The company today reported a 6.5 per cent, or NZ$95 million (AU$75.43 million), fall in revenue for the three months to the end of September, compared to a year earlier, to NZ$1.36 billion (AU$1.08 billion). Operating expenses fell 7.7 per cent to NZ$909m.

Net earnings rose 9 per cent to NZ$163 (AU$129.42)m, due in part to a NZ$43m (AU$34.14)m, one-off effect from changes in tax law. Mobile revenues for the quarter were up 2.4 per cent to NZ$212m (AU$168.32m), with Telecom saying the growth followed the launch of the XT network in late May.

Calling revenues fell 17.2 per cent to NZ$264m (AU$209.61m), from NZ$319m (AU$253.28m) a year earlier. The fall was due to rationalisation of the international carrier services customer base and a cut in the number of access lines, Telecom said.

Depreciation and amortisation costs rose NZ$37m (AU$29.38m) in the quarter, due mainly to the company's higher asset base, particularly for the XT network. The launch of the XT network and a continued focus on improving customer service levels saw total mobile connections rise 2 per cent in the quarter, Telecom said.

At the end of September, 10.8 per cent or 242,000 of the total mobile connections were on the XT network. Telecom chief executive Paul Reynolds said XT customers were using their mobile services more, with an increase of 16 per cent in average revenue per user on like for like customers.

Telecom said it was maintaining its full-year guidance for adjusted EBITDA to range between a 1 per cent fall and a 2 per cent rise compared to the previous year, subject to potential economic risks.

Earnings before interest, tax, depreciation and amortisation (EBITDA) guidance for the 2011 to 2013 financial years had been maintained, but Dr Reynolds said that was subject to potential regulatory risks arising from proposals on ultra fast broadband, rural broadband and Telecommunications Service Obligations.

The company's largest business unit, Retail, which provides mass market products and services, had a 2.9 per cent fall in first quarter revenue to NZ$527m (AU$418.42m). Its EBITDA fell 15 per cent to NZ$91m.

Increases in broadband and mobile revenues for Retail were more than offset by falls in local service and calling revenues, Telecom said. Mobile revenues in the Retail unit were up 3.4 per cent or US$5m (AU$5.49)m to NZ$152 (AU$166.79)m, driven by the launch of XT.

Specifically, mobile handset revenue was up significantly due to customers switching to the network, coupled with the sale of a greater proportion of higher specified and higher value mobile devices, Telecom said.

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• Strong AAPT still faces challenges
• Telecom NZ loyalty offers to face High Court
• Kiwi TV spectrum could be wireless broadband
• Survey debunks broadband productivity gains

Google and other search engines help, and tag clouds and other social tools can make it easier to follow other people's recommendations, but wouldn't life be easier if someone was out there on the web scouting for the stuff that you really wanted to see?

Topikality is trying to fill that role. The brainchild of entrepreneurs Phillip Scott and Richard Heycock, Topikality is designed to learn what a user is interested in, and then scour the internet for matching articles that are delivered to the user on a regular basis.

Scott says the key difference is that Topikality presents what you have told it you are interested in, rather than just showing what is popular.

"It looks at everything to do with the articles you are reading, not just specific words — so phrases, words and the context of those words and phrases," he says.

Rather than searching the entire internet, Topikality is restricted to specific sources such as media outlets, blogs, governments and well-regarded organisations. Users can also nominate additional sources.

The value is in the artificial intelligence techniques used — in this case machine learning — which means that the more the system is used, the better it becomes at delivering the right information.

Search tends to be a once-off activity and does not record whether you were satisfied with the result, and hence the search engine does not learn your preferences.

"Once you've done a little training on the system, it delivers results to you ever day," Scott says. "So the net result and return for you increases over time."

Hence if you want to keep up to date on topics such as treatments for specific diseases, it can over time narrow down your interests.

Commentary

There is a lot to like about Topikality. The service, which has entered a public beta, has a clean interface, and the technology appears to do what it is supposed to in terms of dragging back information that you might be interested in.

The company was founded in December 2007 and has been in development ever since. While the technology is not patented, Scott says the sheer hard work and complexity behind Topikality is a series barrier for competitors.

Heycock has a background in mathematics, while Scott has been the co-founder and CEO of Australian customer management company, Prosper Business Solutions, which sold to a US company in 2006.

But it looks like a good idea in search of a business model, and faces two significant hurdles.

Firstly, the founders are uncertain as to how they will make money out of it.

The company is not currently charging for the public beta service, but may look at subscription models for corporate users. The so-called free-mium model is a very difficult one to translate into dollars however, and will require Topikality to find a lot of extra functionality to make it worth companies paying money for it. Just ask the folk at Twitter about that one.

Scott also wants Topikality wants to sell the software as an appliance to companies with large information repositories, and is currently in an unpaid trial with a large media services company that processes hundreds of thousands of documents each day, and has another lined up. The other opportunity is in enterprise search, for information retrieving from the web or intranets.

But herein lies Topikality's other major hurdle. It is playing in a competitive market, against competitors including Google, and there is a good chance that its service can become quickly commoditised (another Aussie company, Isys, has had stored search for years). And with limited sales and marketing resources it will be difficult for the company to make its voice heard amongst the noise.

Scott says he isn't worried about the competition.

"If everyone in the IT industry worried about those things nothing would ever get developed," Scott says. "This is something worthwhile that's worth having a crack at. Who knows that the potential might be and where it will end up."

So while the opportunity is potentially big, until Topikality can batten down a reliable business model, its chances of being a boom company are slim. Thankfully the company is funded by its founders and has a very low burn rate, but at this point the question mark over its potential to generate revenue is a big issue.

• Does it address customer pain? TICK
• Does the technology work? TICK
• Is the business model robust? CROSS
• Does the company have sufficient resources to compete? CROSS
• Is it under threat from competitive pressure? CROSS

bootstrappr opinion: BUST

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• Aussie start-up Liaise wows Demo
• B33hive founders start all over again
• Biarri's massive maths mission
• Doing for AV what VoIP did for telephony

• Decent battery life

• No expandability through docks, odd for a business product
• Not a great screen

HP's ProBooks are non-extravagant business-orientated machines with additional diagnostic tools built in for the benefit of system administrators. This 4310s model is a perfectly serviceable machine for almost all everyday tasks; however, it will struggle to run 3D games or do any heavy-duty media creation work.

The machine runs a Core 2 Duo T6570, which contains two CPU cores running at 2.1GHz each. Complementing this is 2GB of RAM, a 250GB hard drive, wireless N networking, gigabit Ethernet, Bluetooth, VGA and HDMI outputs, ExpressCard 34 and audio ports, SD card reader and a modem of questionable utility.

This laptop is not hugely expandable. There is no FireWire connector, no port replicator or docking port and no PCMCIA slot. All this is fine, provided you're the kind of user who won't miss the extra external connectivity.

