Telstra

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Telstra Corporation (ASX: TLS, NZX: TLS, NYSE: TLS) (formed from Telecom Australia) is an Australian telecommunications company under private ownership, holding a dominant position in landline telephone services, large share of mobile phone services, domestic consumer (including dial-up access and Broadband internet broadband cable modem, satellite and ADSL services under the BigPond brand) and business data services, and cable television.

[edit] History

Telecommunications services were originally controlled by the Postmaster-General's Department (PMG). On July 1, 1975, separate commissions were established by statute to replace the PMG. Responsibility for postal services was transferred to the Australian Postal Commission (Australia Post). The Australian Telecommunications Commission (ATC), trading as Telecom Australia, ran domestic telecommunication services.

In 1989 the ATC was reconstituted as the Australian Telecommunications Corporation.

In 1992 the Overseas Telecommunications Commission, a separate government body established in 1946, was merged with the Australian Telecommunications Corporation into the short-lived Australian and Overseas Telecommunications Corporation (AOTC) which continued trading under the established identities of Telecom and OTC. The AOTC was renamed to Telstra Corporation Limited in 1993.

Telstra has faced competition since the late 1980s from Optus and a host of other smaller providers. It retains ownership of the fixed-line telephone network, as well as one of two competing pay-tv and data cable networks. Other companies offering fixed-line services must therefore deal with Telstra except Optus, Transact and a few others who have installed their own infrastructure.

[edit] Privatisation

Telstra was partially privatised by the Commonwealth Government in two public offerings in 1997 and 1999. These floats attracted a great deal of public interest but have, in many cases, been poor investments, a majority of which was caused by global sentiment about telecommunications companies first inflating, and then just as quickly deflating the share price. There seems no immediate prospect of the share price climbing back to the level at which the earlier shares were originally sold.

The Australian Labor Party (ALP) has consistently opposed full privatisation and continues to do so, although previous Labor PM Paul Keating considered a trade sale to BHP. Their official party platform also notes a desire for the wholesale and retail arms of Telstra to be more "clearly distinct" within the company to enable fairer competition with private telecommunications providers who use Telstra's lines. In the past, Labor Party figures (including Lindsay Tanner) publically considered the idea of a breakup of the company into separate retail and wholesale businesses; this proposal was dropped after opposition from trade unions and the cost of the legal action from the shareholders that would follow. The Australian Greens, the Australian Democrats and key independent Senators Meg Lees and Len Harris held similar positions to the ALP, which meant that any bill for full privatisation was guaranteed to fail in the Senate.

Since the Coalition gained control of the Senate, it passed the sale legislation with a majority of 37-35. In many rural areas, the availability of mobile phone services and broadband internet services, as well as general service quality, remain topics of contention for many rural customers. Additionally, rural voters feel that a privatised Telstra will neglect its much less profitable rural networks, placing further pressure on the National Party not to support the sale. Ultimately, the National Party supported the sale, drawing criticism from state Farmers Federations, but not the National Farmers Federation. Senator Barnaby Joyce drew criticism for reneging on his campaign promise to oppose the sale of Telstra.

First, Telstra remains a company that struggles to maximise shareholder value. In the past two years, but especially since the appointment of American Sol Trujillo as CEO, the share price has fallen consistently. Second, voter concerns in rural areas of Australia — which are the most at risk of any negative consequences of full privatisation due to the current cross-subsidy of experience regional and remote telecommunications.

The Commonwealth Government announced on August 25, 2006 that it would sell a third of its remaining Telstra shares in October and November of the same year (approximately AU$8 billion), with the remainder (worth approximately $7.5 billion) being placed into the Future Fund to sell down over time. The Future Fund is independently managed and thus considered a private investor. The third Telstra share offering closed on November 10, 2006 and was oversubscribed. As of Monday, the 20th of November, Telstra became majority privately-owned, with the government's 51.8% stake reduced to roughly 17% after the sale of two-thirds of its shares.

[edit] Services

[edit] Fixed-line services

Telstra own and operate most PSTN services in Australia. One competing fixed-line service is the Optus network which uses HFC to deliver telephony to a limited percentage of the population. Most of Telstra's revenues are generated from fixed-line services. Telstra recently issued a profit warning due to declined growth in the fixed line market. A shift from their fixed line services is underway as local call volume falls.<ref>Annual Report 2006 - Full Year Results and Operations Review</ref>

Telstra outsources a significant portion of network installation and maintenance to private contractors and businesses, such as ABB Communications and STCJV.

