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The Broadband Turmoil in Australia

By sremorse in Technology
Mon May 06, 2002 at 01:26:31 AM EST
Tags: etc (all tags)

The dream of broadband is one that many a geek held during the "pre www" period of the late eighties to the early ninties, and even more so thereafter. To have a connection to the internet that was both constant, speedy, reliable and untimed was a service not many could afford let alone whether it was feasibly possible at the time (which it wasn't). So for the next 5 odd years we eagerly upgraded our analog modems, to grab those extra kilobites 5 minutes faster then before, clinging to the thought of a cheap alternative.

When one arrived it seemed too good to be true, both cable and *DSL managed to provide everything that was expected of a service such as Broadband. Generally affordable, very speedy, and just in time for the advent of streaming media and graphically intensive online gaming. As well as America, Australia also received the same treatment - services that provided a relief from the confines of snail like surfing. We basked in the glow that was Broadband, rolled it in it. We took it for granted, thinking, stupidly, that it would exist for many a year to come. The horrible truth is that it probably would, if it wasn't for a large Australian Telecommunications company known only as Telstra.

To begin, I'll just lay down a general backstory of the companies and services involved so those not living down under can grasp the situation.

Back in 1995, a company known as Foxtel was established - a joint operation between FOX Entertainment, and the Telstra Communications Company, to provide a Pay Television service to the public. As part of this agreement, Foxtel/Telstra were to rollout the biggest project since Telstra's original copper phone line development - Australia's first cable network. Billions of dollars and several years landed our favourite Telco a network that covered 93% of the population. Quite a feat for such a broad country such as this great brown land. Foxtel then began operation in 1995 after its completion and all was well.

Around this same time Telstra began developing other uses for this gigantic cable infrastructure that had cost them quite a packet, and investigated cable internet technology to provide a broadband service to customers able to be connected to the said network. Tests were run, trials were made, and eventually Telstra rolled out Bigpond Advance Cable - the first of its many Broadband options. Providing unlimited usage in both bandwidth usage and speed, it was the perfect solution to those who could afford it at the time. Meanwhile, Australia's second largest Telco, Optus, was developing a simular (but smaller) rollout of its own cable infrastructure, to run both a PayTV service (OptusVision) and Cable Internet Service (Optus@Home - A licensed version of the American @home cable service).

By the end of 1997 both Optus and Telstra were growing their respective customer bases, both providing unlimited services to generally satisfied customers. It was around this time and into 1998 when the differences of quality in service and other factors began to appear.

* Since Optus was using the @Home equipment, manuals and setup - it had both an established link and portal with Excite, a reliable and established network (DOCSIS), and @home trained engineers and techs. This provided customers with a service that was well recieved.

* Telstra had decided to develop their own network completely - using their own techs, technology and a network based on a non-standard Motorola system. Customers would complain of random cutouts, much downtime and unsatisfactory helpdesk support. (NB: They eventually migrated the majority of their users over to a new DOCSIS network)

Either way, customers with either service were generally satisfied with their broadband experience. It wasn't till 2000 when Telstra introduced a download cap onto its heavy user "Freedom Deluxe" plan of 512kbps - which, as you may guess, was not accepted favourably. Usage was kept unlimited, but not for long.

Over the next few years, Telstra raised prices, induced a 3 Gigabyte cap (per month) onto the freedom deluxe service. It then continued to restructure all other plans to smaller usage amounts, raise the price yet again, but did (as of March this year) uncap the download speed, but by then the price was over $90 Australian ($45 US) for a substandard service in many regards. The same treatment has been placed on Telstra's ADSL service - the only differences being ADSL's higher price tag. Its also interesting to note here, that Telstra own the only wholesale market for ADSL service in Australia. All of their compeditors buy through them at prices barely lower then Telstra's retail residential pricing.

Optus, though, grew a fantastic name for itself during Telstra's drastic race for cost cutting, by regulating usage using a NetStat system, which provided a fair way to prevent "leeching" from its service. The NetStat was a number generated daily based on the downloads (uploads are not counted on Optus) of the user over a rolling 14-day period. To put it simply - an O@H user could download 10 times the daily average per day, which averaged around 60-70mb (600mb/day). You weren't restricted, but to keep your NetStat below the cutoff of 10, keeping to 19/20 Gigabytes a month and keeping a simular average of use per day is perfect. The price stayed the same, installation costs dropped, and they renamed themselves to OptusNet Cable Internet, after the recent collapse of the @home corporation. Optus Cable is currently noted as the best Broadband service in Australia. Unfortunately, Optus's rollout was only restricted to 3 cities, Brisbane, Melbourne and Sydney, after funding depleted.

And so the turmoil begins. With costs so high for a substandard service such as Telstra's, both with ADSL and Cable, many users do not have a choice but to stick with their capped plans. Their ADSL competitors (numerous as they are) can only offer simularily priced plans, due to Telstra's monopoly over copper line and exchange ownership. To turn a profit, and earn customers, they must provide an edge their service, which can be difficult when Telstra gives no sympathy to its wholesale pricing.

Over the last 2 years, Bigpond users have had to deal with:

- Numerous mail server problems
- Login and authenication problems
- Lengthy Nation wide service outages
- Below standard (and occasionally abusive) customer support
- A 3GB cap with incredibly high extra mb charges
- Billing errors based on incorrect usage rate collection
- Bills appearing up to three months late
- Deletion of customer websites
- Failure to pay promised compensation
- 2 Major price increases

Optus does not currently provide ADSL services, and its rollout was small, and scattered. It provides a fantastic service, but only to those lucky enough to live in the varied "patches" of cabled area in the 3 cities. Optus also refuses to cable Unit and Apartment blocks, leaving suitable customers those living in houses. It has been known, among the diehard, to move house to GET Optus Cable, the BB situation being that desperate.

