Telstra CEO: Survival of the Bravest

Fixed-line speedbump for Telstra
But while Telstra has its next-generation wireless network up and running, things haven't gone so smoothly with the carrier's fixed broadband plans.

While Telstra has implemented an ADSL2+ upgrade of its access network, which now covers 84 percent of Australia's 20 million-plus population, Trujillo wanted to build a fiber-to-the-node (FTTN) access network. (See Telstra Touts DSL Milestone and Telstra Unveils Next IP.)

"That's a proposal I made three years ago. But that's tied up in government processes at the moment. We couldn't agree with the last government, but we are willing to invest." (See Telstra Abandons FTTN Plan.)

He says Australia's new government, which came to power in late 2007, "has a process to get to a decision about a high-speed broadband network by the end of the year, but we'll have to wait and see. It's subject to government decisions."

And Telstra isn't the only company hoping to be the government's partner in building out an FTTN infrastructure, with archrival SingTel Optus Pty. Ltd. also ready to build out. (See Optus Plans FTTN Build.)

And Optus, which is also pushing its HSPA mobile services heavily to Australian consumers, is making as much noise as it can about the process and the possible end result, saying that Telstra should be forced into a structural separation process if it wins the right to build out the network, according to this report from Australian newspaper The Age.

So would Telstra consider following in the footsteps of BT Group plc (NYSE: BT; London: BTA) and neighbor (and rival) Telecom New Zealand Ltd. (NYSE: NZT; New Zealand: TEL) by splitting itself into separate operating units to ensure competitive transparency? (See BT Opens Up Access, Telcos Consider the Splits, and Telecom NZ Splits Up.) It's fair to say that Trujillo is not at home with that suggestion.

"No. That's the worst thing that could happen for Australia, customers, shareholders, and relative to investment. Look at the facts. BT has done it, and it has [led to] value destruction... eir in Ireland is finding that it doesn't make sense, and now Telecom New Zealand is doing it and its valuation is down. If there is no evidence of it working, why would you do it? The theory behind [structural separation] is that it fosters competition. In Australia there is already a lot of competition, so it wouldn't make any difference."

Those are statements that the likes of BT, Telecom New Zealand, and Optus would likely contest fiercely, but Trujillo is already speeding towards his conclusion: "The punchline is that you need to create an environment where companies invest."

And invest in FTTN is what someone in Australia will do -- it just might not be Telstra.

— Ray Le Maistre, International News Editor, Light Reading

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