TelstraClear's Freeth warns of 'network socialism'

TelstraClear CEO says Chorus is best bet for ultra-fast broadband

TelstraClear CEO Allan Freeth is championing Telecom’s Chorus wholesale division as the best candidate to provide the government's planned $1.5 billion Ultra-Fast Broadband (UFB) network.

Freeth, speaking as part of a panel of Telecom senior executives at the TUANZ Telecommunications Day conference in Wellington, also warned about "network socialism" — the use of public money to overbuild privately funded networks.

Freeth says TelstraClear has a good record in working with telcos large and small, but warns that his company is likely to be less attracted to collaboration with providers overbuilding existing fibre infrastructure.

“Public money being used to overbuild privately funded networks is simply like network socialism to me," he says.

“We neither intend to be accepting or welcoming of any such new guys and new entrants should factor that into their business case.”

The way UFB is set up at the moment, he told the conference is complex and includes artificial limitations such as the exclusion of wireless technology and of providers that have a retail arm.

“To us, the present proposal [with its many potential players] looks likely to play out in a way that’s reminiscent of the Tragedy of the Commons,” Freeth says.

The Tragedy of the Commons describes a situation in which a number of individuals, acting independently, and solely considering their own self-interest, will deplete or degrade a shared resource even when it is clear that it is not in anyone's long-term interest for this to happen.

“I personally believe we should choose the player or the team with the best chance of maximising the ‘commons’ — that is, the limited resource — for the best outcome,” Freeth says.

“In this case, that’s probably Chorus. Let’s find a way for them to do so, while regulating for open access and equivalence.”

This applies, he says, whether or not Chorus is structurally separated from the retail arm of Telecom — a possibility increasingly under discussion.

Refering to the variety of bidders seeking a piece of the UFB deal and the possibility Telecom could be shut out, Freeth changed tack.

“To use an analogy more fitting of 2011, I am at a loss as to why you would set up a system for regional cricket teams to play the Rugby World Cup, having excluded the All Blacks, because they are involved in merchandising,” Freeth told the conference.

He went on to say, however, that “you can’t fight City Hall” and something like the current UFB plan is likely to eventuate.

TelstraClear, he says, has a record of working in collaboration with both large established telecommunications providers and small newcomers.

He pointed to TelstraClear’s work with Network Tasman in 2004.

“They had built a new 170 km back-up fibre link from Nelson to Blenheim, where it connected with TelstraClear’s existing national fibre network.

“We then extended the reach of their services by deploying wireless local loop equipment, and offering a full suite of services, across fibre and wireless, to businesses in the Nelson region.

“Then, in 2008, we worked with Northpower as they built their fibre network, and formed a strong partnership…These ventures demonstrate our ability to partner with non-telco organisations, and operate across multiple networks and technologies.”