So, as you can see - the story of Australian Broadband is getting worse a lot faster then it is becoming improved. With more supposed price hikes on the way from Telstra, a promising ADSL provider known as XiS having major troubles getting on its feet, and the unfortunately flawed Optus rollout, its looking very grim for Australian internet users. Especially from what was once a top 10 broadband contender in the world, is now barely in the top 20.

So while you download that Linux ISO over that T1 dedicated pipe without a care in the world - spare a thought for us little guys down under.


Voxel dot net
o Managed Hosting
o VoxCAST Content Delivery
o Raw Infrastructure


Should current Telstra customers....
o Ditch Telstra and find another ADSL provider? 48%
o Go back to dialup? 14%
o Move house to get Optus? 25%
o Continue to get shafted? 11%

Votes: 27
Results | Other Polls

Related Links
o Also by sremorse

Display: Sort:
The Broadband Turmoil in Australia | 39 comments (31 topical, 8 editorial, 0 hidden)
The obvious solution (4.20 / 10) (#4)
by greenrd on Sun May 05, 2002 at 04:42:07 PM EST

Nationalise Telstra - turning it from a profit-making entity into a public utility working for the public good. It's a monopoly already anyway, so competition isn't buying you anything. And Internet access is as much a public good as public education or the telephone service, so it should be treated as a public utility like electricity.

Of course, nationalisation tends to be politically "unthinkable" among politicians in this day and age (which is not to say that it is necessarily unpopular with electorates). Perhaps your only hope is for an exceptional case, for Telstra - like Railtrack in the UK - to go bankrupt, thus providing an excuse for nationalisation. In this case, a good strategy might be to press for stringent regulations and/or price controls that Telstra couldn't meet without either going bankrupt or offering an acceptable service.

"Capitalism is the absurd belief that the worst of men, for the worst of reasons, will somehow work for the benefit of us all." -- John Maynard Keynes

Hah. A broadband amtrak. (5.00 / 3) (#7)
by rebelcool on Sun May 05, 2002 at 05:32:01 PM EST

On the contrary, nationalizing things tends to make them far, far worse. It's a monopoly with no higher market accountability.

Nationalizing telcos tends to have the effect of:
Poor service. As anyone knows, getting fired from a government job is damn near impossible in most countries.
Poor equipment. Government budgets are often tighter and more misdirected than corporate ones. The $10,000 toilet seat and other ridiculousness consumes a large portion and leaves little for what REALLY needs upgrading.
Little incentive to upgrade. Being the only legal game in town, nobody is going to pressure them to upgrade to better equipment, better people, service and so on.

The telco world is not like the electric company. Electric service hasn't changed a whole lot in the past 100 years. Telephone has. If you look at most countries with nationalized telephone systems, they tend to be obsolete and expensive (ever wonder why cell phones are more popular in european nations than america? america's land line phone system is superior and cheaper)

The real solution is to smash the monopoly and provide incentive for competition to come in and force telstra to give up its terrible policies, upgrade its equipment and provide better service.

COG. Build your own community. Free, easy, powerful. Demo site
[ Parent ]

US Cellular Phone System (4.66 / 3) (#14)
by Tom Rowlands on Sun May 05, 2002 at 07:07:30 PM EST

ever wonder why cell phones are more popular in european nations than america? america's land line phone system is superior and cheaper

No, it's because the US phone system is a mess. As opposed to Australia where because we had a nationalized phone carrier there was an authority to say `OK guys, we're using GSM.' Australia has massive market penetration of mobile phones because of it. (Wheather or not this is a good thing is a separate issue.) That the US phone system is a mess is also the reason the US (and Japan) is one of the few places I can't take my mobile phone with me and have it `just work anywhere in the country' like I can with most of Europe.


Tom Rowlands
(Sorry, I can't sign this.)

[ Parent ]

monopolies (5.00 / 3) (#12)
by mideast on Sun May 05, 2002 at 06:03:09 PM EST

Nationalized or not, a monopoly is a monopoly. A nationalized monopoly may be more desireable than a private monopoly, but it still won't hold a candle to a dynamic competitive marketplace, where if you don't keep up and give customers what they want, you're toast.

[ Parent ]
They were before. (4.75 / 4) (#16)
by daniels on Sun May 05, 2002 at 08:11:33 PM EST

Telstra originally started life as the Postmaster General, a government department that did both post and phone. Then the departments spilt to become Australia Post (now AusPOST), and Telecom Australia (now Telstra, because it sounds cooler). Telstra is semi-privatized - 49.9% of it is privately owned (no-one has a significant interest, all small private investors), and 50.1% belongs to the government.

While Telstra is always a "buy, buy, buy" stock, what the shareholders are forgetting is that what's good for the share price is bad for people who own phones. That's them. They make profits off the shares because Telstra are a scammy bunch of pricks, not realizing that they're being caned by Telstra's rip-off merchant style of operation, too.

Apparently they're exactly like BT in the UK. As everything2 says about "British Telecom":
"Fucking, fucking, *fucking* bastards."[1]

[1]: http://www.everything2.com/index.pl?node=British%20Telecom&lastnode_id=71422
somewhere in space, this may all be happening right now
[ Parent ]

The Australian situation is _far_ worse (none / 0) (#31)
by thebrix on Mon May 06, 2002 at 01:48:01 PM EST

Doubtless I'll be jumped on by the "we've never had it so bad" brigade, but the events in Australia are just horrible. BT would get away neither with three price rises in quick succession, nor the imposition of metering.

[ Parent ]
oh god (5.00 / 2) (#22)
by eviltwin on Sun May 05, 2002 at 09:34:16 PM EST

When they were nationalised their service was even worse and they had no accountabiity what so ever - believe me this not a solution to the problem.

All generalisations are false, including this one.
[ Parent ]
Wrong. (5.00 / 1) (#36)
by static on Thu May 09, 2002 at 12:27:05 AM EST

Whilst it might be the obvious solution, the problem with it is that the current Communications Minister (Richard Alston) is a bit of a ... well, I'll let you imagine a suitably vile epithet. Australian Personal Computing had an article the other month about AU's broadband problems; apparantly Microsoft, Cisco and several other people went to him with a large report basically saying "Broadband in Australia is broken: fix". He essentially ignored it.

