Telstra has recently circulated to some media and policy makers a set of questions about another proposal to build a fibre to the node (FTTN) network by the so-called Group of Nine (G9).

T4 welcomes this contribution to the debate and expects that Telstra’s questions will be addressed by the G9 when it presents it planto the regulator in the next week, if not before. However, we note that Telstra continues to refuse to release its own network proposal for examination.

In the spirit of Telstra’s questions to G9, the T4 has 30 questions for Telstra.

Unlike Telstra, however, T4 has made these questions available to everyone - not just the media and politicians.

Following are T4’s 30 questions for Telstra. Australia waits with anticipation to hear its answers.

Unknown details of Telstra’s FTTN plan

1.    What compensation will Telstra pay competitors who have their equipment made redundant

• Optus CEO Paul O’Sullivan has indicated his company will consider suing if its investment is made worthless without compensation. This could potentially cause the courts to delay the Telstra network being built until these issues are resolved, yet Telstra has not said how it will deal with this.

2.    Where will the Telstra network be built first and why?

• It has been reported that the Telstra network build proposal will begin in those locations that are presently the best served with broadband, which are those locations where competitors have already invested. 

3.   Will the procurement process be restarted so that tax-payers and consumers who are being asked to subsidise Telstra’s network through guaranteeing its rate of return get value for their money?

• It was revealed last year that Telstra did not follow its usual contracting processes before it choose Alcatel as its network build partner. It was also revealed the Alcatel had admitted in the past to overcharging Telstra.

4.    Is it true that Telstra has in the past 10 years received about $1 billion in taxpayer’s subsidies, directly and indirectly, for regional services? Will Telstra continue to demand subsidies for regional services if it gets what it wants for its FTTN plan to proceed? Will it pay this money back?

5.    Is it true that Telstra is, according to independent analysts, one of the most profitable companies in the world? Are Telstra’s expectations of an appropriate rate of return based on its desire to remain this profitable?

6.    What will Telstra do for customers presently satisfied with a competitors’ broadband service, but are then forced to use the Telstra FTTN network and are ultimately unhappy?

• Telstra has recently admitted that it is switching some customers dissatisfied with the    performance of its monopoly NextG network back to the old CDMA network that it plans to close.

7.   Will Telstra guarantee its proposal will be for the long-term benefit of Australia and not the short term benefit of its management team?

• Telstra’s American management team was appointed on contracts of two to four years, starting in 2005.

Impact on customers and services

8.   What are the transitional arrangements for those customers presently buying a broadband service from carriers other than Telstra.

• Telstra’s proposal will cut off the copper wires connecting consumers to competitors’ equipment, leaving those customers unable to receive their present service.

9.    What does Telstra mean when it says it will offer a Bitstream service to competitors? Does that mean, for example, it will support the delivery of IPTV by other carriers?

10.  Telstra has said that it will provide ADSL2+ in those locations where it presently is refusing to turn on the service. Does this mean it plans to by pass these customers with its FTTN plan?

11.  Will Telstra guarantee that no customer will be worse off (in terms of speed per dollar) if it cuts off these services to replace them under its FTTN proposal?

• Many customers of Telstra’s competitors have received very fast broadband services for several years.
  

12.  Why doesn’t Telstra invest in a national program to fix faults before trying to force the Government to change the rules for FTTN?

• Many Australians cannot get broadband simply because Telstra has installed equipment or joins in the lines to their homes. This makes it impossible for a broadband signal to be delivered. These customers do not need FTTN to get broadband – they need their lines repaired.

Pricing

13.  What will be the prices for wholesale and retail services and how will they be set?

14.  Will these prices be determined via the established and internationally accepted methodology used by the ACCC and recently again affirmed as correct by the Federal Court?

15.  How will these prices be adjusted over time?

16.  Will Telstra pay exactly the same prices for exactly the same services as everyone else using the network?

17.  Why is Telstra insisting it gets a guarantee on the prices it can charge before it will use this process, in so doing making the Special Access Undertaking (SAU) process effectively irrelevant?

• The SAU process that the G9 is using to present its proposal was implemented in 2003 at Telstra’s behest.

18.  Is it true that Telstra has tried to insist on an increase in the Unconditioned Local Loop Service (ULLS) price in discussions about FTTN?

