The Australian telecommunications sector has been a mess now for almost two decades. Poor decision making by the Hawke, Keating and Howard governments gave Telstra an infrastructure monopoly that stifled competition and innovation. What is almost universally acknowledged is that Telstra should have been separated into an infrastructure company and a retail company, allowing competitors to have the same level of network access as Telstra enjoyed. This seemed an impossible task, Telstra and their shareholders were hostile to the idea and full privatisation had left the government without any meaningful way to wield influence. That all changed last week.
The announcement that the Federal Government had rejected all of the private tenders for a national broadband network and would instead build the project itself dramatically changed the telecommunications landscape. By surpassing the original proposal of fibre to the node and instead planning fibre to the home the government has completely side-stepped Telstra, effectively making their entire network redundant.
While a lot of attention has focussed on the possibility of 100 Megabit per second internet speeds to every home I haven’t seen a lot of attention paid to how this will affect the way we do things. It will mean a lot more than High Definition streaming
porn video services and fantastic ping times for online gaming, it has the potential to completely change how services and other things we consume are delivered.
An obvious starting point is telephony, Voice over IP technology is already very good, but with ADSL 2 being the most common method of broadband delivery in Australia the uptake has been relatively small as you need a phone line for your internet connection anyway. More recently ‘Naked ADSL’ services, phone lines with broadband but no voice service, have changed this somewhat, but this will be nothing compared to the impact of FTTH.
High quality, reliable connectivity means that utilities will be able to use ‘smart meters’ to ensure accurate billing and even introduce variable pricing with a lot more precision than traditional ‘off peak’ services. Home automation, presently a geeky hobby will become much more a part of our lives as we see the benefits of being to remotely access and control many of the systems and appliances in our homes.
Entertainment will also be dramatically affected as the spectrum constraints that have limited broadcast TV and radio since their inception are completely removed. Content providers will have to move to a new model because the bar for their competitors will be significantly lowered. No longer will a TV producer have to rely on being selected by one of five TV networks to go ahead with their show, if they believe that they have an audience they have a delivery medium available. It’ll mean good-bye to most video stores too, as services like iTunes movie rental and Netflix replace them.
Telstra’s copper network, the connection between homes and the network backbone, that has long been the cause of many of their competitors access problems has neatly been eliminated. With one announcement, the government has effectively induced the structural separation that been called for for years. And as a result of this, only a week later, Telstra has blinked, and volunteered to look at the possibility of structural seperation.
It seems that Kevin Rudd and Stephen Conroy have just played the best hand of poker ever. Telstra’s long winded bluff, refusing to tender properly for the initial broadband proposal, has been called. They’d gone all in but have been left with no option but to fold at the last second.