And as far as ADSL goes, the solution is to spin-off either BigPond or the POTS copper completely from Telstra. The problem is that because Telstra is selling services to itself, the ISPs are in the unenviable position of competing with the same company they have to buy a service from.


[ Parent ]

What's even worse is... (4.00 / 4) (#5)
by Detritus on Sun May 05, 2002 at 05:14:28 PM EST

What's even worse is the way that American users just don't make use of their uncapped connections. I know people who gripe about the speed limits (there are speed limits, but no monthly download limits) but when I ask them "What's your computer doing now?" they say they've turned it off. And damn, does that make me mad!

To me it doesn't really matter whether it takes an hour or two, as long as it gets done. I don't have broadband (can't bring myself to cough up the 50 bucks a month), and I sincerely weep when I see a connection unused. I mean, come on, just think of all the money you could be costing the music industry if you just left the connection on, if not to download music, then just to share.

Please, you who have been blessed with broadband, use it and share it. Run Kazaa, set up an open wireless network, do something!

Kings and lords come and go and leave nothing but statues in a desert, while a couple of young men tinkering in a workshop change the way the world works — Havelock Vetinari

but that just drives up prices (5.00 / 5) (#10)
by Delirium on Sun May 05, 2002 at 06:01:00 PM EST

If everyone makes full use of their cablemodem connections 24/7, then the price will go up, because $40/month simply isn't enough to pay for that level of data transfer. For example, I can average around 40 kB/s upstream and 250 kB/s downstream simultaneously. If I keep that up for a month, that's ~750 GB of data transfer. If all cablemodem customers transfer ~750 GB of data per month, you can bet it'll no longer cost $40.

[ Parent ]
breakup (4.66 / 3) (#6)
by mideast on Sun May 05, 2002 at 05:20:01 PM EST

Isn't Telstra a monopoly telephone company? If that's the case, a breakup might be in order. In the US we used to have a monopoly telephone company, AT&T, which was broken up in the early 80s. The result of this was a that long distance prices quickly fell, and later long distance prices decreased. If there was some credible competition for broadband, Telstra wouldn't be able to get away with such poor service.

Oops (5.00 / 1) (#8)
by mideast on Sun May 05, 2002 at 05:36:45 PM EST

"The result of this was a that long distance prices quickly fell, and later long distance prices decreased."

That doesn't make a whole lot of sense, does it? I ment to say that long distance prices fell first, and then later local prices started to go down. There's some pretty intense competition in the American long distance market, and prices have been plummeting. There's less competition for local service, so the effect hasn't been as great, but that could change because cell phones are starting to compete with landlines.

It should be noted that in America, telephone companies and cable companies are usually separate, so cable and ADSL companies complete with each other. It seems that in Australia, Telstra owns everything communications related (both cable and telephone networks), hence even less competition and shit service.

[ Parent ]

Bit of trivia (5.00 / 2) (#19)
by cafeman on Sun May 05, 2002 at 08:46:37 PM EST

Telstra is the only full service telecommunication provider in the world. It provides wholesale services (owns the network), retail services (PSTN and data), and wireless services (mobile telephony). And, it probably shouldn't.

"No Silicon heaven? But where would all the calculators go?"
[ Parent ]
Its pretty sad (5.00 / 1) (#11)
by hovil on Sun May 05, 2002 at 06:02:29 PM EST

Even when you use another ADSL provider (like me) telstras poor service shines through, when I organised to get ADSL connected I had my normal phone disconnected for 7 days instead! They fixed my landline but I didn't get my ADSL service connected properly until 2 weeks after. Finally things started to work.

Its kind of sad that the only stage that telstra has to be involved in this whole process ( they own the exchanges and are a bit anal about letting people in to install the adsl cards, so isps have to go through them to setup ADSL for their customers) they manage to stuff up on such a huge scale.

Some additional quick points (5.00 / 3) (#18)
by cafeman on Sun May 05, 2002 at 08:44:32 PM EST

Broadband seems expensive on Oz, but it has a lot to do with the exchange rate. At the moment, you'll pay around $80 for a 3 gig limited 512kb connection. That's $40 US. Probably much more expensive in comparison to what you get over there, but think about the difference in market size and penetration - we're stuck in a chicken and the egg situation here. Broadband is too expensive, so its uptake is slow, and until the uptake picks up it'll remain expensive.

And now for some links - here's a link to Broadband Choice, a site providing broadband options for capital cities in Australia. Here's a link to Whirlpool, the premier broadband community in Oz.

Telstra is probably overcharging, but I'm sure there are a lot of complexities behind the scenes. Based on my previous experience, it probably has more to do with a collection of poor historic decisions and organisational paths than pure malice and greed. But anyway, that's beside the point and doesn't really help us that much. Also, I'm sure other people here will rant about Alston (our telecommunications minister), so I'll leave that to them.

Also, Telstra used to be government owned, but is now 49% a public company (51% government owned). It historically had an engineering focus, hence their bad customer relationship management. It's pretty much stuck between a rock and a hard place, given it's supposed to be turning a profit while also acting as a public good (given the breakup in ownership). There are rumours that the retail arm is going to be split off and the infrastructure made a public good again, owned by the government.

Basically, the entire thing is a huge cock-up, with no easy solution. My guess is that broadband in Oz will continue to be very average until wireless becomes a commodity (802.11b). Until then, we're stuck. Making the network government owned would probably ease the pain, but from what it sounds like, the reliability issues of DSL etc from Telstra smack of bad implementation decisions (which aren't going to go away soon, given the huge deployment costs associated with a rollout).