The upshot of its modest configuration is good battery life. Even with the screen brightness at maximum, it took over three and a half hours to drain the battery from full while decoding MPEG-2 video. We repeated the test in HD using the vastly more computationally intensive VC-1 codec, and saw the battery life drop to a very respectable hour and 50 minutes.

The 1366x768 display has reasonable horizontal visibility, but the image washed out faster than you'd expect when you tilt the monitor off-axis. This isn't so much a problem with text, but images and video will appear washed out and inverted when you look at the screen from steep angles. Despite the LCD having quite a bit of flex, the notebook's construction is solid.

At the top right of the keyboard are a series of touch-sensitive hotkeys for volume controls, wireless and a HP launcher. We found the volume up and down buttons unresponsive, and occasionally the wireless would turn itself off without us touching it.

On the software side, a subtly HP branded copy of the 32-bit version of Windows XP Professional comes preloaded. Many of the recent patches to keep it stable, however, do not. XP Service Pack 3 had not been installed. IT managers will like the diagnostic tools built into the hardware that are accessible by interrupting the boot sequence.

A 60-day trial of Microsoft Office is included, as is a 60-day trial of Mcafee Total Protection Service. It's an antivirus suite with extra programs that notify you of phishing attacks in Internet Explorer. This continued to function when we upgraded Internet Explorer from version 6 to 8; however, the software added itself as a space hogging toolbar. It functions with minimal extra effort under Firefox, but does not work at all under Google's Chrome browser.

There are HP branded software helpers scattered throughout the operating system, many of which are unnecessary. After installing our benchmarking applications and several Adobe products to test real-world usage, we found the machine could not finish its restart cycle, although this problem disappeared after several Windows updates. During our battery life tests, we hit a blue screen.

If you find that the price is right and you are only planning on doing menial tasks, you could do a lot worse than the HP ProBook.

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AAPT recorded earnings before interest, tax, depreciation and amortisation (EBITDA) of $29 million in the three months to September 30, up 61.1 per cent on the previous corresponding period.

First quarter operating revenue of $235 million was down 13.9 per cent on the same period last year, with lower revenues from calls, mobile and broadband internet. Data revenue was up 6.3 per cent. The improved EBITDA was achieved through cost reductions and products offered on AAPT's own network, its chief executive Paul Broad said.

"Improved commercial terms have also been agreed with Telstra," he said.

AAPT is a wholly-owned Telecom Corporation of New Zealand Ltd subsidiary. It holds approximately four per cent of Australia's telco market, with over 3,000 kilometres of its own fibre network.

Telecom NZ chief executive Paul Reynolds said today AAPT had posted a "great quarter" of earnings. "I wouldn't bank it for the future quarters, we think the underlying rate is probably about $22 million," he said.

The company's reconfiguration has seen it become akin to a startup company, he said, and its plans for the rest of the year revolved around moving its customers onto its new platforms.

"AAPT is reinventing itself as almost a startup telco," Reynolds said. "We are getting right off those legacy spaghetti systems in billing and customer management (and) that helps a business be more efficient and efficient and flexible going forward.

"So not surprisingly with that, the plan for the year is to complete our migrations from legacy systems.

"That will reduce churn, and in partnership with some strong marketing that's undergoing in the business, will help turn the consumer trend to one of growth and connections."

Telecom NZ's first quarter EBITDA dropped by 4.1 per cent on the previous corresponding period to NZ$447 million (AU$354.9 million), while operating revenue fell 6.5 per cent NZ$1.36 billion (AU$1.09 billion).

The group's EBITDA remained on track to achieve full year guidance of up to two per cent growth, Reynolds said. Telecom NZ declared a a first quarter dividend of six NZ cents per share, unchanged from last year. The group's shares were up four cents, or 2.03 per cent, at $2.01.

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• AAPT adopts Google Apps
• AAPT, Telstra broker $500m wholesale deal
• AAPT wants Optus reined in too
• AAPT unlikely to be sold

The savings, targeted at so-called "business as usual" spending on information and communication technology (ICT) within federal government agencies, are expected to be realised between 2010-11 and 2012-13, according to a statement by Tanner.

"The completion of the second phase of this program means the savings foreshadowed by Sir Peter Gershon have now been realised," Tanner said in a statement today.

The UK thrift-expert conducted a review of the Australian government's $6 billion-a-year spend on ICT. The review covered the agencies use of contracted IT workers, datacentres and IT outsourcing. Gershon said at the report's release that many agencies acted "as though they were independent private sector entities".

Larger agencies were asked to find savings of between 10-15 per cent while smaller agencies were asked to find between 2 and 5 per cent.

The government does not intend to release an account of savings delivered by each agency. However, some key initiatives it has announced include the signing of a whole-of-government Microsoft licensing deal through the Department of Defence. Tanner has also recently selected a panel of datacentre providers as part of its plan to centralise control over agencies' use of computing power.

Round two of the Gershon program followed completion of the prior stage in April this year, according to Tanner, which had identified $570 million in savings.

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• IT hiring freeze blamed on Gershon
• Gershon fallout: Contractor cuts realistic?
• Gershon report released
• Recruiters slam Gershon's data

The commission announced today it had initiated a High Court prosecution for three separate loyalty offers made.

"This is utterly disproportionate response to an inherently uncertain area," said Tristan Gilbertson, Telecom NZ group general counsel.

"It is extremely disappointing that the commission has elected to use the High Court as its method for clarifying the issue, rather than working constructively with Telecom NZ and the industry as a whole."

The commission alleged the offers, made between December 2008 and July 2009, were likely to have breached Telecom NZ's obligation not to discriminate between service providers, under Telecom NZ's separation undertakings.

"Telecom NZ Wholesale initiated the offers as a good faith competitive response to customer demand. We felt then, and still feel now, that the offers were consistent with the spirit of the undertakings," Mr Gilbertson said.

"On receiving complaints in April, we spoke to the telecommunications branch of the commission, but received no guidance or indication of concerns under the undertakings.

"In fact, earlier published reports in February indicated that the commission did not have any concerns with the offers."

However, the commission said today it considered breaches of Telecom NZ's separation undertakings had the potential to seriously harm competition in the telecommunications market and undermine or deter efficient investment in telecommunications infrastructure.

Proceedings issued in the High Court against Telecom NZ were seeking remedial orders and/or monetary penalties in relation to the loyalty offers, the commission said.

An investigation by the commission followed findings by the Independent Oversight Group that Telecom NZ Wholesale's loyalty offers breached Telecom NZ's undertakings. The commission said it also separately received complaints on the matter.

Telecom NZ has already withdrawn the offers from the market.

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• Kiwi TV spectrum could be wireless broadband
• Telecom NZ rejects govt phone proposal
• TelstraClear earmarks $20m exchange spend
• Telecom NZ, govt 'discussing separation'

Going into this week's Telstra AGM, one may have wondered whether the company's shareholders would embrace the leadership team of David Thodey and Catherine Livingstone or pine for a return to the days of Trujillo.

