As the new FCC Chairman focuses “relentlessly” on competition, he cannot have failed to notice the recent admission of Australian carrier Telstra that it has engaged in anti-competitive practices, denying rivals the legal right to interconnect by falsely claiming there was no room for new equipment in seven exchange facilities – an admission that came only after the departure of its former chief executive officer, Sol Trujillo.
Known for his adversarial relationship with unions and the government (which owned the company just four years ago and still owns a large part), Trujillo will be remembered by Australians as “the one who took on the government and lost,” one analyst said. As the former CEO of US West, Trujillo must have been shocked to learn that a Fortune 500 company can take on the government and lose. Now Australia is barreling ahead with an ambitious plan to build a $34-billion open nationwide network, dramatically changing Telstra’s tone and inspiring others around the globe.
“Incumbents in the Netherlands and elsewhere, the CEOs of these companies are starting to understand that the future of broadband is becoming much bigger, that there are many more opportunities,” Australian telecom consultant Paul Budde recently told us. “[They] won’t be able to control all of it anymore as they did in the past. Most of the incumbents in Europe and Asia are starting to understand you can’t forever run these monopolistic networks. There is still a long way for Verizon and AT&T to go, but it will happen in the US. A year ago, you couldn’t even whisper the words ‘open network,’ but now it is part of the broadband stimulus.”
The FCC does appear serious about competition, judging from its inquiries into exclusive deals between carriers and smartphone makers and the rejection of Google Voice from the iPhone. And carriers obviously think they can win once again by beating the government; the Wall Street Journal reports today that major wireless operators are quickly beefing up lobbying operations and hiring former Democratic Congressional staffers.
But Budde is right: Control is slipping out of carriers’ hands anyway. When Google Voice was banned from the iPhone, it not only created a market for those offering a workaround, it fueled a backlash that both drew regulatory scrutiny as well as helped convince some iPhone users to switch to T-Mobile’s Google-powered smartphone.
Even with a new FCC vowing dogged defense of competition, carriers will probably still be able to keep government regulators at bay for some time. But if they want to keep following Trujillo’s playbook, they can’t be surprised if their fate eventually follows his.