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Australia biggest ISP admits to lying

By Peter Nowak, CBCNews.ca. Last week saw an interesting revelation from Telstra, Australia's biggest phone and internet provider. New CEO David Thodey admitted to a court that Telstra had lied to block rival internet service providers from accessing its network. Under previous CEO Sol Trujillo, an American, Telstra had told other ISPs that several of its downtown telephone exchanges were full so they couldn't install their own equipment and thereby provide customers with their own services. There was, in fact, plenty of space but Telstra was playing dirty tricks to cut its competitors off at the knees.

Yikes. That's quite the admission. Telstra is facing a fine of up to $300 million Australian for its misleading and deceptive conduct. Thodey, however, seems intent on changing his company's image and repairing relations with the government, both of which were sorely strained under Trujillo. I actually covered telecommunications in New Zealand during part of Trujillo's reign and was thus exposed to it.

Telstra, like big phone companies in just about every developed country including Canada, is required by law to open its network for other ISPs to rent. The idea is that the phone networks were built decades ago when the companies were government-owned, taxpayer-funded monopolies. Opening them up for all to use is one way of ensuring that no one company benefits from that taxpayer investment, and it also encourages more competition among a number of players. The owners of those networks, however - with this Telstra case being a shining example - have often gone to incredible lengths to stymie their competitors' access.

When I was Down Under, I heard some amazing stories from smaller ISPs in Australia and New Zealand about the depths their phone incumbents plumbed in order to block competition. In one case, the phone company told the smaller ISP it had "lost the keys" to the building. In perhaps the most devious instance, the phone company demolished a bathroom in one of the buildings, thereby preventing the smaller ISP's contracted workers from entering. Government bylaws, you see, required that contractors be provided with somewhere to pee in their workplace.

What's interesting about the Telstra example is that the company's abuses were only brought to light through complaints lodged by the Australian Competition and Consumer Commission, a watchdog agency formed back in the nineties to administer the country's Trade Practices Act.

Here in Canada, the Canadian Radio-television and Telecommunications Commission referees fights between big phone companies and small ISPs all the time, with the most recent high-profile skirmish being over the issue of Bell Canada's internet throttling. But our equivalent of Australia's ACCC, the Competition Bureau, has to my knowledge never investigated any such blatantly anti-competitive charges. That either means the Bureau is turning a blind eye or these sorts of things simply aren't happening.

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neo

The difference here is between an outright block (aka preventing you from using it) and heavily limiting it though onerous procedures and unfair costs.

BCE has yet to go as far as "losing the keys" or demolising bathrooms to prevent the likes of TekSavvy from accessing GAS so the competition bureau really has no power to do anything until they start acting like Telestra did. I don't think they really care either because its a matter of consumers exercising their choice (aka living without internet if it comes to that).

If you think of it like the Iphone issue with rogers the exact same similar issue applies. If they don't like it they don't have to buy it and if the company is desperate enough they will balk to their customers.

I suspect though if the Independents start declaring bankruptcy one by one forcing a contraction in the industry then they may get involved as its politically beneficial to do so but like everything no one moves until after the fire has consumed the building.

Internet isn't essential like phone is and the competition beauru knows this. Thus staying out while these negotiations are going on (keyword negotiations) and until people are willing to cut it out completely or the independents cease to exist this climate will continue.

your also dealing with political climate right now with the fact the government is pushing for a similar state in the us (where there are no independents left) so its a policy issue rather than a competition issue. Until policy changes and there is enough political will to force the changes it will get worse and worse.

Posted August 13, 2009 11:48 PM

Avery Owen

Toronto

These things ARE happening, perhaps not to the extent of demolishing bathrooms, but the lying about full areas definitely occurs. In fact, some small ISPs have had such problems with this that they advise potential new customers to sign up with Bell for a month (no contract) and then migrate over to the wholesaler. This is because when wholesalers put in the line request, they are often told that the customer can not receive DSL or that the customer will receive a much lower speed profile.

In regards to the Competition Bureau, our Bureau consciously ignores all anti-competitive behaviour from Bell. When Bell started throttling its retail customers, they lost a large number of subscribers to DSL wholesalers. Bell then unilaterally and magically decided that their network was congested because of wholesaler traffic and started throttling their wholesalers. This was an unbelievably anti-competitive move. However, how did the Competition Bureau respond? They referred all complaints to the CRTC, claiming that all telecommunications issues were the responsibility of the CRTC.

Posted August 14, 2009 02:10 AM

Avery Owen

Toronto

(cont)
Fast forward a few months. An association of small Canadian internet providers, the CAIP, files a tariff application with the CRTC asking for access to Bell's new upgraded network. The CRTC agrees and gives Bell notice to submit their expected costs from this move. What does Bell do? Bell ignores the CRTC order and instead submits a proposal to impose Usage-Based-Billing on all wholesalers, with absolutely ridiculous overage fees of nearly $1 per GB, with no maximum penalty. The CRTC recently granted this proposal on an "interim" basis. This, despite the overwhelming submission of comments against the proposal. The CRTC even acknowledges that the proposal discriminates against wholesalers, but claims that it is not "unjust discrimination"? Huh? It is worthy to note that Bell Retail is NOT included in this proposal, and Bell only just today added a new $5 for 40GB insurance plan to its offered internet services. Smells like anti-competitive behaviour to me.

Posted August 14, 2009 02:10 AM

Ted Woodhead

Ottawa

Based on your story, it would seem that Telstra tried to block competitors from accessing its facilities. The new CEO would appear to have admitted this and Mr. Thodey is trying to take another tack, no breaking bathrooms or claiming no room at the Inn. These transgressions, if true, need to be dealt with and probably harshly. On the main CBC site it is reported that Telstra has been asked to split itself up. Is there a connection between these two stories? I have never been to Australia, but it seems extreme to deal with what you essentially describe by breaking up a company,exacting other penalties and withdrawing economic enabling spectrum from Telstra. Seems out of proportion to me if I get the gist of this. In addition, it seems odd to me that the Australian government is spending $43B(AUD) on some broadband project however noble in intent, and there is no conflict there? Is that a typo? Anyway, this whole things seems highly suspicious and the motives seem highly suspect. Breaking up a company for smashing bathrooms etc. seems highly disproportionate to the alleged offense, and the government's supposed pledge to spend $43B on broadband to the outback seems a likely candidate for such overreaction. Australia will be the poorer for it, if this is true.

Ted

Posted September 15, 2009 09:38 PM

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