The resounding response was that many of the shareholders are more than pleased with Thodey, but also far from pleased with the government's plans for its separation.

There were calls to "throw the government out" by shareholders because it "couldn't care less" about Telstra or its shareholders. While some were open to the possibility that splitting Telstra could be good for the nation, there was deep-seated fear and distrust of a government that had a "hidden agenda".

Shareholder fears appeared to stem from a belief that they were being kept in the dark over the government's negotiations with Telstra. One shareholder said that Communications Minister Stephen Conroy had not yet explained how a win-win outcome could be achieved.

And for avid contributors to ZDNet.com.au's feedback, keep an eye out for a certain prolific commenter that makes an appearance during this video.

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• Telstra strike called off
• Shareholders OK Telstra exec pay
• Do we need the legislative blackmail?
• Telstra launches new blogging site

"We have decided to renew our Managed Print Services contract with HP because our existing HP printing infrastructure has reduced the cost of our printing, improved staff productivity, and reduced our environmental footprint," Leighton Contractors chief information officer Diane Fernley-Jones said in a statement.

HP has already reduced Leighton Contractors' printer fleet from a seven-to-one user printer ratio to 10-to-one, and in some cases 15-to-one. Leighton has a fleet of around 700 HP LaserJet printers which support 9000 staff.

"We have better control over copying and printing by restricting printer access and usage within the organisation. The HP solutions reduce unnecessary printing and paper wastage, as uncollected jobs are never actually printed," Fernley-Jones said.

A spokesperson for HP said that the extension was "multi-year" as was the previous deal, but would not say how much it was worth.

In January, the company had increased the scope of its former multi-year contract with HP to include taking part in the HP Carbon Offset program to improve the company's environmental footprint.

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• ATO: EDS deploys 25,000 HP desktops
• ActewAGL goes HP
• HP has no respect for EDS
• HP dumps EDS brand

The Communications, Electrical, Plumbing Union (CEPU) is in negotiations with the company's management over enterprise bargaining agreements.

The CEPU on Wednesday said Telstra was trying to punish employees who wanted a union-negotiated workplace agreement by offering them less pay, and announced it had organised strike action.

But a statement posted on the CEPU website on Friday said the strike had been temporarily cancelled as the "very complex and delicate" negotiations continue.

"As a result of these negotiations and the stage that the discussions are currently at, the CEPU has taken a decision to temporarily suspend industrial action," the statement said. "Negotiations with Telstra will continue with a view to progressing towards a draft agreement that can be discussed with members."

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• Shareholders OK Telstra exec pay
• Telstra launches new blogging site
• When angry Telstra shareholders attack
• Thodey warns challenging times ahead

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New PayPal Australia
chief Frerk-Malte Feller
(Credit: PayPal)

The company has been led previously since March 2009 by an acting managing director, Dinuke Ranasinghe, who has now moved into a regional role in Singapore. Before he shifted to the company's Australian division, Feller was managing director for eBay Germany.

Between 2004 and 2008, the executive was managing director of PayPal's German, Austrian and Swiss divisions, geographies he launched the payments company into.

"I am delighted to be joining the Australian team to provide strategic direction at a time when there is great demand for PayPal to help grow online shopping in Australia," said Feller. He noted his main priority was to continue to provide PayPal's more than five million local customers and 18,000 merchant customers with services.

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• PayPal launches Aussie developer program
• How do you return stolen bank credentials?
• RBA criticises payments innovation
• Reserve Bank tackles PayPal

Despite Senator Nick Minchin's claim that it's all legislative blackmail, the report concluded that "while further examination of issues raised above is warranted, the committee believes that the passage of the Bill should not be delayed".

So hang on, why the rush? As you'll hear in today's Twisted Wire, which eavesdrops on the committee's public hearing in Melbourne last month, Telstra says it is close to having an IT system capable of providing an equivalent service to its wholesale customers as it does to its own retail division.

There's also the question as to why, if we separate Telstra, do we need public investment into the NBN? Wouldn't a structurally (or functionally) separated Telstra invest more in infrastructure and manage the build themselves? I ask if it isn't all a bit "arse about"?

You'll hear from the witnesses at the public inquiry held in Melbourne on 13 October:

• Geoff Booth, group managing director, NBN Engagement, Telstra
• Tony Warren, executive director, Regulatory Affairs, Telstra
• Andrew Sheridan, general manager, Interconnect and Economic Regulation, Optus
• David Havyatt, manager, Regulatory and Corporate Affairs, Unwired
• Matt Healy, national executive, Regulatory & Government, Macquarie Telecom
• John Horan, general manager, Legal and Regulatory, Primus Telecom
• Dale Clapperton, legal counsel, Pipe Networks

Be sure to let us have your thoughts too, in the Talkback section at the end of this post.

You can also read the transcript of the full day's hearing (PDF) or read the Senate inquiry report on the Bill.

See transcript here.

Phil Dobbie (ZDNET): This week on Twisted Wire, we hear how Telstra is talking to the government about a way forward without the proposed legislative change.

Geoff Booth (Telstra): ... these negotiations commenced before this Bill was introduced.

Dobbie: They say issues with wholesaler customers are often exaggerated:

Dr Tony Warren (Telstra): We do not believe it is anywhere near as bad as people make out.

Dobbie: But Optus, naturally, like it — and they like repeated quotes from Senator Conroy — they like him, too.

Andrew Sheridan (Optus): ... so that the wrongs of the past 12 years can be addressed.

Dobbie: We'll also hear from Pipe Networks, Unwired, Macquarie Telecom and Primus Telecom, as we hear the arguments for and against the proposed telecommunications reform. That's all today on Twisted Wire.

While the senate inquiry into the NBN has been going on for some time, and is yet to produce its report, the Senate Standing Committee on the Telecommunications Legislation Amendment Bill 2009 — that contentious one that will threaten Telstra with a functional separation, divesting itself of its share of Foxtel and denying access to 4G spectrum — yes, that one — this inquiry has been relatively quick.

It was called for by the senate on 17 September, submissions were in by the 7th of last month, they held a couple of public inquiries and the report was produced on 26 October. This week and next, we'll hear the views from those public inquiries, today from Melbourne on 13 October and from Canberra on the 14th.

By now you'll know that the report recommended that the Bill be passed. The committee said it will be to the benefit of providers and consumers and, while further examination of some of the issues raised is warranted, they say that shouldn't hold back the passing of the legislation.

First up in Melbourne, the case for the negative from (who else?) Telstra. Well, actually probably no one else, or very few, in the Telco sector — but a lot of shareholders probably support their views. Although, to be fair, Telstra do say that, although they oppose the passage of the Bill in its current form, they're looking for a win-win outcome in all this, but the win for Telstra has to be an acceptable outcome for their shareholders, of course. And Telstra is talking to the government, but:

Booth: Given the commercial sensitivity of these discussions it would not be useful for us to comment on the details of those discussions at this point. What we can say, however, is that these negotiations commenced before this Bill was introduced. We strongly believe that the way to realise a mutually acceptable outcome on the National Broadband Network is via commercial negotiations and not via legislation.

