The Pebble and the Avalanche

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Current Revolutions in Business and Technology

by Dr. Moshe Yudkowsky,

author of The Pebble and The Avalanche: How Taking Things Apart Creates Revolutions


Wed, 2008-Mar-19, 11:33

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Where Are They Now? Up To the Same Dirty Tricks 10,000 Miles Away

I ran across an interesting article in The Sydney Morning Herald on Saturday, 15 March (and yes, I was in Sydney when I read it). Australia made the same mistake the US did: Instead of disaggregating local fixed-line telecommunications service into separate businesses to allow true competition, they left the national monopoly that provided local land-line communications intact and mandated by law that the monopoly, Telstra, allow competitors to lease Telstra's lines.

If you read the book, you know what happened next — Australia's monopoly is following the Baby Bell playbook.

In fact, they've got Baby Bell players running the show. Sol Trujillo and Phil Burgess, formerly of US West, are now 10,000 miles away and working for Telstra. They've brought the old US Baby Bell tricks with them to Australia. When a competitor attempts to lease a line, their local monopoly Telstra attempts to charge a huge fee; the local regulators side with the competitor; Telstra heads off to court and issues florid press releases about reasonable rates, competition, rates of return, and similar bilge. At present Telstra has forty-seven legal actions pending against the regulators.

Although Telstra recently lost its biggest case in Australia's highest court, the legal actions continue. Each one, even when it's lost, costs the competitors time and money and helps discourage other competitors from even trying. And just as in the US, the political pressure campaign from Telstra is slowly modifying the views of the regulators.

Different conditions, different country, same results: the failure to disaggregate spelled the failure of the project.

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