Telstra wholesale 3G to beat NBN wireless clause?


news The maverick owner of national broadband provider Exetel has speculated that Telstra may be planning to provide wholesale access to its flagship Next G mobile network to get around the clause in its contract with NBN Co that will prevent it advertising its mobile broadband services as an alternative to the NBN fibre.

Unlike Optus and Vodafone, Telstra has previously proven reluctant to provide wholesale access to its mobile network, seeing the infrastructure as a competitive advantage. However, over the past several months it has softened its stance, confirming this week that it was planning to open up the network over the past six months. Speculation has thus far focused on the idea that the company will provide wholesale access to the normal HSPA+ sections of its network — but not the higher-speed sections based on the Long-Term Evolution (LTE) areas it is currently building, also referred to as fourth-generation mobile or 4G.

However, in a blog post yesterday, Exetel chief executive John Linton speculated Telstra may have ulterior motives for opening up access to its infrastructure.

“If I was a conspiracy theorist, which I’m not by any definition of that term, I would say that the only reason that Telstra would wholesale a high speed mobile service should be taken in the context of the strange clause in the “break up agreement” that forbids Telstra from “advertising its high speed mobile service in competition with the ‘NBN2’,” wrote Linton.

When Telstra unveiled its NBN contract in late June, it revealed a segment of the contract stated that part of the NBN deal is that it “may not promote wireless services as a substitute for fibre-based services for 20 years” from the commencement date of the contract. The Australian Competition and Consumer Commission believes the clause has the potential to harm competition. Optus has similar constraints in its own contract with NBN Co, although the terms of its arrangement are different.

Linton also questioned why it would take six months “to do something that requires no thought at all” beyond the decision to wholesale the service, and noted that he did not expect Telstra’s prices to be reasonable. Exetel currently wholesales 3G mobile broadband access from Optus.

“Does anone seriously think that Telstra will provide ‘real wholesale’ pricing for 4G mobile any more than it provides “real wholesale” pricing for any other product?” Linton asked. “If you do then perhaps you need to change your medication for something less mind-transforming.”

So far, Telstra is only known to have approached cut-rate ISP Dodo to re-sell Next G, although a number of other ISPs, such as iiNet and Internode, have also expressed their interest in gaining access to the company’s infrastructure.

Linton, however, didn’t appear to be confident that the opening up of Telstra’s network would generate positive outcomes for competition in the telecommunications sector. “… a ‘wholesaled’ Telstra high speed mobile service will be as effective in generating competition as a currently ‘wholesaled’ Telstra ADSL2 or PSTN service … totally ineffective,” he added.

This may sound strange, but I believe both Telstra chief executive David Thodey and NBN Co chief executive Mike Quigley when they say the wireless marketing clause in Telstra’s NBN contract won’t be a huge deal for the company in terms of Telstra’s ability to go to market with mobile broadband over the next decade.

As the Australian Competition and Consumer Commission noted yesterday as it released its annual report into the telecommunications sector, wireless broadband is becoming increasingly popular, but fixed-line broadband dominated the actual amount of downloaded data via broadband in Australia. In short, mobile broadband is primarily for light internet use at the moment, while fixed-line is for heavy downloading.

It will make sense for telcos — especially those which operate their own mobile networks — to focus on ‘bundled’ plans in future — offering a combination of fixed broadband over the NBN alongside mobile broadband through 3G and 4G.

However, it must be said that Linton’s question is a very interesting one — and one I was planning to raise this week myself. If another telco markets a re-badged Telstra Next G mobile service as an alternative to the NBN fibre, does that place Telstra in breach of its contract with NBN Co? I would think surely not … as the contract only binds Telstra. But it would be a fascinating situation that would highlight just how foolhardy that particular clause of Telstra’s NBN deal is.

Kudos to Linton — constantly an out of the box thinker — for raising the idea.

Image credit: Telstra


  1. Next g is already barley able to keep up with demand and in my area is slower than every other option dispite getting excelent signal in a High speed area

    If they do this I expect that very soon they will be the next Vodafone I have already jumped ship until 4G hits and then will try it and see if it is any better but I am sure lots of people have the same idea but it may be possible to get a somewhat usable connection for a couple of months it would be nice.

    Oh well will be moving once my lease is up if nothing happens soon :(

    if only internet in this country was not so stuffed :'(

  2. The day 3G becomes even close to what Fibre can provide in any location, I will eat my shoe.

    • I can tell you that with no congestion, 4G would come close to what fibre can provide.

      I have seen one of these Telstra 4G sticks in action, and (given that there is absolutely no one on the network yet) the performance was fantastic.

      Add any congestion into the mix and I won’t be surprised to see less than half. Especially in my area of melbourne CBD, typical Next-G Ultimate (set one up for someone in my office) I was lucky if I got 200 ms and 1.5 megabits, even luckier if I had a 3G signal at all (I suspect that one of the 3G towers was faulty on the Lonsdale exchange – I have direct LOS to it and the reception was still horrible).