• The ACCC has said Telstra wanted to “artificially inflate” the price of other broadband services in order to make its proposed pricing for FTTN appear more reasonable.

Competitive and governance issues

19.  If Telstra is happy for an open access FTTN network to be built, priced reasonably, managed under clear and certain regulatory arrangements and with services that allow retailers to compete fairly, why doesn’t it join with the G9 and develop one industry plan?

20.  What will be the corporate governance arrangements around the network?

21.  How will the independence of decision-making by those managing the network be ensured so as to avoid anti-competitive practices?

22.  How will the governance arrangements for any new network ensure that the industry is not forever mired in the regulatory arms race that has resulted from Telstra’s ownership of the legacy copper access network?

23.  Will Telstra agree to an independent public assessment of its claims around regional losses before pressing its FTTN proposal any further?

• The Competition Tribunal has found that Telstra’s claims about its regional deficit cannot be accepted because the data behind these claims is unreliable. Yet this claim that Telstra is entitled to another $500 million in subsidy is reportedly at the core of Telstra’s demands from the Government.

24.  If Telstra cannot get the promises from the Government it is demanding before building an FTTN network, will it promise not to overbuild any other network that is built instead?

• In the early 1990s Telstra overbuilt the Optus Pay TV network, making both networks white elephants for many years, only to stop its build as soon as Optus was forced to stop.

25.  Will Telstra now apologise for calling the ACCC a “rogue regulator”?

• The Federal Court has again found the ACCC was acting in accordance with its legal obligations when it refused to accept Telstra’s proposal to increase broadband prices last year.

26. Why does Telstra say it cannot invest in FTTN under the established rules in Australia when it has urged the New Zealand regulator to apply these same rules in the New Zealand market, insisting they will promote investment?

Can Telstra be trusted to Tell the Truth?

27.  Given Telstra’s continual complaints about the costs of providing regional services and the increasing number of reports about the disappointing performance of the NextG network, why should regional consumers trust Telstra to be allowed to develop a next generation fibre access network?

• US West, the company Sol Trujillo ran in America, was successfully sued after he had left for failing to meet its customer service obligations and being dishonest to customers; especially to regional consumers that the company did not think were driving enough profit.

28.  Why should Australians believe Telstra’s management will not be encouraged to take short cuts along the way in response to their incentive packages?

• Independent equity market analysts last year reported that Telstra’s management incentive payments were heavily loaded toward short term objectives. An FTTN rollout would take several years to complete.

29.  One of the reasons Telstra said the G9 proposal should not be supported is that some of its proponents are partially foreign owned. Given that Telstra is presently 18.75 per cent foreign owned, and that the senior management of Telstra has continually travelled to Asia, the US and Europe to promote Telstra shares to foreign investors, is this not equally true of Telstra?

30.  How can Telstra be trusted to tell the truth about what it will offer if it gets its way on FTTN?

• Telstra for many years claimed ADSL could be delivered over only very short distances from telephone exchanges. Last year, after competitors proved that ADSL could be delivered over much greater distances, Telstra announced that it could do the same.

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About “Tell the Truth Telstra” (T4)- http://www.tellthetruthtelstra.com.au/

The Tell the Truth Telstra (T4)campaign was launched in April 2007, to counter Telstra’s campaign of misinformation on telecommunications and broadband competition and regulation in Australia.

Tell the Truth Telstra is an initiative of Australia’s leading telecommunications carriers and Internet Service Providers (ISPs) including AAPT, Adam Internet, Austar, iiNet, Internode, Macquarie Telecom, Powertel, Primus Telecom, Telarus, TransACT, WestNet and Unwired.

The Tell the Truth Telstra (T4)initiative commenced with a united complaint to the Australian Competition and Consumer Commission (ACCC) asking it to investigate whether Telstra’s conduct amounts to misleading and deceptive conduct.

The Tell the Truth Telstra (T4)initiative documents a list of Telstra’s myths and highlights their misleading nature.  An accompanying education program includes an information kit for MPs, a public Web site (http://www.tellthetruthtelstra.com.au), and a series of information sessions for MPs, exposing the truth behind Telstra’s attempt to gain relief from regulation.

PRIVACY POLICY