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moving towards monopoly « Previous | |Next »
April 14, 2006

Fred Benchley, in yesterdays Australian Financial Review, reports on a development that addresses the issue of Australia's broadband in the slow lane. He says that Helen Coonan, the Communications Minister, and Telstra have made a significant breakthough in negotiations for the planned roll-out of Telstra's $3 billion fibre network, its broadband pricing and the sale of the government's $20 billion stake. Things may be all signed, sealed and delivered in early May.

If installed,Telstra's planned $3 billion fibre network fibre-to-the-node (FTTN) network to service 80% of the population would extend fibre-optic cable beyond the telephone exchanges — where it now terminates — to nodes within 1.5 kilometres of houses to ensure faster ADSL broadband connections. The last section between the nodes and houses would still use the copper wire used in the existing fixed-line network. This network would by pass the current copper network exchanges, and deliver around 16-32 megabits per second of high speed internet that would allow users to download films and music as well as use ordinary telephony.

The "significant breakthough" on the planned roll-out is ensuring Telstra's domination as the proposal is designed to make the local copper loop redudant in a few years. That leaves the smaller communications carriers who have installed ADSL equipment in Telstra exchanges to deliver their own local loop services stranded. It is this snvestment by the smaller communications companies that have allowed me to access broadband from the shack in Victor Harbor and high speed broadband in the apartment in Adelaide.

What we have is a monopoly.

Telstra is proposing to build the fibre network itself with no competer ability to add services as in current exchanges, and so competitors would be forced to simply resell Telstra's fibre services. The simple resale of Telstra fibre is not competition in the telecommunications market.

So what's going on? Devising a wholesale-only arrangment to boost the value of Telstra to prevent in decline in Telstra's wholesale revenues? That means more money for the Government in selling Telstra, doesn't it. Where does the ACCC stand in this? Well there have been talks between the ACCC and Telstra over a new fibre cable network, the release of the proposal has been pencilled in for May 5, and ACCC chairman Graeme Samuel has said public comment on the fibre network proposal could be sought as early as May.

Telstra is about Telstra.What is good for Telstra is not necessarily good for Australia. It is time to bust Telstra into network, wholesale and retail. Another possibility is to to encourage Telstra's competitors to build a wireless network, as is happening Sydney with Unwired. An even better possiblity is for the Howard Government to use the proceeds of the sale of its remaining slice of Telstra to build a new fibre network which all telcos can use. Is that even on the policy agenda?

| Posted by Gary Sauer-Thompson at 10:57 AM | | Comments (0)
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