"No Silicon heaven? But where would all the calculators go?"
+1 even (5.00 / 3) (#21)
by eviltwin on Sun May 05, 2002 at 09:22:45 PM EST

As someone who has been involved daily in ADSL and network bandwidth issues since before ADSL came into australia it's good to see a fairly good article on this subject - you have a few mistakes but on the whole good picture

* Telstra had decided to develop their own network completely - using their own techs, technology and a network based on a non-standard Motorola system. Customers would complain of random cutouts, much downtime and unsatisfactory helpdesk support. (NB: They eventually migrated the majority of their users over to a new DOCSIS network)
You also need to be aware of the debacle for Telstra over their widespread use of RIMS technology (remote multiplexors) which they were forced to use extensively as the suburbs spread across the country - exhanges are'nt cost effective in this situation - these have left telstra with massive problems as they don't cope with data very well. The issue of remote areas also needs to be considered - it wasn't (and indeed isn't) cost effective to upgrade all the older SXS and Stepper (electreo mechanical) exchanges in most country areas to digital due to small numbers - many older country exchanges service 5-10'000 people.

Optus does not currently provide ADSL services, and its rollout was small, and scattered. It provides a fantastic service, but only to those lucky enough to live in the varied "patches" of cabled area in the 3 cities. Optus also refuses to cable Unit and Apartment blocks, leaving suitable customers those living in houses. It has been known, among the diehard, to move house to GET Optus Cable, the BB situation being that desperate.
Optus does provide ADSL - until now it has only been business but that will be changing - their cable rollout was stopped in many areas by residents groups and busy bodies who objected to the cables being strung - the issue of apartment blocks has a lot to do with infrastrucuture costs, building codes, leasing (owners of apartment blocks want rental for the sapce needed to install a distro panel) etc - it's not as cut and dried as you think.
With more supposed price hikes on the way from Telstra, a promising ADSL provider known as XiS having major troubles getting on its feet, and the unfortunately flawed Optus rollout, its looking very grim for Australian internet users. Especially from what was once a top 10 broadband contender in the world, is now barely in the top 20. - As i write this i'm rolling on the floor laughing
- XIS is anything but promising in fact the company is simply an onseller of services with no technical skills, no owned infrastructure and no financial backing run by a 20 year old with no social skills out of a small computer store in suburban Brisbane, they use Comdininco to provide dial up and possibly netspace to provide ADSL (been promising this to customers for 8 months now) - a quick read of the Whirlpool posts on the product and better yet a visit to their IRC channel #XIS will give you a unique understanding and the interesting sight of any one needing help or having a problem with them being banned or glined having first been abused. They do however have an excellent website (if the links are working).

The reality is the australian broadband industry is a mess but this is a reuslt of government indecision, rampant greed from telstra and a huge landmass with a small population base - infrastructure costs a lot of money and we have fairly cheap services in comparison with the world - it's easy to compare this offering in AU with the US and say we get ripped off - but economoies of scale (18 million pop versus 300+ million) mean that it's always going to be like that.

Broadband has not failed and i would not describe the Optuse rollout as flawed - the legal environment meant that councils slapped bans on them stringing cable and telstra hampered their every move with full goverment support - the optus rollout is nowehere near finished (watch for their consumer ADSL rollout starting very soon) as an Optus cable customer i can tell you it is the finest service i have ever used with 100% uptime and reliability (something i suspect you may agree with as a customer yourself)

Good article and the XIS stuff even gave me a good laugh, well done

All generalisations are false, including this one.

Thanks! (none / 0) (#23)
by sremorse on Mon May 06, 2002 at 01:47:30 AM EST

For some good points that I missed. I used the majority of my information from personal experience and gathering from various sources including whirlpool. I could have been generally more through but I left it up to the Australian readers (such as yourself) to fill in the blanks :)

Yes, I do use Optus cable, I love it :) But I mentioned it the rollout being flawed due to the erratic layout of the network. Money and council restrictions stopped it firm, but that still means that 2 people living on the same street can not both get Optus, only one can.

Thanks again for the comments I missed :)

"Life sucks, get a fucking helmet." - Denis Leary.
[ Parent ]

Optus (none / 0) (#24)
by eviltwin on Mon May 06, 2002 at 02:08:32 AM EST

Yes thats the flawed thing about it - the widespread figthing by councils to stop them damaged the rollout and they put a lot on hold - you may find they do more roll outs in the future but i suspect for the next 12-18 months they willn concentrate on getting their consumer ADSL up.

The reason they didn't provide the service before had a lot to do with telstr's exchange isues - the brodband cable itself is still provisioned by telstra and thats the problem - it's not so much an issue in city and business areas as they have run fibre thru a lot of the major CBD's (155mb fibre thru sydney, brisbane, melband perth cbd in loop - several companies have done it)  Cable meant they didn't have to deal with telstra.

good article man, very well written, look forward to reading more by you

All generalisations are false, including this one.
[ Parent ]

Misleading? Things aren't that doom and gloomy. (4.00 / 2) (#25)
by vastor on Mon May 06, 2002 at 03:48:18 AM EST

The body of the article makes it sound as though 93% of the country has access to the Telstra cable infrastructure, which obviously isn't the case.

I don't think there is any evidence that service has improved with Telstra since they were partially privatised either.

It's not really a comprehensive rundown of the situation either, since there are regional players out there. TransACT in the ACT is providing broadband capacity (albiet not at much of a better deal than Telstra from what I saw), Saskatel is supposed to be wiring up Newcastle and may well offer quite a good deal.

One hopeful sign as well is that wholesale data costs are much lower than they once were - only a few years ago it'd have been a dream to get data at 5c/mb, there is slow progress going on, it's just very dispersed.

It's also probably worth considering the idea that maybe cable networks have been setup and running at below costs. Just look at the restrictions starting to take place in the USA, in some cases they're not a whole lot better off than we are.

