Telstra vows to outdo NZ

Australia could leapfrog New Zealand if its government takes up Telstra's offer to build a fibre-to- the-cabinet network that would provide higher speeds and at least as wide coverage as a similar broadband network being built here by Telecom.

Telstra says it would invest A$5 billion of its own capital and a $4.7 billion soft loan from the government to build a "cabinetised" network that would reach 80-90 percent of the population, so long as it avoids the regulatory fate to which Telecom was subjected.

The network would use VDSL2 technology to provide download speeds of 25-50 megabits per second (Mbps) to 65-75 percent of households it reached and speeds of 12-20Mbps to the remainder. Telstra could start building the network next year, but gave no completion date.

Telecom is investing $1.4 billion cabinetising its network as part of its undertakings on operational separation agreed with the previous government. It is deploying ADSL2+, an earlier generation of the same copper-line technology proposed by Telstra.

Telecom has promised speeds of at least 10Mbps to 80 percent of New Zealanders by 2011 by laying fibre to roadside cabinets, thereby shortening copper phone lines. Fourteen thousand customers who have already been cabinetised are getting average speeds of 12Mbps and the first 750 of 3600 cabinets will have been installed by June.

Telstra chairman Donald McGauchie said, in a 12-page letter to Australian communications minister Stephen Conroy outlining Telstra's plan, that there was now "substantial evidence" that the operational separation of BT in Britain and Telecom in New Zealand had failed to deliver large-scale investment.

"On the contrary, there is very direct evidence that no benefit has flowed to consumers, but instead, the main effect has been a dramatic reduction in separated companies' market value in two years, resulting in a very significant reduction in their ability to spend the very large sums of capital required across their networks to deliver fast broadband to a majority of their customers."

Telecom spokesman Mark Watts says Telecom would not respond to Mr McGauchie's comments regarding its performance. "We shrug them off. They have caused nary a ripple."

Telstra's access network would be built by 4000 workers using equipment supplied by Alcatel- Lucent, which is also the main contractor for Telecom's network.

Other telcos would be able to wholesale the network on the same terms as Telstra's retail units, but Telstra says the deal would be off the table if the Australian government sought to operationally or structurally separate Telstra or "unbundle" its cabinets, as Telecom will be forced to do in New Zealand.

It is also contingent on there being "no further material dislocation in financial markets or an economic contraction".

The Australian Government will also consider a rival bid to build a cabinetised access network submitted by Terria, a consortium of telcos led by Singapore Telecom- owned Optus.

Telecom subsidiary AAPT pulled out of the consortium in October.

The Australian Financial Review said the Australian government could announce a decision on a preferred bidder for the access network next month, but contracts might not be signed till the second half of next year.

Telstra says the recent sharp depreciation of the Aussie dollar has pushed up the cost of its proposed network by A$1 billion because fibre optic cable and networking equipment is priced in US dollars and euros.

- © Fairfax NZ News