Telstra remains a financial winner

He believes that within the current regulatory framework there is nothing to stop Telstra from continuing its market dominance in moving forward with fibre networks.

However the regulatory status is not under the control of Telstra and can be changed quickly if the government chooses to do so. So the company is obviously nervous about this and it is pulling out all plugs to try and retain its control for as long as possible.

“Market dominance allows Telstra to make very substantial returns on its investments (ROI), which, of course, is good for Telstra’s management, and for its shareholders,” said Budde. “But the digital economy is too important to the nation for it to be based solely on the delivery of the highest possible investment returns.”

Budde claimed that this is where Telstra’s strategy comes unstuck. In order to use the infrastructure for emerging technologies such as e-health and tele-education it must be based on returns in line with other utility services, such as electricity, gas and water.

"An NBN that most people cannot afford to use, or that is not economically viable for the delivery of government services, would be contrary to the national interest," he said.

"However from all aspects the future for Telstra remains very bright indeed. While its dominance in the fixed market can, at least to a certain extent, be reined in, at the same time the company will always remain the dominant player in that market."

"It is a fallacy to think that an NBN can be built without Telstra, or that Telstra can be bypassed."

Budde claimed the company was extremely well-positioned to deliver the infrastructure for the digital economy, and its transformation process and focus on fibre networks are clear indications that the company is on the right track.

Unlike some of its international counterparts Telstra has all of the right strategies in place to move successfully into the future.

“This would make Telstra the ideal partner for e-health, tele-education, e-government, smart grid and other services that will be developed in a digital economy,” he said.

“True, with an open network policy Telstra will encounter more competition and this will force the company to accept a lower ROI on its infrastructure investments.”

Although Telstra may receive a slightly smaller slice of the pie in future, the overall size of that pie is increasing significantly and this bodes very well for the company’s future, said Budde.

telco/isp