I can’t help maundering over the future conduct of Telstra, which has emerged from the telco wars of the past 10 years more dominant than ever before – and more willing to compete with its own wholesale customers for a slice of their commercial businesses.
Tension is growing among ISPs and small telcos, who broker slices of Telstra’s bandwidth to their own clients after buying it at wholesale prices. Just now there are a number of disturbing signs. For a start there’s talk that NBN Co’s $A1 billion payment to Telstra for use of existing ducts has been earmarked as a war chest to bankroll sub-wholesale pitches to the major clients of smaller telcos.
These assertions come from small telcos themselves, which having cut service costs to the bone, find themselves substantially undercut by the very carrier from which they lease their bandwidth. Sure, it’s not as if such things have never happened before. But there’s a clear conflict of interest when your largest competitor owns all your infrastructure and knows your vital statistics.
The other problem is that the only check on Telstra is its own self regulation, which even the best intentions cannot always guarantee. To my mind, the NBN will spread this conflict in all directions. Consider that Telstra is to joint manage the cutover between its copper and NBN Co’s fibre. This arrangement has been described by commentators as like ‘putting Dracula in charge of the Blood Bank’.
“Where Telstra has formed the opinion that particular information will not provide Telstra with an unfair commercial advantage over its wholesale customers, Telstra has sought to exclude this information from the definition of NBN Co migration information,” NBN Co. recently told the Australian Competition and Consumer Commission.
The criticism is at least partly justified. Telstra Wholesale was found guilty by a court of passing competitively sensitive information to Telstra Retail between 1993 and 2000. In the process of a 9-year legal challenge, Optus alleged this conduct actually had sanction from senior management.
The NBN issue relates to the fact Telstra is going to know precisely where and when the cutovers will take place, which could allow it to target its marketing. This said, Telstra’s migration plan incorporates the NBN Information Security Plan, which outlines how information it gets from NBN Co about customers’ migrations won’t reach Telstra Retail.
However, Macquarie Telecom's submission to the ACCC on this issue stated that the NBN Information Security Plan gave Telstra leeway, enabling it to avoid strict compliance without materially breaching the terms of the document.
“In a number of places throughout the NBN Information Security Plan, Telstra has adopted loose or subjective language, which has the effect of watering down the commitments being made,” Macquarie's senior manager, industry and policy, Chris Zull said recently.
As I see it, the issue for the alarm monitoring industry is the confluence of huge forces. We have a single, very dominant telecommunications provider which owns most the nation’s current infrastructure, will own key items of NBN infrastructure, and which, thanks to ongoing off-shoring, is altering its cost structure considerably. This same provider shows itself very willing to compete with its wholesale clients in a number of areas.
Changes from PSTN to IP will see the old symbiotic rebate model ending just as this same huge provider is driving the implementation of a new digital technology perfectly suited to low-cost bundling. And then there’s the advent of new products that facilitate additional services, including video verification and video monitoring.
Along with these factors, there’s this. More than a couple of informed people in the monitoring industry have now mentioned to me they’ve heard that Telstra plans to market monitoring services at eye-wateringly competitive rates. This talk is unconfirmed by Telstra but it’s a legitimate vertical and would do no more than bring the company into line with every other developed market on the planet.
Worldwide, telcos big and small are making serious plays at security monitoring. This month came news AT&T has received Five Diamond certification from CSAA for its big domestic home automation and security monitoring station in the U.S. This exalted level of certification is held by the best 150 of America’s 2700 monitoring stations. From memory AT&T only got into monitoring about a year ago.
