From: brendan@otc.otca.oz (Brendan Jones)
Newsgroups: aus.general
Subject: Re: Optus v AOTC.  The Facts. (was Re: Cream-Skimming)
Date: 16 Dec 92 22:41:16 GMT
Distribution: aus

in article <1992Dec15.221012.8098@trl.oz.au>, djewell@rhea.trl.OZ.AU (David Jewell - Radio and Satellite Networks) says:
> Interesting little FACT though that seems to be constantly overlooked by
> most pro-competition types is that the MOST efficient Telcos in the 
> world are monopolies, eg: Sweden.

On what "efficiency" basis is this measured?  We could argue on all sorts of
pedantic points whether a telecommunications monopoly is better or worse than
competition, but in the end it's what the customers think that counts.

The fact is, many customers, rightly or wrongly, were not pleased with the
service they sometimes received from Telecom.  Having the world's best
technology is wonderful, but it's useless if your customer service doesn't
match it.

Good technology is a *necessary* but not *sufficient* condition to be a good
telecommunications company.  You won't win customers by having the lowest
trunk network congestion figures in the world if you also have an antagonistic
attitude towards complainants.

If the advent of competition has done one thing, it's ensured that the fear of
losing customers has meant that the telcos in Australia must now assume the
customer is always right.  And I think that is what the Australian public will
respond to.

You may not like it, but the customer now has the power to vote with the press
of a single button.  Each telco must now give customers reasons why they
should stay with them.

> [re Optus' leg-up]
> You forgot to add though that all of this "immensely powerful resource"
> pales into insignificance when compared with the resources of Bell South
> and Cable & Wireless, the Optus owners.

Firstly, they're not Optus's owners.  They hold a 49% stake.  Optus is owned
by Optus Holdings Pty Ltd., which has a majority Australian shareholding.

Secondly, the leverage of the incumbent the size of AOTC is probably
sufficiently massive to even ward off Bell South and C&W if there wasn't some
concession made to this fact.  Optus is arrived in Australia with no network,
no brand recongnition, no customer base, and no leverage.  You really seem to
have little understanding of just how *powerful* a position AOTC is in.

AOTC is still the only telco that can provide end to end connectivity for a
customer (ie has a local distribution network).  That alone gives us a *very*
large advantage over Optus.

Now I'm not saying all these things because I'm an Optus stooge :-)  I've
worked for Telecom for three years and OTC for five, and my loyalties are
here.  Combined, AOTC has a teriffic chance to become a global telco.  But
I've also learned that the picture is much bigger than philosophical arguments
about monopolies.

It's about national enterprise efficiency, it's about microeconomic reform,
its about customer service and customer satisfaction, it's about product
differentiation, it's about the motivation to improve your products and
services through the threat of someone else doing if for you.

There's no point fighting battles that have already been lost.  The game now
is to confront the challenges of an increasingly deregulated world.

> Ever tried setting up a steel industry? Do you think that the government
> would help with the same "level playing field" and 30% rule if you decided
> to compete with BHP?

No, because there are already other steel manufacturers.  Also, steel making
is an entirely different kind of business.  Telecommunications is almost
unique in that *extremely* large sums of money are required for investing in
fixed infrastructure before a cash flow is possible.

Under these conditions, a "level playing field" (a terrible term) is not
possible unless you make concessions on the enormous advantage the incumbent
has secured through being a monopolist and having a 100 year head start.

> [re Safeway at Belgrave story]

There are already anti-competetive and predatory pricing regulations in the
Trade Practices Act to cover instances where there really have been unfair
trading practices.  If you want to launch a case against Safeway, go ahead.

I have to ask the question though, if Safeway now has a Belgrave monopoly and
"the prices there are much higher" why hasn't someone else started a low-cost
supermarket there again?  Surely they'd win business??

-- 
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