Telstra is also responsible for Australia's public phones, and was criticized<ref>Telstra to cut number of pay phones</ref> after anouncing it would remove many of the phones citing unprofitability due to vandalism and the increasing takeup and use of mobile phones.

[edit] Mobile telephony (Telstra Mobile)

Telstra operates one of the largest GSM, CDMA and 3G mobile telephony networks throughout Australia. Telstra also provide Prepaid Mobile services, via Telstra Pre-Paid Plus, utilising all Mobile telephony networks that Telstra operates. This was a service by the former name of Communic8.

In late 2005, Telstra announced that it would replace all CDMA networks with a new HSDPA network running at 850MHz, later to be known as Next G. This network was launched on October 6 2006. The CDMA network will continue to run until early 2008, however, migration onto the Next G network has already begun for customers who have expiring contracts. Despite this, Telstra has also currently expanded their GSM capabilities by offering EDGE.

The current 3G WCDMA/UMTS network operating on the 2100MHz band is provided by a joint venture between Telstra and Three, whereby Telstra acquired half of Three's network and took over its operation. This has enabled Three customers to gain access to the GSM network where 3G coverage is non existent via a reciprocal agreement. Since the termination of Hutchison-Whampoa's CDMA Orange network with roaming access to Telstra MobileNet CDMA and Telstra's introduction of Next G, it is unclear whether in the long run existing 2100MHz 3G customers will be migrated back to Next G, thereby ending the reciprocal agreement.

Telstra was one of the only regional providers to provide i-Mode services (running on GSM/GPRS and 3G 2100MHz WCDMA), licensed from NTT DoCoMo. With the launch of the Next G network, value added services such as mobile TV have been branded Foxtel, and other generic internet services Bigpond. Whether Telstra will continue to use the i-Mode branding is unclear.

Previously Telstra attempted to break through to the value added services such as video streaming and content via its CDMA/1xRTT network with a service called the Telstra MobileLoop. This offering was not popular, and was abandoned in favour of a GSM iMode offering, and later Next G.

[edit] Internet (Telstra BigPond)

[edit] Telstra Wholesale

Due to their ownership of existing copper phone lines and telephone exchanges, Telstra is the incumbent and dominant wholesaler of ADSL related services to other Internet Service Providers. They installed the first DSLAMs in exchanges prior to 2000, and began wholesaling access in late 2000.<ref>"Telstra pressure increases as more ISPs join ADSL race", Whirlpool (website), 2000-09-05. Retrieved on 2006-10-14.</ref>

On the 10th November 2006, Telstra finally launched uncapped ADSL1 and ADSL2+ broadband services, more than 18 months after some competitors started offering the higher speed services. The uncapped ADSL will allow speeds of up to 8Mbps. ADSL2+ allows speeds of up to 24Mbps, but Telstra is advertising the service at up to 20Mbps.

"Because of regulatory constraints, the up to 20Mbps service would be limited to [telephone] exchanges where competitors are also offering those higher speeds," says Justin Milne, Telstra's group managing director of its BigPond division.

[edit] Broadband

Telstra, through its retail Internet Service Provider, BigPond, sells broadband internet access via ADSL, HFC cable, fibre, satellite, and wireless access through its EV-DO and NextG networks. Telstra has over one million retail ADSL customers, and over 200,000 Cable customers. The existing customer base of Bigpond Wireless is currently being migrated over to the NextG network, which offers higher speeds and greater coverage.

On November 10 2006, Telstra made two major changes to their ADSL network. The first was an increase of the cap of wholesale ADSL speeds offered from 1.5Mbps/256kbps to 8Mbps/384kbps. These increased speeds were available from Bigpond on the same day, and will be available through other ISPs in December 2006. Telstra also released their ADSL2+ broadband service offering speeds of up to 20Mbps from exchanges offering ADSL2+ services.

See also Broadband Internet Access (Australia).

[edit] Dial-up

Telstra, through its retail Internet Service Provider, BigPond, sells dialup internet access.

[edit] Subscription television

Telstra's Hybrid Fibre Coax (HFC) Cable network is one of the delivery systems used by the Australian Subscription Television provider Foxtel, 50% of which is owned by Telstra. Telstra also resell Foxtel's "Digital" products in Foxtel's service area and Austar's "Digital" product, in Austar's service area.

Telstra's ownership of Foxtel has in the past come under fire from the Australian Labor Party (ALP).