Dobbie: They're going to have to get a bend on then if they want to stop the new legislation being passed, which is why Telstra want to see the passing of the Bill deferred. That was Geoff Booth, by the way, who used to run Telstra Countrywide at one stage, but today he is Telstra's Group MD for NBN Engagement. There's another job the NBN has created already! And as for that legislation, it will ...

Booth: ... impede the achievement of the National Broadband Network vision; it will reduce competition, especially in the mobile and media markets; it will harm consumers, particularly those in rural and regional Australia; it will not necessarily result in industry reform; it will provide the ACCC with expanded powers unparalleled in any other industry; and it could destroy value for the 1.4 million shareholders who have purchased Telstra shares from the government over the past 12 years.

Dobbie: But then there are these secret discussions, positive ones we're told, that are looking at how Telstra can be involved in the NBN, and achieve the government's vision without resorting to all this legislative change. One of the issues Telstra raises is if they are forced to functionally separate and then buy access from the NBN, that's a massive two-stage migration process.

Booth: The time taken to implement functional separation would create at least a double migration for customers from the current Telstra legacy systems to the functionally separated legacy systems; indeed, if Telstra were then to buy from a National Broadband Network it would require a third set of IT changes. So this multiple migration does significantly add to the risk of customer service and billing programs with millions of customers involved. It really magnifies the potential for some chaos.

Dobbie: Can't fault the logic of that one, can you? And he says having people working on the separation would take the focus away from developing new systems to access the NBN. Plus, of course, separation doesn't come cheap. In Britain, BT put the cost at around $300 million or so. Telstra reckon it will be closer to around $1 billion. Why the difference? Well Telstra say, over and above the system changes at the wholesale level, there's all the retail products that need to change as well to meet the new wholesale structure — something that other retailers have had to live with — moulding their products according to Telstra's wholesale offerings.

Warren: The billion dollars that we have put in there we think is a serious estimate having spoken at length with both BT, Telecom New Zealand and, to some extent, Telecom Italia as well.

Dobbie: Telstra's Dr Tony Warren, executive director of Regulatory Affairs — who has something to say on the hotly debated topic of equivalence — asks does a wholesale customer get the same prices and services and access as Telstra retail? Well, of course they do — there may have been issues, but ...

Warren: We do not believe it is anywhere near as bad as people make out and so it therefore in no way justifies the massive cost of the solution.

Dobbie: He says they have just been through a massive IT transformation and their new systems are ...

Warren: ... absolutely customer agnostic and are completely blind.

Dobbie: These new systems, costing hundreds of millions of dollars, will be available very soon and should fix up the issues they say. And as for fixing up disputes, that's simple — don't leave it with the lawyers, get an engineer.

Booth: We basically suggested in our previous submission that you could sit such a person within the ACCC as a specialist adviser, but essentially what we are saying is that you need an engineer to deal with some of these problems rather than trying to have economists and lawyers (much as I am sure we would all agree that they are fantastic at these things). You really do sometimes need specialists to sit down and say: "That's rubbish; this is rubbish. Why don't you try this?"

Dobbie: Now that makes sense — but just going back a moment, if Telstra can provide equivalence with their new IT systems, why will it cost a billion dollars extra if they are separated — hasn't the work already been done?

Booth: Just to be clear, functional separation BT-style would require retro-fitting of the systems. The BT-style model is "chop it up and duplicate it". We are saying that with our new systems much of the manual processes, if not all, have been taken out and equivalence has been hard-wired in there, not because of functional or operational separation or accounting separation. As you know, under the standard access obligations under part 11C we have to have that equivalence. That has been there from the very beginning of the regime.

Dobbie: Although many would say, it's not been totally adhered to — hence the call for this new legislation. And if the new law is passed, how long will Telstra have to split itself apart? Quite some time is the answer.

Booth: The legislation as it currently stands means that, three months from royal assent, the minister must give a direction to ACCC on what any minister would expect from functional separation. We then have three months to put an undertaking in, and then the ACCC has to assess that. As to the timing of how long we would have to implement separation, that really depends upon what we put in our undertaking and what is acceptable to the ACCC. You can see from our submission that the experience from overseas is that how long it will take really depends on the flavour of separation imposed upon us.

Dobbie: So it could be years before the changes are even started, let alone implemented. By which time the NBN might well exist, or at least only be a couple of years away. In the meantime it defocuses a lot of time and effort from Telstra, providing no long-term benefit to its shareholders — or anyone really. And as for those two threats hanging over Telstra's heads with this new legislation: are they in the public interest?

Warren: We believe that taking us out of the upgrade path, the 4G market, would basically reduce competition in that market, particularly for rural and regional consumers, for whom we are the only network. Secondly, in the Foxtel space, clearly if we were forced to divest Foxtel it is most likely that a media player would acquire that, and we have not seen a good argument for how a greater concentration of media can be in the consumer interest.

Dobbie: All interesting points from the Big T. Next came the not-quite-as-big Big O. Andrew Sheridan is the general manager, Interconnect and Economic Regulation at Optus — so there! They love the proposed changes — that's why he toadied up to the panel.

Sheridan: I would, thanks. Firstly, thank you for the opportunity to appear before the committee today.

Dobbie: And they seem to think it will do the trick.

Sheridan: It addresses problems that exist in the market today and impact all users of telecommunications services. It is important therefore that the reforms are enacted in full and quickly, so that the wrongs of the past 12 years can be addressed.

Dobbie: Of course it's only wrongs from the past 12 years of telecommunications — if you had an affair, or said something awful to your mother — this law does nothing for that. But as for fixing up the telco industry, well Optus would say that wouldn't they? Being a Pom he was inevitably asked about the UK experience with the split of BT which he says has been ...

Sheridan: ... an undoubted success. I will just draw your attention to some comments from Ofcom, which very recently undertook one of its annual assessments of the undertakings that were given by BT, saying that the separation arrangements in the UK had led to "greater choice and take-up of services, choice of suppliers, products and packages and increased value for money" for customers.

Dobbie: Not a view that Telstra follows, although they seem to be at odds even with BT over that one. Andrew Sheridan says that the changes need to be enacted quickly because right now, we're paying too much for our telecommunications services. As far as the OECD is concerned ...

Sheridan: We are the fifth-most expensive country for both small and home office and small and medium-sized enterprises for fixed-line voice prices.

Dobbie: But is a break-up necessary when the government is already putting $43 billion into building another, competing network? As Senator Nick Minchin puts it ...

Senator Minchin: Why go through all the hassle of breaking up Telstra?

Dobbie: Well?

Sheridan: Whether the National Broadband Network happens or not, the need for reform of the existing market structure is quite clear. The full implementation and roll-out of the National Broadband Network is some way off. I think there has been talk of an eight-year period. I do not think consumers should have to wait for eight years to benefit from some fairly standard rights that they should have today — that is, to have a choice of provider and access to affordable services.