There has also been a lot of quiet rumbling about wireless internet access providers. Little seems to have eventuated thus far, but something is bound to start emerging sooner or later. Data caps are likely to persist just because of how we fit into the big scheme of things, they'll probably slowly improve, but I think a 3gig cap is quite reasonable - anyone on the internet 100hrs a month would need to average 30mb/hour to exceed it. I'm surprised the cap isn't lower, actually. Odds are 99% of people not engaging in illegal activities online wouldn't exceed 1gig a month anyway (which isn't to say I don't think it is bad that internet business is stiffled due to the costs they face, but home users don't have it that bad except for reliability issues). Broadband has largely failed to deliver much of use thus far anyway, odds are as things actually come out that make it useful then it'll probably become more accessible.

So as you can see, it's mostly greedy users that expect to be able to suck down dozens of gigs of data that are simply getting what they deserve. The bulk of the gripe is just about nothing new - very little has changed in the broadband situation in a fair while - things aren't any worse (the unreliability isn't new, though ADSL has made things available to many more people). People who can't get a decent 56k connection I'll have sympathy for, but 3gig limits on ADSL/cable are quite reasonable for the current state of the internet (and below the average optus user figure provided too, which is probably exaggerated by those that do download from the internet as though it was going to disappear in a weeks time).

No turmoil in Australian broadband. No doom and gloom. No massive decrease in service. Just the same settling of markets as is taking place elsewhere in the world as comapnies start taking a firmer grip on things (it's only a few years ago that dialup modem accounts had no download restrictions, but as people started leeching they brought it in - it's a natural reaction to abuse, not a massive downgrading of the system - we're just seeing the same thing happening more slowly on broadband as we saw on modems is all).

People who move just to get broadband are just sad and have bigger problems than 3 gig limits IMO. Extra mb charges aren't "incredibly high" either, they're less than wholesale was a few years ago to small ISPs. It may be excessive, but Telstra is like that across the board and the broadband situation is hardly in death throws.

The whole article is making a mountain out of a mole hill. Authentication problems have occured at most ISPs (whether they be Ozemail, Telstra, Dingoblue or Optus), Telstra just manages to stuff it up more than average - service comes second to profit with Telstra, a well established and long standing problem.

Interesting but (none / 0) (#27)
by eviltwin on Mon May 06, 2002 at 06:14:50 AM EST

Good thoughts and some things that occured to me.

Transact are an interesting company - they began as a cable TV provider in canberra and have branched out - they have it seems excellent financial backing and might shake up the market however their mandate is only ACT coverage - it was a joint ACT government project to provide a FTC (Fibre to Curb) networking solution for future expansion - and are unlikely to ever move out of the market due to cost - however this raises the question of Regional based providers - the option of regional Cable TV coverage / Cable services has never been tested here and might be a good broadband solution however the capital start up costs are massive which is the think you mentioned in below cost comment.

Sasktel look interesting but are an overseas player with good financial backing - still getting a network up and runnning takes time and money and poses the question about why start in an area like newcastle which is suffering from a depressed economic base and massive unemployment ?

The comment on data limits is interesting but it needs to be said that on a fast connection 3gb is very little - however you made the point -

but I think a 3gig cap is quite reasonable - anyone on the internet 100hrs a month would need to average 30mb/hour to exceed it. I'm surprised the cap isn't lower, actually. Odds are 99% of people not engaging in illegal activities online wouldn't exceed 1gig a month anyway (which isn't to say I don't think it is bad that internet business is stiffled due to the costs they face, but home users don't have it that bad except for reliability issues).
Missing the point that the reason people fork out $300+ install fees and up to $80 month in connection fees is to get large download limits and speeds and be online - i used to use 150 hours a month on my previous dial up ISP ands pulled down approx 3-4gb - sure a lot of that might have been mp3's but hang on the ISP's want users to do that - thats the sort of user they are after and the 'illegal' term is subjectively bandied around - you can suck down 3gb a month easily without touching 'illegal' stuff - pull down the 3 CD set of mandrake 8.2 - theres half your monthly limit gone. The download limit argument won't go away as Neighbourhood cable just found out the other day.

Telstra charges a minimum of 15c a Mb for bandwidth and i think it is dearer - i pay 7.5c for my links at work and the company i use has consistenlty made profits - telstra makes a lot of money out of it's services - $4 billion AU last year- and plows very little back into resolving the reliability and service problems they created to save money when they were first provatised (i encourage you to read about RIMS and other systems used commonly as a cheaper alternative in the mid-late 90's to lower costs and increase profits thus increasing the share price).

No turmoil in Australian broadband. No doom and gloom. No massive decrease in service. Just the same settling of markets as is taking place elsewhere in the world as comapnies start taking a firmer grip on things (it's only a few years ago that dialup modem accounts had no download restrictions, but as people started leeching they brought it in - it's a natural reaction to abuse, not a massive downgrading of the system - we're just seeing the same thing happening more slowly on broadband as we saw on modems is all).
Hmmm - sorry but there is doom and gloom - Telstra have limited competition and are likely to be fully privatised by the end of 2003-2004 - they own the infrastructure (the silliest decision ever made by an australian government) and have no desire to make it easier for anyone else. Optus have basically threated to close their cable internet and cable TV operations (which make a loss) if the Foxtel merger is stopped. Companies such as Comdinico are in finnancial trouble, our friends XIS are putting ADSL customers off until mid june (after and 8 month wait already for some) and there's this gem from whirlpool :
Telstra plans to increase broadband internet pricing again by up to $25 per month, according to credible information leaked to Whirlpool by a Telstra insider.

All plans will be affected, with prices rising by at least $10 per month. The 3GB residential plan is likely to be hardest hit, with the possibility of a rise in the order of $25 per month.

Whirlpool has learned that Team Leaders within BigPond Broadband have offered bonuses to staff if the price increases are successfully implemented, a tactic which shows that Telstra realises the audacity of raising prices for the third time in a little over a year.

The source stresses that the decision hasn't been finalised yet within Telstra. It's my hope that if the inevitable negative consumer response is felt within management ranks, it's possible that it won't happen at all. We can only hope.

