Australia – land of sun, surf and telecoms buffoonery

Image credit: Kaspars Grinvalds |

Is it simply because Australia gets too much sun, or are some of the telcos there going bonkers for some other inexplicable reason?

Telstra leads the insanity pack by announcing 8,000 job cuts (almost a quarter of its workforce) at a time when its basic services are failing almost on a weekly basis. Optus comes in a close second by vying for the World Cup streaming coverage from Russia and then failing to deliver the goods to an anxious audience. Thirdly comes the national broadband network that started life as a political football (no pun intended) and now, after five years in the making, is unable to deliver FTTH or even speeds barely better than ADSL.

The Telstra2022 strategy announced by CEO Andrew Penn this week stated that the company would “fundamentally change the nature of telecoms products and services in Australia by eliminating many pain points for customers”. Presumably, many of Telstra’s customers hoped this meant basic service would be delivered without interruption, something they have not experienced for some time.

All too often we hear announcements of massive staff layoffs under the guise of streamlining operations and reducing costs often to appease unhappy stakeholders and there are many. Telstra has shed more than A$40 billion in market value since early 2015. Job cuts may have boosted share prices in the past, but discerning investors smelled a rat, just as they did with the recent BT cost-cutting announcements. Telstra shares fell nearly 5% to close at A$2.76, a 7-year low. Mr Penn will be hoping he doesn’t suffer the same fate as his BT counterpart.

One bright spot was the announcement of a new infrastructure unit, dubbed InfraCo, to house network assets, data centers, international subsea cables, exchanges, poles, ducts and pipes. Presumably there is not that much fixed-wire left in the Telstra arsenal since it sold its copper network to NBN Co. Does this amount to a structural separation? That might well be the best part of Telstra2022. We have been driving that point home for quite a while.

NBN Co is not fairing much better. A scathing article from Bloomberg blasted Australia’s national broadband network project as “a poster child for government mismanagement” and an international embarrassment in terms of broadband speeds. Since the NBN was launched by the Australian government in 2009, the project has been plagued by delays, cost overruns, and political infighting over what technologies to implement, among other things.

Just when you think things couldn’t get much worse, Australia’s second carrier, Optus, infuriated football fans with its streaming coverage of the Word Cup that left frustrated viewers staring at a frozen picture or error messages in the middle of the night. Optus admits it underestimated the challenges of playing on the world stage but insists it didn’t skimp on the backend infrastructure required to stream World Cup matches to the nation. Yet something obviously went wrong.

Regardless, the whole episode raised the ire of a nation that has a team playing in the World Cup – so much so that the Australian Prime Minister resorted to phoning Optus CEO Allen Lew seeking assurances that the issues would not reoccur. What a PR nightmare!

Keep in mind that Australia tied for first place with Sweden and Singapore in the Economist Intelligence Unit’s Technological Readiness Ranking for 2018-22, and that Telstra is constantly touting speed records like 30.4 Tbps per fiber pair, a global programmable network for NaaS, its cellular NB-IoT network, and even Gigabit LTE. But that all counts for nought if the network goes down, something that happens at Telstra quite regularly with exchange fires, outages here, here, here and here, and affects the share price accordingly, not to mention consumer and business confidence.

We are officially in the connected age, which means that – believe it or not – people expect to be connected all the time. That’s literally what they pay subscriptions for. Do they really care if their operator is the fastest, flashiest and most application-loaded, and offers state-of-the-art next-gen cloud services, data centers, submarine cables and flying (connected) pigs?

NO! They just want to be connected. And in Australia, that most basic requirement seems to be a lot to ask. Is it time to get back to basics and simply assure service? You bet it is!

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