Dobbie: But isn't there a bit of self interest here — the proposed Bill could deprive Telstra of access to mobile spectrum that could be bought instead by — oh, yes, Optus! Isn't that less competition and how is that good for the customer?

Sheridan: In terms of the broad package, the government has very clearly articulated what its primary objective is, which is to achieve improved equivalence of access through the separation of Telstra's fixed-line network and retail business. That is clearly the primary objective, and it has done that to deliver outcomes — as I keep talking about — for the 22 million Australians.

Dobbie: Actually 23 million — that's a million Optus don't know about.

Sheridan: Putting forward that vision has given Telstra some options. If Telstra buys into that vision, then it will be able to access spectrum, it will be able to keep hold of its HFC cable network and it will be able to keep its investment in Foxtel. But, if it decides that it does not want to embrace that vision, then it effectively has a choice: does it want to retain its dominant position in the fixed-line market? If that is the case, then the government is basically saying: "Because of your dominance in this market, we think we need to take something away from you in some of the other markets", the key one there being the wireless market. We do not want a carrier taking a dominant position in every single platform. From my perspective, that is the underlying rationale.

Dobbie: Although as Nick Minchin is quick to point out:

Minchin: It does not have a dominant position in mobile, does it? It is less than 50 per cent.

Dobbie: And this?

Minchin: So you think it is reasonable for the parliament to sign up to legislative blackmail?

Sheridan: They are not the words that I would use to describe this, but Optus is certainly supportive of the whole package of reforms.

Dobbie: Although Andrew Sheridan is quick to point out the approach of threatening to remove the ability to compete on spectrum auctions was not something Optus had put forward to the government — they had asked that Telstra be forced to divest itself of its stake in Foxtel. The wireless spectrum was all just an added bonus for them, really! And as for threatening Telstra to rid itself of its share of Foxtel, is that just another piece of corporate blackmail?

Sheridan: In many jurisdictions HFC cable and pay TV operations have been used essentially as a means to bring competition to the incumbent operator, particularly in the provision of voice and broadband services. Clearly, if you enable the incumbent telco to take a dominant position in that market then you are not going to get infrastructure-based competition, and that is exactly what we have seen in the Australian context. If you look at other jurisdictions such as the US, incumbent telcos face strong competition from cable operators. There are examples of that around Europe as well, where cable companies offer very strong competition to incumbent telcos through voice and broadband services.

Dobbie: Of course Optus had a go at their own pay TV infrastructure — they just didn't do it very well. So what about the need for Telstra to provide equivalent services to its wholesale customers to those it provides its own retail division. Interestingly, Telstra had argued that they already provided that, and could do even better soon, but the man from Optus says no.

Sheridan: We are strongly of the view that we do not get equivalence of access. Perhaps the best example of that is an issue that we raised with Telstra three years ago when were activating customer lines in an apartment building. We felt that we were not being given equivalent treatment because we were required to send out a Telstra technician and an Optus technician and it took eight to 10 days to provision the line. And the customer has to be home during that period — so it is very inconvenient. But Telstra Retail could do it remotely, and that would have taken a day. So we raised this issue with Telstra, and they said, "We don't have to provide equivalence because we are taking a different service."

Dobbie: A different service that Telstra retail clearly has access to. It gets very messy, doesn't it, when you start looking at all the operational support and management systems. Just how much should Telstra be providing for what is considered an equivalent service? It's part of the mess that has seen Optus spend $200 million or so in legal fees over recent years. Speaking of money, what about the cost to Telstra have splitting itself functionally ...

Sheridan: We have some problems with Telstra's claim that it would cost Telstra over $1 billion when BT — which is a company at least twice the size of Telstra in terms of revenue and three times the size in terms of its workforce — only spent $153 million. And I do not understand why it would be in BT's interests to under-cook this figure in its financial statements.

Dobbie: Unwired's David Havyatt as always had some interesting observations including:

David Havyatt (Unwired): Telstra still represents 90 per cent of the profit pool of this industry and only represents 70 per cent of the investment, which actually means it has been under-investing. That is an indication of the market power that exists in this industry. Only if there is market power in a firm can you afford to survive in an industry by not investing; only people with market power can withhold investments.

Dobbie: And he refers to Telstra's claim in its submission to the inquiry that it can provide transparency and equivalence without being split up.

Havyatt: I do not know how you can reconcile those two views: that you can get equivalency and transparency in a wholesale structure with a vertically integrated firm, yet the vertically integrated firm has a lower cost structure and a greater ability to innovate than any other firm in the market. Quite frankly, if the first statement is true, that vertical integration reduces costs and facilitates innovation, then we should not attempt to have a competitive telco regime.

Dobbie: Yes, let's just call it Telecom, renationalise it and I'll pay 50 cents a minute to call my mum over in England. And a final point from Mr Havyatt:

Havyatt: Finally, on competition: Telstra continues to identify the number of new carrier licences and ongoing price reductions as indicators of a vibrant, competitive marketplace, completely ignoring the figures included in the explanatory memorandum which show the extraordinarily high figures for the HHI, the Herfindahl-Hirschman Index, for this industry. That is a standard measure of concentration in industry that shows this industry is basically as concentrated as a dysfunctional duopoly. So we have got those characteristics that have been ignored.

Dobbie: So he's a fan of the Bill then. Strange how all Telstra's competitors seem to love it. Like Matt Healy from Macquarie Telecom.

Matt Healy (Macquarie Telecom): It is clear that Australian consumers are not well served by the level of competition in our sector, and the primary constraint in relation to that competition is Telstra's market power.

Dobbie: Yep, I think that's a point we keep hearing. He says at each stage of the sale of Telstra there were opportunities for reform but they were held back to see how competition unfolded.

Healy: There have been many regulatory reviews but in each instance when a decision was to be made we have really gone for the light-handed option of tweaking around the edges of competition.

Dobbie: But this new Bill — this is the real deal.

Healy: Here we have it well set out in a coherent and coordinated manner. We urge the Senate to take this forward.

Dobbie: Pleeease. Well, it looks like they might get their way. John Horan from Primus was another voice at the hearing saying reform was needed because Telstra really has no incentive to provide services to other carriers. Every wholesale customer is a retail opportunity lost, I guess.

John Horan (Primus): We continually face price and non-price discrimination. Telstra grudgingly says, we'll carry your services; the High Court has told us we have to, but things just do not get delivered to customers when they should and they arrive battered and broken.

Dobbie: A bit like shopping on eBay really. And thank god John Horan said it because no one has so far this week. The proposed regulatory reforms will deliver a ...

Horan: ... a level playing field.

Dobbie: And he says that the whole industry, including Telstra will grow under the new scenario. Really, Telstra too? We'll see on that one. He says it'll come from innovative services — David Havyatt says most of the innovation so far has not come from Telstra.

