Australia's lagging broadband: blame Telstra

Stuart Corner
Monday, 16 July 2007 13:00

Opinion and Analysis

After the last debacle where politicians seized on 'statistics' comparing Australia's broadband performance against those of other OECD countries, only to find the data refuted by the OECD, you would think the would be more careful about making knee-jerk reactions to figures comparing Australia to other OECD countries without first checking the facts.

Thus a story today in The Australian that opened with the statement "Australia has the second-slowest broadband speed in the developed world, according to the latest international comparison by the OECD" drew an instant response from shadow communications minister, Stephen Conroy: "The OECD figures highlight what Australians already know. Australia has amongst the slowest and most expensive broadband services in the world."

Unfortunately the story in the Australian was wrong. What the OECD said was "Fastest broadband download speeds offered by the incumbent telecommunications operator." And that value was Telstra's 1.5Mbps DSL service. If you were to take 20Mbps as the highest speed available on ADSL2+ on offer from several providers in October 2006 when the data was collected, Australia would rise to joint seventh place.

Not only did The Australian mislead in its statement, it reproduced the OECD graph with a matching and erroneous title. "Fastest broadband download speeds offered by the incumbent telecommunications operator," said the OECD. "Fastest broadband download speeds offered," said the Oz. Naughty.

And as for price, if Conroy had bothered to read the OECD's report, the latest edition of its 'Communications Outlook', he would have seen that prices for broadband services in Australia span a very wide range as they do in most OECD countries and that, by and large Australia is middle of the road, although with all countries' pricing displaying very wide ranges it is difficult to say anything definitive without more detailed analysis.

With phone services the story is rather different and Australia compares badly against many other nations.

Conroy would have done much better to focus, as the Competitive Carriers Coalition did, on why our largest carrier rather than leading is, or was, lagging so badly in comparison to its international peers. But as Telstra is presently backing the ALP's $4.7b FTTN proposal, perhaps he wants to keep on side with Telstra.

CCC executive director David Forman had no such reservations "Australia's fundamental problem is Telstra's continued market dominance, which is reflected in Australia's paying some of the highest prices in the world for all telecommunications services.

"Australia has spent so much energy arguing about broadband in the past year that many people have lost sight of the bigger problem – we simply are not price competitive with the countries we consider our international peers. Australia's telecommunications market remains dominated by Telstra to an extent that is unique in the developed world."

Forman concluded: "The consequences of this dominance follow as night follows day: Telstra has a profit margin that is the envy of other incumbent telcos and Australians pay more than consumers in other countries."

Which begs the question: why don't we see stronger price competition for Telstra's competitors?