From
http://www.theaustralian.news.com.au/story/0,25197,23911036-5013408,00.html

FEDERAL Communications Minister Stephen Conroy must think Christmas has come
early this year, watching Telstra's chairman Don McGauchie at his bully
best, trying to set the parameters of the regulatory debate.

Conroy should enjoy his moment of fun now, because the real test will come
when, as seems probable, Telstra emerges as the only one that actually bids
to build a fibre-optic network.

Conroy has said nothing about what he wants for the network's regulation. In
fact he has said he doesn't want anyone saying anything publicly.

McGauchie said yesterday there was some chatter from the Government,
indicating Conroy was sliding away from his commitment not to enforce
structural separation.

He is not, because there is no need for that at this stage. Even if he
wanted to change his mind, he won't need to until he sees what bids are on
the table.

Right now it would make life a lot easier for him if Optus and Telstra did
bid, after the disappointment of Macquarie's no-show.

Macquarie's decision was based on the fact that in the present financial
markets, given Telstra's enormous advantages -- 17.6 per cent return on
assets and earnings margins of 44 per cent -- it was impossible to outbid
the incumbent.

Whether SingTel wants to back Optus is also problematic, given that in its
own backyard it is joining a consortium to bid for Singapore's proposed new
network.

At a press lunch in Melbourne yesterday, McGauchie went out of his way to
say the company had not yet decided whether to bid. Like most of his speech,
this was self-serving nonsense.

Afterwards, potential rival Michael Egan from the old G9 team confided that,
if Telstra did not bid, that would be good for him because he would be the
only bidder.

Amid all the noise and rhetoric, such as McGauchie's description of Optus as
"the dole bludger of Australian telcommunications", the facts are as
follows:

Tomorrow submissions are due for potential bidders to suggest the best
regulatory framework for a new fibre network.

McGauchie says Telstra won't bid if it is forced to separate ownership of
the network from the service arm -- which is so-called structural
separation.

That part is fine because no one is seriously demanding that happen if
Telstra wins the bid.

This is classic lobbying: argue you don't want to be turned into a Martian,
knowing no-one planned to do so.

It also suits Conroy because it sets the scene for him to go part-way
towards the New Zealand model, which would require the fibre network to be
held under a different transparent arm of Telstra.

McGauchie rejects that notion as well, arguing correctly that it would
increase costs.

This is where the debate gets serious.

As much as McGauchie says Telstra has an option of building the network or
not, if it is serious about HDTV and being in the entertainment game, it has
no choice.

His own chief Sol Trujillo has made it clear that wireless is fine, but as a
shared network it is not the best medium for delivering moving pictures.

If we just want fast broadband, then Telstra has it already and, thanks to
its brilliantly successful Next G network, has already delivered on Conroy's
promise of making fast internet available to everyone.

This point is important, in case Telstra wants to hold a gun at his head
about election promises.

Last year, Telstra delivered 19,000 telebytes of data compared to 200 in
2001, and is now capable of delivering broadband at speeds of 35 megabytes
by cable and 40 by wireless. McGauchie's team has done the job so well that
one could argue there is no need to build the fibre network.