Havyatt: Firstly, ADSL2+, the higher-speed ADSL, first introduced to the marketplace by the people who were accessing Telstra's copper network, not by Telstra; and, secondly, the 3G mobile network. The first 3G mobile network in Australia came, in fact, from Hutchison, not from Telstra. Telstra, in its submission, tries to claim that innovation is an important thing driven by vertical integration, yet the two biggest innovations in recent times came from non-Telstra firms.

Dobbie: So would it have been different with the split of Telstra? Matt Healy says yes, it would. And it would get over that issue where Telstra retail has a service that is not available to wholesale customers because it has not been "productised" for wholesale.

Healy: We do not think that the incentive to fail to meet wholesale customers' needs will prevail in a structurally separated and effectively functionally separated market in Australia.

Dobbie: But there is an option — David Havyatt says Telstra can separate, voluntarily, without divesting itself of any of its assets. It's all in the timing.

Havyatt: Telstra agrees to let NBN Co use its ducts, wires, poles and exchanges for building the NBN — and have to spend thriftily. At the same time Telstra gives an undertaking to NBN Co that as it builds the NBN Telstra it will migrate its customers onto the NBN. At the end point of the NBN being built, Telstra would be structurally separated within the meaning of the act and would never have actually divested itself of a single asset. So, Telstra can structurally separate without any of this fear mongering of its need to break itself up etcetera. In fact, the greater risk for Telstra and its shareholders is to decide that it does not want to pursue that route and decides it wants to fight.

Dobbie: That means ultimately, of course, one network which all end users ultimately end up on. No room for infrastructure competition here, says David Havyatt:

Havyatt: It is as economically inefficient to have duplication on fixed-line networks as it would be to have duplication of electricity distribution networks, especially when you move to the point of an all-fibre network that can perfectly perform the functions of both telephony and pay TV.

Dobbie: And he says the only reason Telstra argue for the opposite is because they don't like the idea of not controlling the access network. He thinks they're control freaks, in other words! Of course when Telstra has been found to be anti-competitive, the ACCC is after them flapping a copy of the Trade Practises Act in their face. Telstra has every incentive to move slowly on any arbitration — the "negotiate-arbitrate" model is slow and allows for delays. It needs to be fixed says Pipe Networks' Dale Clapperton, but the new legislation might actually make things worse.

Dale Clapperton (Pipe Networks): Virtually all of Telstra's competitive carriers have a contractual framework with Telstra called a CRA, customer relationship agreement, under which they obtain access to eligible facilities and declared services. At the moment it is very difficult to negotiate substantive amendments to the CRA with Telstra. Telstra has a significant advantage in bargaining power over the competitive carriers. Because there is no alternative source for many of these services, the only real constraint on that is that the competitive carriers go through the currently broken negotiate-arbitrate process resulting in a more reasonable outcome on the terms that they have agreed to under protest. Under the new regime as it is currently drafted the terms of a negotiated agreement between the parties, and I use the term "negotiated" loosely — remembering that we are dealing here with Telstra who have no incentive to negotiate better terms, especially in relation to aspects such as pricing — will trump any access determinations or rules of conduct that the ACCC might make.

Dobbie: Which does sound like a step backwards for everyone except Telstra. And, of course, you can change the Telco legislation or make changes to the Trade Practises Act — but when you have a vertically integrated Telco, you'll always have difficulty proving anti-competitive conduct — and you'll always have suspicion. Here's Macquarie's Matt Healy again.

Healy: The most recent example that hopefully illustrates the sort of conduct that we have to deal with but also illustrates the opportunity, if we restructure the market, to remove that kind of conduct concerns the Deakin Exchange in Canberra. That Telstra exchange is in a building that a third party owns, so Telstra obviously has a lease with that third party to use the basement as a telephone exchange. That lease had lapsed and indeed the building owner had decided to redevelop. We, as an access seeker who has equipment in that exchange and have customers that we service from that exchange, were given weeks of notice that we needed to be out of there and we were not offered any real comparable service to move to on the shutting down of that exchange. You could just imagine that, for the weeks that we and other access seekers were given notice of when we needed to be out, how do you think that would stack up against the actual lease terms in terms of how long Telstra knew that it would be able to be in that exchange, and what sort of changes it needed to make to its investments to move to another operation and set it up so that it could transition all its customers onto another exchange? We got weeks but we suspect they probably got years. They certainly had a lease that allowed them to run to a certain point and they would have been given notification by the landlord that they were repossessing it in order to redevelop the building. All of that notice would have been absorbed within the integrated Telstra and made its way through to the retail arm so that it could deal with its customers to migrate them to the other building that would replace the Deakin Exchange.

Dobbie: And every telecommunications company has their own examples — we could talk about case studies for hours, maybe years — and not be any nearer proving the accusations as true or otherwise. Imagine, if Telstra did split, and all these allegations disappeared — what would their lawyers do? I still think they are the ones at most risk from this proposed legislation. Let's just have a moment's sympathetic pause for telecommunications lawyers.

Very sad. So, is the new legislation essential to the delivery of the NBN. Pipe networks won't say, Primus says it's more to do with the short term and David Havyatt from Unwired says there is the issue about whether, without it, Telstra would frustrate the progress of the NBN. Senator Birmingham raised the very real question of what if the Bill isn't passed — couldn't Telstra ramp up its investment only in the most profitable areas. If the NBN is built, isn't that fair enough. For example, competing ISPs obviously place their DSLAMs where they'll make the most money. And another great question from Senator Birmingham — if Telstra is separated, wouldn't they invest in infrastructure and would you, in fact, need the NBN? David Havyatt.

Havyatt: The chance for answering that hypothetical question was passed by Telstra in December 2007 when they chose not to bid for NBN version 1.0. They chose not to bid for NBN version 1.0 at the time on the basis that they could not get any guarantees from the government about structural separation notwithstanding the fact that the government had been clear from the day it announced the NBN process that the intention was that that network would be a structurally separated, wholesale-only network. So the short answer is that Telstra had the chance to go down that route and said no.

Dobbie: Although that was the politics of a vertically integrated telco. Split them up and see what happens. As Senator Birmingham points out:

Seantor Birmingham: Perhaps the government went about it in the wrong order. Regulatory reform before throwing out different NBN models might have been a more sensible approach.

Dobbie: Yes. Has it all been done a bit arse about? Maybe a separated Telstra could have done it cheaper — at one stage they were saying they could do it all for $5 billion, although that was, of course fibre to the node, and not for regional Australia. But it would be interesting to see if Telstra had been separated, for example, before Sol Trujillo got here, would its wholesale and network services arm have been investing in an open access fibre network without the need for government money — or perhaps a bit of government money for those hard to reach places. Why, if the restructuring of the industry will cure all known ills, does the government need to step in with public money for the NBN? And is there a risk that by rushing through the Bill, with such far reaching consequences, there's a chance that all the detail hasn't been thought through? Surely not!