As telstra lubes up the market once again for a price sting the question that is on everyone's lips is who will survive in the australian market ? Ozemail continues their philosphy of ripping the heart out of any ISP that looks a little shaky (examine their 12 month on again off again purchase of asia on line only to pull out and bankrupt the company and then ride in on a white horse and save the day.

This will be an intersting year for broadband in australia.

Note - : Dingoblue declared bankruptcy 2 weeks ago and cease service on may 16th - another one bites the dust, and this raises the question of the stability of Transact of whom AGL (owners of DingoBlue) are a major shareholder.

All generalisations are false, including this one.
[ Parent ]

You were an unprofitable exception, not the rule. (5.00 / 1) (#29)
by vastor on Mon May 06, 2002 at 08:36:01 AM EST

Regional cable will certainly make for an interesting experiment. If TransACT and Sasktel show that it can be done, then I'd imagine that we're likely to see more competitors entering the field. Going for the middle tier cities is probably a sensible tactic since it means that can provide fairly complete coverage for a city and thus get a good reputation for being comprehensive and a loyal backing without the massive capital injections. The messy cabling of Sydney etc earned Telstra/Optus plenty of ire, hopefully something these companies will do.

As for why Newcastle for Sasktel, I'd think because it is a fairly good base and pretty similar to their home territory. I doubt they have huge cities in their province, so Newcastle is probably on par with places they've done before. I'd hardly say Newcastle has a depressed economic base anymore than most other regional cities, unemployment may be double that of Sydney's but apparently cable services are fairly popular amongst those on unemployment benefits.

I thought they may have made some kind of bargain with the city council to get things going smoothly, however apparently they don't do a whole lot more than have monthly briefings to keep them up to date (which they don't really need to do, since telecommunication companies have all sorts of nice legislative powers). I'd suspect that Newcastle may not be the start but more the whole project, but it's hard to tell (my impression was that they were more about developing a good system using other peoples capital and that quite possibly they aren't too interested in being here for the long haul - Sasktel, that is).

$300 install fees aren't a whole lot, I remember buying a 28.8k modem back in the BBS days for $500. I'm not interested in making the download limit go away - just saying that downloading more than 3 gig a month is more than is a reasonable expectation for a typical home user. Lots of people don't have time to spend 150+ hours a month on the internet. Of course you can download gigs without ever doing anything illegal, it's just abnormal and quite possibly statistically insignificant.

On a fast connection 3gig is ample. Thats more than the average optus user uses going by the stats provided by the poster. Chop off the top 10% heaviest optus users and quite possibly none of them would be affected by a 3gig limit.

People should vote with their feet with Telstra. Either the 3gig a month is worth the $100 they'll probably end up paying a month or it isn't. I'm annoyed enough with their plans to keep on increasing the line rental costs and plan on dumping my perm modem link sometime in the next few months to cancel its line, but I made the transition from 512kbit down to 33kbit well over a year ago and it had pretty minimal impact. Part time will mean no more running web servers etc on my home machines, but thats not anything too dramatic.

The more Telstra increases their prices, the more viable it is for competitors to enter the game. I still expect to see something happening with the wireless internet situation sometime in the next year or two. But to be sane about reasonable downloads, pricing data at $50/gig means it is a bit foolish to expect anyone to let users download more than $150/month when they're paying almost half as much for the service.

Telstra is just doing what they've always done, I just don't see anything new in their actions. They screwed up ISDN here when it could have made us a leading connected nation, they've not managed to stuff things up quite so badly yet with ASDL/cable.


The above pricing may still be somewhat steep, but compared to what you had to do in the past to have similar speeds there are some nice savings to be had. The minimum montlhy charge for a business at 256/64 is much the same as it once cost for a single 64kbit ISDN channel to be always on except for with no data included at all.

Is everyone still getting fleeced? Sure - the Telstra profit margin says that clearly enough when they make $200 in profit for every person in the country. However I'd still maintain it isn't a doom and gloom situation.

The type of user ISPs want aren't the ones that hang around downloading gigs of mp3s. They want the professional types that come home from work, like that they can visit websites faster than before but in many cases probably don't download a whole lot more than they did on dialup. No dialup ISP wanted users downloading gigs - thats why so many implemented the 300mb/month caps. Users that you lose money on can either learn to moderate their usage or go elsewhere (and is probably part of the reason why Dingoblue shutdown).

'Click and drool' users. Thats what ISPs want. 2-3mb/hour was pretty much the standard for dialup users two years ago (no idea what is now). Less than 5% of users would deviate from that to a marked degree. The likes of kazaa etc has probably altered that somewhat these days, it'd be interesting to see the latest figures.

I'm all for giving Telstra a wakeup call, just think people are over-reacting. 5.3c/mb was the best deal I saw offered for data supply to a medium level ISP - obviously firms that are serious don't use Telstra, but it's a bit foolish IMO to expect consumers to be getting better deals than the bulk of wholesalers.

I've read bits and pieces about NI RIMS and the like (though it has been a /long/ time since I followed aus.net.access or whatever newsgroup they used to get mentioned on), I'm not a fan of Telstra by any means. I just don't expect any better from Telstra and plan on using alternatives wherever possible. The bigger Telstra's profit gets the more fish are going to want a piece of it. I'm confidence that patience is all that's required to see the situation resolved.

[ Parent ]

Very true (5.00 / 1) (#30)
by eviltwin on Mon May 06, 2002 at 09:08:09 AM EST

Great point about telstra, i admit i might be an abberation - my living is IT and that has to be taken into account.

I do think that the market needs a shake up but the worrying thing is that if people leave telstra for other ADSL providers then telstra will simply increase wholesale pricing forcing the other providers to raise prices or go broke - sounds extreme but it's not beyond them.

I am intrigued to see how saktel goes - the messy telstra and optus cabling was (as mentioned in my parent post) heavily due to councils and residents groups campaigning against them on a number of reasons - this left the rollout's fragmented and patchy - i suspect we may see a change as optus for one has to get more customers connected to make money but then again they are now pushing a satellite option and rolling their ADSL from business into consumer.

