news National broadband provider iiNet this week claimed Telstra was being heavy-handed with its treatment of wholesale customers in its new South Brisbane fibre area, virtually forcing them into signing up to agreements with its terms or facing the prospect of having their customers in the region cut off from broadband.
Telstra has chosen to replace the copper connections to about 20,000 premises in the region as its South Brisbane telephone exchange — where the copper cables terminate — is being closed in order to make way for the new Queensland Children’s Hospital in the area. The region is one of the first in Australia to receive fibre services to the home — but is not part of the Federal Government’s flagship National Broadband Network project, although the long-term plan is for the infrastructure to become part of the NBN.
The first customers recently went live on the network — including customers of ISPs who had gained wholesale access to the network.
iiNet has previously expressed its dissatisfaction with how Telstra is handling the switch for wholesale customers, with the company’s chief executive Michael Malone complaining in mid-August that Telstra wasn’t offering a multi-cast distribution option for IPTV, despite doing so on its copper network, for example.
However, in a post on broadband forum Whirlpool yesterday, iiNet chief regulatory officer Steve Dalby went further. “iiNet has now signed a fibre schedule after a lengthy and difficult process with the incumbent,” he wrote. “Our new customer plans are being finalised and we expect to commence the migration of our customers in the next few weeks.”
“The agreement is unsatisfactory and is signed with the knowledge that we have no choice, given Telstra’s massive power and the option of ‘sign before we cut your customers off’.”
Dalby said iiNet hadn’t been able to secure ‘like for like’ services on the network. “Telstra simply refuses to our request for equivalent services to those available over the regulated copper,” he wrote. “Instead of a state-of-the-art fibre to the home service being built, we have a fibre network that won’t cater for products currently being delivered on 50 year old copper.”
The executive claimed iiNet’s contract with Telstra had been signed “under duress”, and said iiNet would continue to oppose what he described as ‘anti-competitive’ practices and seek a better solution. “This is a clear example as to why Telstra must never again be allowed to operate the national telecommunications infrastructure, it’s why the ACCC must be hard-nosed about the structural separation undertaking and why I will never recommend Telstra to anyone,” Dalby concluded.
Telstra’s wholesale division has been invited to respond to the comments, but has not yet done so.
In an interview several weeks ago, Telstra’s general manager of wholesale products, Graham Bate, said that the telco had originally planned to start migrations in March, but after feedback from telco customers, decided to defer the shift until August this year.
The product suite available over the telco’s copper network — including features such as multi-cast and naked DSL — has evolved over a lengthy time period over the past decade. Bates said at the time that Telstra viewed the rollout as “the perfect opportunity for the industry and Telstra to derive some learnings about fibre”. And with respect to the complete suite of services available over copper: “The challenge is for us to replicate in our fibre product, something which customers have implemented in their own network — something which we haven’t implemented in our own network previously.”
There’s two sides to this story — and to be honest, I sympathise with both in fairly equal measure.
In the context of the wider Telstra network, South Brisbane is a fairly small project for Telstra, and it’s not clear to what extent the telco will have to modify its existing internal systems (such as billing) to be able to deliver similar services on fibre as it currently does on copper. I’m sure iiNet would like to offer its customers the equivalent of naked DSL — fibre without a telephone line, for example — but Telstra doesn’t even offer that to its own customers on its copper network at the moment.
In addition, I’m not sure to what extent multi-cast, for example, has been worked out as a technology on fibre. What internal development would be required for Telstra to get this working in a similar way as it works on copper? We just don’t know.
However, iiNet also has a point. Telstra must not be allowed to use its new fibre development in South Brisbane to set extortionate terms with its wholesale customers (who are also, obviously, competitors with its retail division). Are the terms it’s setting with iiNet extortionate? It’s not clear, as obviously neither party will release the fine details of their contract, although the ACCC may be able to get a hold of that information.
However, iiNet has been a great deal less vocal than other ISPs such as Internode recently on the matter of Telstra pricing and terms. I can only assume that this means when iiNet does get vocal on the issue, it is serious about pushing for a solution. This kind of push has become fairly normal in the telecommunications industry over the past decade — Telstra tries for terms which are a little too far, other ISPs complain to the regulator, and then we end up with a fairly decent middle-ground solution after arbitration. Let’s hope South Brisbane turns out well — or at least makes some progress before it is eventually handed over to NBN Co ;)