Leave us your comments on ZDNet alongside this week's podcast. Next week more of the same, with disgruntled shareholders, the newly founded Australian Communications Consumer Action Network, the Competitive Carriers Coalition, ATUG and the folks in the suits from the Department of Broadband, Communications and the Digital Economy.

Join me for that — and for my daily podcasts on BNET too — for ZDNet.com.au. I'm Phil Dobbie — thanks for sitting through another Senate hearing — you did well. I'll see you next week.

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The annual event, which ends today, attracted the attendance of Australia's ICT Minister Stephen Conroy, representatives of the Korean government, and around 150 industry figures.

Joyce told those present that his government has a NZ$300 million program to help deliver rural broadband to the 25 per cent of New Zealanders who live in rural areas. This is in addition to a NZ$1.5bn ultra-fast broadband urban fibre initiative.

The (rural) policy will ensure that 93 per cent of rural schools will receive fibre, enabling speeds of at least 100MBps, with the remaining 7 per cent to achieve speeds of at least 10Mbps through other technologies such as wireless and satellite, he said.

Providing wireless to schools is helping local communities around them access similar broadband services. But fibre backhaul limits the delivery of rural broadband. Getting fibre backhaul into rural communities will also allow other technologies such as wireless and cellular to play a larger role in rural New Zealand.

Wireless initiatives will play an increasingly important role in bringing faster broadband to rural households and businesses. Comparative to many countries, New Zealand has allocated large amounts of spectrum for wireless broadband use, and the government continues to look for new opportunities in this area.

Right now, the government is considering plans to release the digital dividend spectrum in the 700MHz band for future mobile and fixed broadband wireless solutions after analog television is switched off, the minister said.

New Zealand's Ministry of Economic Development released a discussion paper on Radio Spectrum Management and the Digital Switch Over (DSO) process in August, seeking submissions by 30 September.

The New Zealand Government expects DSO to take place sometime between 2013 and 2015. For television, the aim is to achieve DSO by 2015 at the latest, to maximise the economic benefit, which is estimated to be NZ$230 million (providing the switch-over occurs by that date).

A tentative date will be announced when digital take-up has reached 60 per cent, and a final date will be announced when take-up is at 75 per cent, or in 2012, whichever comes first, Broadcasting Minister Jonathan Coleman said in May.

Ernie Newman, chief executive of the Telecom Users Association of New Zealand (TUANZ) said today that using analog tv frequencies for wireless broadband was an issue he had to get up to speed on but he would look at it with interest. The Australian government plans its own DSO by 2013.

Last week, the European Commission called on member states to speed-up their switch over from analog to digital television to free up spectrum for wireless broadband services.

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David Crafti
(Credit: Pirate Party)

These discussions had their roots back in 2006 when the US and Japan floated the idea of a new treaty to help build joint intellectual property rules to fight counterfeiting and piracy. June 2008 saw Australia included along with other countries.

The most recent round of discussions started this week in Seoul and was set to deal with "enforcement in the digital environment". Reports based on leaked information say that the discussions are focusing on issues such as making safe harbour for internet service providers contingent on deterring users storing and transmitting content that infringes intellectual property. Deterrents could take the form of terminating subscribers based on a three-strikes scheme.

The discussions have until now, apart from leaks, remained secret, with the Australian government giving as a reason that it is "accepted practice during trade negotiations among sovereign states to not share negotiation texts with the public at large, particularly at earlier stages of the negotiation", while the US government quotes national security. Parties who saw documents were reportedly required to sign non-disclosure agreements.

The Australian Pirate Party, formed last September to champion copyright, free speech and privacy issues, decried the discussions and their secrecy. "It is an alarming development, we need people to speak up and make it known to the Australian government that this is atrocious. Secret negotiations, with no transparent public consultation for a treaty that threatens to further compromise our civil liberties and expand the already damaging and draconian copyright monopoly is unacceptable." David Crafti, Pirate Party Australia president, said in a statement.

The secrecy and the treaty, which would be used to give a monopoly to an innovator and not to foster innovation were tyrannical, he said.

Another Pirate Party spokesperson, Rodney Serkowski, said that the talks were being conducted in complete disregard for civil liberties. "Any move to disconnect any person from the internet because they are partaking in cultural exchange by sharing privately and non-commercially is offensive. We completely reject any plan to make carriage service providers de facto copyright cops. ISPs should be given no right or responsibility to snoop through private communication. We wouldn't tolerate it with Australia Post, so we shouldn't tolerate it with our internet connections," he said.

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McAfee Total Protection 2010 is the latest in McAfee's security stable to offer all the bells, whistles and options that the company can squeeze into one security suite. This program is nothing if not extensive, as the following screenshots show.

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Despite a day which saw several shareholders attack Telstra's chairwoman, Catherine Livingstone and its chief David Thodey at the telco's annual general meeting (AGM)over billing woes and the performance of Telstra shares, shareholders have supported executive remuneration levels.

Each year shareholders vote for or against the salary as well as long and short term incentives Telstra offers its top executives. The remuneration report is included within Telstra's annual report.

Shareholders voted overwhelmingly for the remuneration report with 95.88 per cent in favour and 4.12 per cent against.

The "yes" vote was a marked difference to the outcome of the vote in 2007, which saw just 33.82 per cent endorse executives pay levels. Last year 95.89 per cent had voted for that year's remuneration levels.

This year's near unanimous vote came despite outrage over former Telstra chief Sol Trujillo pocketing a $3.7 million in "termination benefits" last financial year.

Michael Perry of the Australian Shareholders' Association told Livingstone that Trujillo's remuneration was "excessively generous in both terms and quantum". Livingstone defended the pay out on the grounds it had been negotiated as part of Trujillo's contract. "Whilst it was to the letter of the contract, it was simply far too much," Perry said. "I would like you to take that on board."

A $1 million bonus awarded to group managing director (MD) of Telstra Networks and Services Michael Rocca was also criticised by a shareholder at today's AGM. Livingstone defended that decision on the departure of Trujillo ring-in, former chief operating officer, Greg Winn, who left Telstra earlier this year. Winn's departure came during the final stages of Telstra's $5 billion technology transformation, which meant Telstra needed to pay a retainer to Rocca.

Shareholders also voted on the appointments of three new directors. Former MD of Microsoft Australia Steve Vamos was voted in, along with Telstra's chief financial officer, John Stanhope.

The outgoing board member and chair of Telstra's remuneration committee Charles Macek was today congratulated by Livingstone for aligning Telstra executives' pay to the company's financial performance.

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• Shareholders OK Telstra exec pay
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Fujitsu Australia chief Rod Vawdrey (Credit: Fujitsu)

"The Supply Chain brand and the Kaz brand are being gracefully retired," former Kaz head and current Fujitsu executive director of sales and business development Mike Foster said.

Fujitsu CEO Rod Vawdrey said that keeping the brands would not have been viable. "Economically it's very difficult unless you're running a federation of companies to keep multiple brands in the market place," he said. "Our strategy is to create one Fujitsu."