Time will tell? worth watching for me.  Thanks by the way for an excellent conversation - its late now but i will read your comment thru again toomorrow and see if i can come up with another counterpoint to dicuss if you like.

All generalisations are false, including this one.
[ Parent ]

They aren't? (3.00 / 1) (#28)
by Sleepy on Mon May 06, 2002 at 08:09:18 AM EST

From where I'm sitting, I'd say the situation is looking really bad. At least when I compare it to what we have in Sweden. Here, the worst problem most broadband users have to face is usually having to logon with a username and password to the broadband service each time the computer is restarted (and ISP:s that use this model are very disliked for it, I might add), and prices levels average something roughly equivalent to 30USD per month(though increases in pricing should be expected within the next few years). A few ISP:s have tried using download caps, but it has been very unsuccessful so far. Nobody accepts it. And I don't see why they should.

You make a few calculations intended to prove that no user "should" need to exceed the download caps unless they are exceptionally "greedy". And correct as the may be, you are missing the point. I've heard this before, when the topic of "the need for broadband" first came up. It's very easy to "prove" mathematically that most home users don't need broadband at all, and that they'll be just fine using their plain old 56K modem. Yet, almost every user still stuck with a modem yearns for some sort of broadband connection. Why do you think that is?

Users don't want to worry about the time or numbers of downloaded bytes ticking away. They want to be able to use their internet connection freely, much the same way as you use your TV (how many would want to watch if you feel like your wasting money each time you turn it on?). And they most certainly do not want be told from above what they should and should not be using their internet connection for.

So like I sad, form my point of view, the situation looks BAD, and I don't at all think that users should have to put up with it. I'm not sure what should (or could) be done about it, though...

[ Parent ]
Sweeden sounds great, we'll get there eventually. (none / 0) (#32)
by vastor on Mon May 06, 2002 at 06:58:21 PM EST

USD$30/month is what the service roughly originally cost. However since the AUD has been sliding against the USD that has changed... plus they're pushing up prices slowly here anyway.

Users get greedy and yearn for the latest gadget. Thats the biggest thing broadband has going for it at the moment, we've yet to really hit the practical era when the internet has much that actually makes a use of the kind of capacity it offers. That and they like to think their time is important and so having a webpage load in 5 seconds instead of 10 is pretty nifty to them (nevermind that most could be sped up by that much if they weren't badly bloated - we're basically facing in bandwidth the same bloat and desire for bandwidth to make up for it as occurs in wanting more RAM in computers as the latest software bloats except there tends to be even less new wizbang features coming out on the internet then there are in the software bloat apps).

The wasting issue is a good point and certainly it'd be nice if there were no caps. However the option is to have the account disabled for the remainder of the month until it resets if you hit the 3gigs, so it isn't so much an issue of wasting money as wanting to evenly distribute the usage of the download quota.

Compared to the situation in Sweeden it's ugly, but for the most part mb restrictions have been around here in Australia for a long time. Things aren't great, it'd be wonderful if they got as good as they are in the better connected nations.

If users don't want to put up with it, they can always form their own groups and interlink together. However wherever they source their actual internet data from is going to charge by the mb and if they do want to download gigs a month, it'll cost them more than going through Telstra/Optus. Genuine all you can eat net connections have had a bad track record of becoming congested here - maybe a less obvious system such as bandwidth shaping down the heavy users is the best way of dealing with them rather than quotas.

Time and competition will clean things up eventually, however it looks like even the smaller regional cable installers are having quotas (TransACT did for the ISP I looked over while down there visiting - there the actual infrastructure provider doesn't sell internet to the end users and lets other ISPs do it, so atleast there is an openness that someone else could come along and offer a totally unlimited download option if they wanted to... which is really what we need to happen to Telstra - it needs it's infrastructure and wholesale to be broken away from its retail).

I'm starting to sound a bit like a broken record making excuses I suspect, the point I'm sticking to however is that things aren't getting dramatically worse - they've just never really been that great (and if they once looked that way, it was because those using the broadband in the early days were such a small amount that they didn't bother with restrictions until a decent amount of users actually signed up for the service).

[ Parent ]

Frustrations with pricing (4.66 / 3) (#26)
by HalfFlat on Mon May 06, 2002 at 04:48:31 AM EST

Wholesale prices have dropped by a factor of four to six, but these costs are not reflected at business-targetted services.

In Australia, if you want to have a fixed IP always on service, you will be paying a minimum of 15cents per incoming MB, and up to 22cents or so depending on your provider. These prices haven't dropped significantly at all in the last five years (and with Telstra, they've increased.)

There is no avoiding the fact that international bandwidth costs, especially given the unequal pricing arangements with the US. However Telstra at least refuse to discriminate in their pricing between international traffic and domestic, and as a result have, I'm estimating, a margin of well over 300% on those BigPond Direct clients whose traffic is mostly local.

By enforcing IP lease times of 18 hours or so, and with the restrictions of their Acceptable Use Policy, Telstra are making sure that their consumer-targetted ADSL and Cable services are unusable by businesses.

To my mind, it's shameful profiteering to the detriment of Australia's 'information infrastructure'.

While Telstra controls the bulk of the physical infrastructure, which they have inherited from their nationalised days, I can't see the situation improving. The current government has ruled out a structural seperation of Telstra as 'stupid', but has provided no rationale for such a labelling. Also, such a division has almost always been expressed as a division into a wholesale and retail divisions. I think a clear case can be made that the physical infrastructure - that thing which in responsible for the greatest barriers in competition - should be re-nationalised. As a national resource, much like the road networks, it can be used to provide services by any number of companies, who can then compete on a much more equal footing. Why is this option, which seems so obvious, not even being debated?!

I'm an Optus@Home customer (5.00 / 1) (#33)
by smallstepforman on Mon May 06, 2002 at 11:36:43 PM EST

- Broadband expensive in Australia?  Not with Optus.
- Service unreliable?  Not with Optus.
- Terms changing every 3 months?  Not with Optus.

