Australia | Dec 01 2006
By Greg Peel
The states are revolting.
Not intent to hang around while Telstra (TLS) plays games with the regulators and the Australian people, and while the government does squat, Queensland, WA and NSW all have plans to establish their own broadband infrastructure. Twenty-first century here we come.
“Governments recognize the community value of affordable, widely available and high speed broadband, and will change the competitive/regulatory landscape to force Telstra to invest in fibre or lose market share”, note the analysts at Morgan Stanley.
To be fair to Telstra, the shelving of FTTN was said to be due to insufficient returns on the capital investment, determined by the fact the ACCC insists every Australian, whether in the Sydney CBD or beyond the back of Bourke, should pay the same price for broadband access. An equitable policy, but one that has threatened to hamstring the delivery of high-speed video services and other business advantages enjoyed by more forward-looking nations. And if Helen Coonan is happy enough with ADSL, then everyone should be happy with ADSL.
Morgan Stanley reports Queensland is seeking proposals for a $550m fibre-to-the-home network in the Brisbane metro area. The government will provide its sewers, telegraph poles and rail easements, and access will be open to competing service providers. Peter Beattie has thumbed his nose at the federal government.
The WA government intends to route all government traffic ($100m pa) over a new high-speed network across the entire (sparsely populated) state. Again, it will be open to all service providers, and private interest is sought.
The NSW government is taking a different route, emulating that of San Francisco. NSW’s major commercial hubs are disadvantaged by a lack of high-speed broadband in some of Australia’s most populous areas, so the government proposes to establish “muni-wifi” in various areas – for free.
Morgan Stanley points out that Telstra’s decision to shelve FTTN made sense commercially, but on a longer term basis may need to be reversed.
In many other parts of the world, where governments show understanding of the situation, copper and cable providers compete with each other to ensure the fastest, most competitive service. The copper networks have been forced to go to FTTN in order to survive. The situation is not the same in Australia, where the government has allowed Telstra to own both. This had allowed Telstra to call the tune, and we thus might as well still be using carrier pigeons.
Morgan Stanley sees it as unlikely that a system such as NSW’s muni-wifi will take major market share away from Telstra’s NextG network, but it will put a cap on how much Telstra can realistically charge. Says MS:
“There is a big difference between paying $100/mth because it’s the only game in town, and paying $100/mth because it’s a better service than the publicly available free wi-fi network.”
Subsequently Morgan Stanley continues to question Telstra’s financial projections, and feels the incumbent telco will be ultimately forced to build an FTTN network eventually.