The company had been working over the last 150 days since the Supply Chain and Kaz deals to make sure that employees understood that the corporate knowledge and values of the companies would be absorbed, not ditched, according to Vawdrey. "So now we're at the point that we've announced to our employees that as of [Friday] the visual side of Fujitsu will be Fujitsu only," he said, which would mean contracts under Fujistsu's name as well as business cards and buildings.

Supply Chain and Kaz would remain as legal entities for a number of reasons, Vawdrey said. "There will be no need for any customer to redo their paperwork as a result of this trading change," he said.

Foster said that the integration was almost finished, with the new larger company ready to take on new challenges.

Vawdrey stressed that being big, around 5000 employees now in Australia, was part of Fujitsu's strategy. He believed the market would be segmented in specialists, and broad interest companies that could use their economies of scale to make things cheaper. Fujitsu was to land in the latter category, he said.

End-user computing was to be a big focus, he continued. Recently Fujitsu won an around $200 million deal with Qantas for desktop computing. The company had to hire around 150 people to service that deal, according to Vawdrey.

Also in the desktop space, Fujitsu was ready to help companies move to Windows 7. There had been a "huge amount of interest from corporate," according to Vawdrey, but as yet companies were still testing. "I can't say that I've seen any major companies moving now," he said.

Another major focus was going to be datacentres. Vawdrey said that there was around 50,000 square metres shortfall in datacentre space across Australia. Fujitsu had positioned itself to fill the gap.

This was likely to come from government, but also from financial services, a sector which Vawdrey said had been having "discussions" with Fujitsu about infrastructure-as-a-service.

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And what happens when you change the agenda of the Change Program, or program in some changes to the Agenda? Or which way actually is it? Not to mention whether there will be any change left in the budget after the program's agenda has changed.

Ratbags is ZDNet.com.au's light-hearted look at the Australian technology scene. Previously, we've poked fun at Stephen Conroy's internet filtering scheme and Telstra CEO David Thodey, Bing'd Google, investigated reports that the internet was going to run out of space, chased Microsoft CEO Steve Ballmer all around Sydney, set fire to and microwaved a bunch of hard disks and asked people what they think of Windows 7 — or was it KDE 4? We've even interviewed Fake Stephen Conroy in a hidden location.

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Madam chairman, I'm disgusted by you. You give us bad service and a bad share price

Telstra shareholder

"Madam chairman, I'm disgusted by you. You give us bad service and a bad share price," a tense-looking Sydney-based shareholder told Livingstone today during question time at Telstra's annual general meeting (AGM) held at the Sydney Convention Centre.

The shareholder went on to note that Telstra's share price had fallen from $7.00 when he had bought them to the current price of just over $3.00. "It's disgusting. The share price is your fault," he said.

Livingstone and Thodey's first AGM as the new face of Telstra was dominated by angry shareholders and disappointed customers; however, there was also widespread support and sympathy for Thodey in his dealings with the government over the telco's separation.

Just over 850 Telstra shareholders grabbed the once-a-year opportunity to vent frustrations on the telco and during question time honed in on executive remuneration, customer service, and how Telstra was handling negotiations with the government.

The overwhelming attitude towards the government's plan to separate Telstra via legislation currently before the parliament, was that Telstra needed to fight harder to preserve the status quo.

One shareholder who had travelled from Perth said Telstra should let the NBN Co and the government "die on the vine" and urged Livingstone not to vend Telstra's assets into the NBN. "Don't give them any assistance," he said to a small burst of applause. "The government needs Telstra more than Telstra needs the government... They forced us into a poker game with a gun at our head. Telstra should not be bluffed out of a poker game."

Another investor from St Lucia, Queensland, said he felt sorry for Thodey who faced a government that was more concerned about "becoming big" than shareholder value. He asked how Telstra could be "constructive" with a government hell bent on its destruction.

They forced us into a poker game with a gun at our head. Telstra should not be bluffed out of a poker game.

Telstra shareholder

Livingstone defended the strength of Telstra's negotiating style, highlighting that although it was not waging war with the government through the media, it was "just as tough" as Telstra was under Sol Trujillo and her predecessor, Donald McGauchie. "There are a number of different styles that can be tough," she said.

Livingstone hinted at the power that Telstra does have in its negotiations with the government by reminding shareholders that the telco has eight million customers which the government wants transferred to the NBN Co as soon as possible. She said to do this would mean shifting 4000 homes across the NBN Co every day for eight years straight.

Billing problems were also a source of annoyance amongst shareholders. One shareholder griped that he was still receiving phone bills for his dead father, despite requests to cancel the account. Another said she was happy with Telstra's $3.9 billion free cash flow (expected to increase to $6 billion within the financial year), but she was concerned apart of it was from her pocket thanks to billing errors on Telstra's part.

Telstra had organised for customer service representatives to be present at today's meeting. Livingstone several times referred concerned shareholders to address their concerns.

The remuneration of group managing director of Telstra Networks and Services, Michael Rocca, came under the spot light over a substantial pay rise he was awarded last financial year. Livingstone explained that Rocca's rise was in response to the departure of US Greg Winn because Telstra needed someone to complete its $5 billion technology transformation.

The shareholder who was disgusted by Livingstone later returned to the microphone, prefacing his question with the comment he would ask it more nicely this time: "Can you provide a bus from Town Hall (train station) to the Convention Centre?"

Livingstone did not answer the question.

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• Telstra launches new blogging site
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Communications Minister Stephen Conroy
(Credit: Suzanne Tindal/ZDNet.com.au)

The forum, dubbed "Realising Our Broadband Future", will be held at the University of New South Wales in Sydney on 10 and 11 December this year and feature Prime Minister Kevin Rudd as a speaker.

"This forum will highlight the opportunities and help our research community and commercial sectors plan for the digital applications, services and business models of the future," said Communications Minister Stephen Conroy in a statement.

However, relatively little of the conference program appears to have been organised, beyond the Labor contingent, which will also include Senator Kate Lundy, who is extremely active in the information technology portfolio, and Tasmanian Premier David Bartlett.

Other speakers will include NBN Company chief executive Mike Quigley, former ICANN chief Paul Twomey, Google chief internet evangelist Vint Cerf, and Nick Gruen from the Federal Government's Web 2.0 Taskforce. In addition, Aussie general manager of marketing Stuart Tucker and Iain McDonald, director of digital marketing agency Amnesia, will take the stage.

Speaking academics include Jeffrey Cole from the University of Southern California and Larry Smarr from the California Institute for Telecommunications and Information Technology.

Attendance at the forum appears to be by invitation, although the public can also register their interest on the website, and Conroy's statement said that webcasts of the plenary sessions and live audio of the specialist streams will be available. "The public will also be invited to contribute to the discussion via Twitter and through a collaborative wiki," the government's statement said.

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• Thodey warns challenging times ahead
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