[edit] Directories and advertising (Sensis)

Sensis: is Telstra's wholly owned advertising and directories arm. Sensis publishes Australia's White Pages and Yellow Pages telephone directories, and in 2004 purchased the Trading Post, a classified advertising periodical. In addition, they manage several websites:

• White Pages Online: an additional revenue source compared to print
• Yellow Pages Online: an additional revenue source compared to print
• Sensis.com.au: an Australian search engine
• WhereIs.com: online maps and street directories
• CitySearch: city-based lifestyle and entertainment guide
• GoStay: online accommodation booking
• LinkMe: business networking directory
• JustListed: a real estate site focused on the Sydney market
• Invizage: a provider of outsourced IT services

Sensis are also responsible for all of Telstra's telephony directory assistance, from basic (1223 (National Directories), 12455 (Call Connect), 1225 (International Directories) to premium (1234) and emergency (000) services.

[edit] Market position and power

Telstra's market dominance extends beyond its historical PSTN voice and private data business, into newer markets such as Internet Access, Hosting, and Colocation services. In spite of competition from both foreign and domestic challengers, the former PTT has retained a strong grip on many of the country's most profitable customers.

Optus remains the companies' closest rival for lucrative business networks. However, Telstra supplies almost twice as many customers in the ASX200 with Dedicated Internet Access services.

Telstra is criticised by some as being the dominant Telco player, and competition companies use the power of the ACCC (Australian Competition and Consumer Commission) to regularly force Telstra to justify prices and costs. When Telstra's predecessor Telecom was formed, all assets became property of the company. This is a point of contention for competitor companies. The copper network forms the backbone of Telstra and is the property of Telstra. Competitor companies continue to complain that they want more direct access to it. Some say the solution is for those companies to be truly competitive and build their own network instead of riding on the assets of Telstra. Obviously the cost of such an undertaking would be considerable, and the status quo does seem to lend Telstra an unassailable (and arguably unfair) market advantage in many fields. This argument is the subject of much discussion in investing circles and the general public.

Telstra has reacted to this with a list of points they feel refute these criticisms on their market power.

Extract of transcript of a speech published by Telstra, Burgess, Phil. 10 Things you did not know about Telstra. Retrieved on 2006-08-02.

[edit] Employment

Empty cells have no data available for that year. All results at 30 June.

[edit] International expansion

Telstra has attempted to expand into international markets. Telstra acquired 51% of China's SouFun, a real estate and property website. SouFun will be integrated into the Sensis business and provide Telstra with an entry point into China<ref>"Telstra Media Release: SouFun acquisition complements Sensis growth strategy", Telstra Corporation Ltd.</ref>.

Also notable is a joint venture with Hong Kong entrepreneur Richard Li and his company Pacific Century Cyberworks during the late 1990s telecommunications boom. Their undersea cable venture, Reach, has struggled, with its book value downgraded to zero by the company in February 2003. (It continues to operate, though, and the company believes that it may still be viable in the longer term.)

In 2002, Telstra also acquired PCCW's remaining 40% stake in Regional Wireless Company (RWC), giving it total ownership of CSL, then the most prominent of Hong Kong's six mobile operators. CSL announced in April 2006 that it was to enter a joint venture with New World Mobility Ltd in order to capture a larger share of the market<ref>"CSL Corporate Profile", Hong Kong CSL (website).</ref>. CSL comprises just over 75% of the joint venture.

Telstra also fully owns New Zealand subsidiary TelstraClear. The company was formed in 2001 from the merger of subsidiary TelstraSaturn (a 50/50 joint-venture with Austar which had previously acquired ISPs paradise.net and NetLink) and the telco Clear Communications purchased from BT Group plc. TelstraClear also operates a Cable TV brand Saturn.

[edit] Sponsorship

Telstra has naming rights to two national sporting arenas, the Telstra Dome in Melbourne and Telstra Stadium in Sydney and is the naming rights sponsor to the National Rugby League.

Telstra also has the naming rights (under TelstraClear) for the TelstraClear Pacific events centre in Manukau City, New Zealand.

[edit] References

<references/>

[edit] External links

• Telstra Australia
• Next G: Telstra's 3G 850Mhz network
• Telstra Global
• Telstra America
• Telstra Europe
• TelstraClear (New Zealand)
• Telstra BigPond Internet
• Telstra Internet Direct
• Telstra's 3GSM product offering
• Nowwearetalking.com.au, Telstra asks for your say in Australia's telecommunications future
• Sensis corporate site
• OPTUS/TELSTRA How it all works?? (Whirlpool, forum post)
• Telstra T3 Prospectus
• Citizens Against Selling Telstra - Australian group opposed to the privatisation of Telstra

[edit] Data

• Yahoo! - Telstra Corporation Limited Company Profile

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