      That said, Telstra won’t wholesale that, they will keep it as their flagship product and wholesale 3G.

      Which just means anyone with Telstra 3G that *isn’t* complaining about their speeds now? better upgrade to 4G as soon as 3G wholesaling commences.

      Also. Does anyone really think (even Telstra 3G) could compete with fibre? Imagine the ads now: “It can totally replace your NBN! It only has 100 times the latency and a 3rd the bandwidth, your Quotas are 10 times lower… but you can go anywhere you want on our network! powered by NextG“.

      4G however, if they wholesaled that? Would be worth worrying about. (for those 12/1 10gb/month users at least)

  3. Ive had 3g Wireless BB for 5 years as my main Net connection.. Apart from the convenience of mobility, its been awful.. So much so that, my contract was terminated without penalty.. Despite tower upgrades and improved modems, nothing has changed for the better.. No doubt, due to ever increasing demand for data.. Anyway, finally have ADSL2, thanks to Iinet investment in DSLAM .
    Im very close to exchange and get 12mbps download and 1mbps up.. A major improvement with 5 times the speed and 5 times the download limits for the same price (bundled)
    This is similar the Entry Level NBN offering .. But its as good as i can expect to get for the next 10 years , unless the NBN roll down my street..
    Point is Wireless wireless is good for mobility, but its terribly unreliable and slow and will never take the place of Fixed line ..

  4. Sometimes Linton makes some excellent points, other times he just rants about things he clearly knows very little about, or worse, doesn’t care to know.

    This seems to scream the latter, especially this part which you highlighted Renai:

    “If I was a conspiracy theorist, which I’m not by any definition of that term, I would say that the only reason that Telstra would wholesale a high speed mobile service should be taken in the context of the strange clause in the “break up agreement” that forbids Telstra from “advertising its high speed mobile service in competition with the ‘NBN2′,” wrote Linton.

    Now, I hate to burst your little bubble here Linton, but, as Merriam-Webster puts it:

    conspiracy theory noun — a theory that explains an event or set of circumstances as the result of a secret plot by usually powerful conspirators

    So you attempted to explain an event as a the result of a secret plot by powerful conspirators to the end of circumventing the wireless clause of the commercial agreements, which falls into the very definition of a producing a conspiracy theory, and you are somehow not a conspiracy theorist? What magic is this Linton?

    Also, I realise you have had the great fortune of running a small company Linton, and with a small company you may have noticed the ability for change to occur is quite rapid, however, if, and when, you get larger, you may begin to notice that the time it takes for change to occur is directly proportional the number of staff members you have.

    Further, if it wasn’t for the wholesale services of PSTN and ADSL2+, as well as LSS and ULL, Mr Linton, your company would cease to exist, so how can you say the mechanisms have been ineffectual at providing competition, when your very existence contravenes this assertion?

    He is right about one thing, the there is a contractual loophole for providers who wish to market resold NextG as a alternative to NBN services. That in itself is an interesting question, and one that I feel is probably irrelevant*, but as to the idea that Telstra are doing this specifically to allow this loophole? That is a strong leap indeed.

    *If companies wish to market products as an alternative to fixed-line fibre, they better be very careful how precisely they do this, because otherwise they could find themselves with a very large and costly class-action to deal with, or worse, a repeat of the Vodafail movement. The technologies are not equivalent.

  5. The NBN is going to move all of the heavy, demanding users onto fibre. 4G (LTE) promises faster performance.

    The NBNCo Corporate Plan provides interesting reading. NBNCo are predicting that 50% will connect at 12/1Mbps (page 118), and that of the premises passed by fibre only 70% will connect and 13% will be wireless only (page 116). The reason stated for people choosing wireless is sensitivity to price of NBN plans. The price difference between a 12/1Mbps plan and a 25/5Mbps plan is $5 (page 105; iiNet plans).

    How many of the 50% who are choosing the cheapest NBNCo option, would switch to wireless if the speed was comparable with NBNCo’s offered 12/1Mbps? Wireless plans are definitely cheaper: $9.90 with 1GB of data.

    the no competitive marketing clauses in the NBNCo contracts indicate they are seriously concerned. The marketing teams at the telcos will be champing at the bit, because the NBN means people have to make a choice. When they have an existing mobile phone and the provider says for an extra $20/month you can use your phone as a wireless hotspot, speeds are similar to the NBN and we will give you free access to facebook, google+ and twitter.

    So why should this concern those of us who plan to connect at 100Mbps and 1Gbps when available (almost) regardless of the cost? Simple the smaller the NBNCo customer base, the less people to share the cost of the infrastructure which means higher prices.

  6. The migration payments clause still apply to any wholesaled Telstra wireless services.

    So if a customer connects to a Dodo NextG but not NBN, then Telstra doesn’t get the NBNCo payoff

  7. The concept that Litton is NOT into conspiracy theorism is totally laughable!

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