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A view from the Milne

A view from the Milne

ARN: What are some of the defining features of a successful online service provider in Australia?OzEmail CEO Justin Milne: One of the distinguishing features about OzEmail is that we have been in the online publishing game for a long time. With five years experience behind us, we were one of the first companies providing online content in Australia. The trick has been to use this first mover advantage without taking it for granted.

Because we have been around for a while, we have managed to arrange our content offerings in a way that doesn't bleed us to death. We are entering a period where business profits are going to be squeezed, and a lot of the online information providers are going to be squeezed if they can't turn a profit from their online offerings. We are already ahead in the game because our online information is a value add to our core ISP business.

Interestingly, over the last six months, the number of people joining us who already have experience online has increased dramatically. We now have a solid base of people that joined us early in the piece and remained loyal throughout, and we are finding that people who have shopped around for other ISPs are returning to the fold. The content provision is an important element of attracting new users as well as return clients.

What are the key elements of an ISP business?Going forward, the things that will differentiate one ISP from another are reliability, security and privacy. People need to know they will have access to the Internet when they need it, a secure environment in which to conduct business and e-commerce and a private connection for personal or business use. We are focussing on providing a reliable, secure and private service.

It may have been hyped as a new economy but the fundamentals of business continue to apply. You need to provide a great product and reliability is fundamental. We are in the business of trying to provide a 99.999 per cent reliable service, and we are just about hitting the mark. Obviously there are some things you can't control, like when someone puts a backhoe through the Telstra cable, but for the most part we are investing in the back-up technology that will ensure a 24 x 7 reliable service.

We are also aiming to be at the forefront of providing a secure framework to enable further developments in e-commerce. As an ISP, OzEmail is already in a privileged position because our customers trust us with their credit card details. With the launch of our new OzEpay service, we will be able to offer our customers access to online commerce without having to send their details over the Internet. Most studies show that concern about security is the greatest inhibitor to the development of e-commerce. We are planning to overcome that by offering OzEmail customers access to online commerce without the concern about security.

For an ISP, invading people's privacy is just a dumb thing to do. Companies that do it are going to lose. Basically people don't like Big Brother watching them. DoubleClick learnt that lesson last year. There are now lots of ISPs and similar organisations in the world that have that capacity to gather significant personal information about their subscribers, but as far as I am concerned it is not a capacity OzEmail will be using - the privacy of our customers is paramount.

Advertising customers especially are very interested in the information we are able to gather about our subscribers. However, if we were to provide them with that information it would devalue us as an ISP, and our relationship with our customers is what creates value for our advertisers.

What are some of the other major hurdles facing the growth of online commerce in Australia?We have two major hurdles: the Government and Telstra.

The biggest inhibitor of e-commerce and the IT world generally in Australia is a bunch of policies and regulations that inhibit the development of broadband services. We've got the infrastructure in place - we have a telephone system that goes right into people's houses. That infrastructure alone could provide every Australian with serious broadband connection.

However, Telstra won't make those twisted pairs available to their competitors. We want to get access to those copper pairs and we think we have a right to get access to them. We think Australians have the right to get access to them.

Those copper pairs don't belong to Telstra, they belong to the Australian people. We paid for those copper pairs to be laid with our taxes. We want to use that infrastructure to provide a DSL service but the price at which Telstra will "rent" us the copper pairs is prohibitive.

The fact is that Telstra will sell us wholesale access to the twisted copper pairs at effectively the same price they will retail it for. So I can either go out of business trying to offer competitive rates or attempt to get Telstra to come to the party.

In many parts of the US, the twisted copper pairs are made available for 8 bucks a month - consequently DSL in the US is going at 100 miles an hour.

Meanwhile in Australia, Telstra will do exactly what it did with ISDN connectivity, they will fight tooth and nail, exchange by exchange, court case by court case, letter by letter, to deny people like OzEmail access to the local loop.

It is only Government policy that will force them to do it, and of course the Government is completely absent from all of this.

Many of the international carriers won't come within a bull's roar of Australia with policies like the ones currently in place.

Traditional media organisations have been actively lobbying the Government on connectivity issues. The digital TV debate has seen the Government and the free-to-air stations do a deal from hell as far as the Australian people and companies like us are concerned. The digital TV spectrum has been handed free to the free-to-air stations, and handed to them in such a way as to preclude any competitors in this space.

The digital spectrum should be able to provide a 24Kbps download speed via a set top box. The implications for information, education, government services and e-commerce are huge.

These are real national infrastructure issues, but John Howard's vision is lacking when it comes to connecting Australians. As a direct consequence of Government policy over the last three to four years, Australians are not getting broadband access and we are way behind the rest of the world. In a year or so we are going to be way behind the rest of Asia. We will be the poor cousins when we should have taken the lead much earlier in the game.


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