As a lucky low ping Optus@Home bastard, my perception with broadband in Australia is that there is no problem whatsover.  Its cheap, reliable and available.  Then again, I'm lucky to live in an Optus-suburb.

If I were to move, though, I'd be darn sure that my new residance has access to Optus cable, otherwise I stay away from that street.

Hit and miss (none / 0) (#34)
by NightRain on Tue May 07, 2002 at 03:12:55 AM EST

That's part of the problem with optus and their coverage at the moment though.  They will not tell you which areas they do have covered, and which ones they don't.  If you call them and ask them if a specific address is covered, they will tell you, but unless you're lucky, they will not go through a list and tell you which ones are covered.

Finally, being covered now does not mean that the address will be covered by the time you move.  Quite a few of the Optus nodes are not accepting new customers, and which ones are and aren't seems to change from week to week.  So you may move after being told you can get optus, only to find that you can't.  I won't go in to the issue of optus cabling flats and units.  :)

With a bit of luck, Optus DSL will change all of this, but for now, it's very hit and miss, so don't hold your breath at the thought of getting Optus should you be forced to move.


Don't vote, it only encourages them!

[ Parent ]
Business realities (none / 0) (#35)
by eviltwin on Tue May 07, 2002 at 08:54:08 PM EST

Some thoughts for you that might clarify the Optus Cable rollout (forgive me if i am repeating myself)

1. Its hit and miss because the councils, doo gooders, environmentalists etc got together to complain about cable looking ugly and blocked the rollouts - thats before most councils started trying to charge Optus for cable right of way.  optus stopped their rollouts in many places because the cost was too high - they are still rolling out and installing cable in new areas at this moment.

2. This is why most nodes are full as the interconnected network does not exist and they fill up - it's fluid as one person drops off, cancels their install etc - remember the only way to make a business like this viable is to book 21 days out and that means you need to consider booked installs in the capacity.

3. Unit blocks are up to owners and Optus have mad a blanket decision in most areas NOT to cable unit blocks due to costs, public liability issues, rent asked for by owners, a million different body corporate rules and by laws, equipment needed to installation, time needed to installation etc etc - and intelligent decison and i will point out that in most cases Telstra Cable is not available in units either.  Theres a lot more to this issue that the average person in the street imagines.

4. Optus DSL is designed to solve exactly these problems as is Optus Satellite in country areas.

Im an optus customer and have been for some 12 months - they provide the BEST isp service i have ever had, business or consumer.

All generalisations are false, including this one.
[ Parent ]

Broadband Cost and Exchange Rates (none / 0) (#37)
by quigleymar on Thu May 09, 2002 at 10:34:44 PM EST

A comment was made about the exchange rate giving appearance that Oz broadband expensive. Not so - a look at Canada (a comparable dollar)shows that cable/dsl currently on offer for C$44.95 per month, with usage caps not yet in place. Either way, makes little differnce, in Australia you get paid in Australian dollars, not US dollars....

Makes a difference (none / 0) (#38)
by cafeman on Tue May 14, 2002 at 01:20:01 AM EST

It does make a difference. We have to reimburse the Tier 1 providers for access to their networks internationally. Payments at this level are done in hard currencies like the US$, which hits us hard. It's a matter of purchasing power, not absolute figures.

Anyway, I'm not arguing whether broadband is too expensive here. It was seen as an experiment in the first deployment, and the implementation sucks. In any case though, there's a rumour that the major broadband ISPs in Canada are going to use caps similar to the ones used here. Think 3 gig transfer a month max. I'm not trolling either - I read it a few days ago, but can't remember where I say the link. I think it was at www.whirlpool.net.au somewhere, but I'm not sure.

"No Silicon heaven? But where would all the calculators go?"
[ Parent ]
Isn't it all about density? (none / 0) (#39)
by Lurkah on Sun May 19, 2002 at 05:54:57 AM EST

I left Australia in the pre-www days. Since then I've lived in the UK and participated in the flourish of Fidonet and the early Internet, then amazed to watch the Net turn into a mass market thing.

The UK has seen the pain that Australia has now with regards to broadband. Fortunately we're doing well now, I have cable and DSL to my house. At £25 a month each, why not? Hell of a lot less than I paid on ISDN a few years ago.

The key issue here is the economies of scale. It costs a lot to deck out an exchanges with ADSL equipment and to build a high speed backbone network between exchanges and the central NOC.

A lot was made of so-called local-loop-unbundling (LLU) here. This being a mechanism where third-party telcos could get access to the BT exchanges and actually provide the last mile connectivity out of the BT monopoly. Everyone got surprised why, when BT were finally forced into allowing this, almost no telcos did.

It just wasn't worth it, that's why. They would need x amount of customers per exchange to make it worthwhile. So they cherry picked the busy large population exchanges in much the same way that cable operators cherry picked the high population density areas so the cost of digging up roads yielded the largest numbers of potential customers.

Now... as I said things are OK here now and there's a few providers and even some tentative LLU plans - all other DSL is actually provided by BT to the home and then provides bandwidth to ISPs doing the upstream peering. But this is the UK with a population of 60 million souls.

What's Australia now, 16 million? And spread out across a larger area (I mean the cities, not the country)... I can very well see that the economies of scale in Australia are not favorable for broadband whatsoever.

In my opinion, Wireless providers would be a reasonable solution to the problems in Australia. Other than that, there's little to be done and it's just a fact that the country's broadband will be years behind other higher population countries.

The only other way is if Australia gets particularly active on the Net and the Government decides it's a priority. Then Australia could try to emulate scandinavian countries which also have a low population but preportionately a much higher desire to get on the Internet.

As for me, I'll go back to Australia when it's sorted one way or another. I expect I'll be in the UK for a few more years yet.

The Broadband Turmoil in Australia | 39 comments (31 topical, 8 editorial, 0 hidden)
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