Paul O’Sullivan looks back at 20 years of Optus

Competition in telco space is not over yet warns Optus chief executive

Optus chief executive officer, Paul O'Sullivan.

Optus chief executive officer, Paul O'Sullivan.

It was 20 years ago on November 19, 1991, when Optus was granted its carrier licence. Since then, the telecommunications company has survived many ups and downs, some of which current chief executive, Paul O’Sullivan, outlined at a Committee for Economic Development of Australia (CEDA) event in Sydney.

According to O’Sullivan, Australians began to benefit immediately from having a second telecommunications player in the market.

“Before we were granted our [carrier] licence, you might remember that you had to apply for your telephone,” he said. “If it didn’t come within a few months, you wrote to your MP or lobbied Canberra. You also only had one choice and that was a government provided service.”

Following the granting of its licence, Optus launched its fixed-line services where each household in Australia had the opportunity to say `yes' on a ballot to be preselected for long distance services.

By 18 May, 1993, it had launched its Global System for Mobile Communications (GSM) digital mobile network. “Today, that little network we launched in 1993 carries nine million Australians and we cover 97 per cent of the country with this network,” O'Sullivan said.

In 1994, Optus embarked on what he admitted was a “misadventure” called Optus Vision where it rolled out cable across Australia.

“Funnily enough another truck from Telstra would appear in every street we rolled out in and we ended up in a position of 20 per cent of Australia having two cables running down their street and 80 per cent of Australia having none,” he said.

“That was a big lesson for us as we wrote off $500 million in losses on that network,” he said. “We realised that you cannot compete in fixed line telecommunications on an un-level playing field.”

By the time of the Sydney Olympics in 2000, Optus had achieved $4 billion a year in revenue with three million customers.

However, the company had what O’Sullivan referred to as one “nasty appendage”; it was losing $600 million a year in cash as it tried to expand.

In 2001, the company joined Singapore Telecommunications (SingTel) which he described as a turning point in the history of the company. “With their technical knowledge, financial discipline and understanding of technology and how to capitalise on it, we turned the company sharply around and within 18 months we went from a loss of $600 million to over $500 million in positive cash flows,” he said.

O’Sullivan added that the company was set to post revenue figures of $9 billion in 2011.

However, the battle for competition was not over and to mark its 20th anniversary the telco has released a report conducted by analyst firm, Ovum, called Unfinished Business.

In the report, analyst, David Kennedy, found that while the average mobile voice price declined by almost 50 per cent since the introduction of full competition in 1997, fixed line prices had gone up by 68 per cent since 1998.

“The last 20 years can be categorised as a tale of two markets: A mobile market, where lower barriers to entry have led to a level playing field and a fixed market where the legacy of a vertically integrated incumbent has slowed the growth of competition,” Kennedy said.

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Tags ovumoptussingtelTelstraPaul O' Sullivan

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3 Comments

Richard Ure

1

If the Telstra trucks were following so quickly, why did it take so long for Optus to work to what was happening and stop their roll out?

gnome

2


@RU, who said anything about 'so quickly'? Let's look at what O'Sullivan said:

'...another truck from Telstra would appear in every street we rolled out in and we ended up in a position of 20 per cent of Australia having two cables running down their street and 80 per cent of Australia having none,” he said.

Seems clear enough; some time after Optus rolled out their HFCC, Telstra duplicated nearly every Km involved. Nobody said it was done quickly - we are talking about Telstra, after all.

K Deem

3

However it does very clearly show why something as important as a countries progression in the realm of IT and telecoms should not be 100% left to the private sector.

Telstra would only act beyond their rorted status quo comfort zone, if another company threaten said status quo, this lead to stagnation that was also compounded by 12 years of governments avoiding the subject.....

Something had to happen, and I for one am glad it did.

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