale must be split for the common good. If we have the capacity to provide 100mbps connections in capital cities now, it SHOULD BE PROVIDED NOW, not in a year or two when Telstra decides to use it to undermine the competition.
They should absolutely be completely separate companies. The current setup is completely anti-competitive and is a disservice to the Australia public. Broadband is a utility and the Government should make sure that it is managed like one.
Can we stop living in the dark ages now?