news The nation’s largest telco Telstra has become the latest private sector player to threaten to deploy its own Fibre to the Basement solution in apartment blocks around Australia, in a move designed to both head off rivals and capitalise on delays suffered in Labor’s National Broadband Network project.
In September last year, national broadband company TPG flagged plans to deploy so-called fibre to the basement infrastructure to some 500,000 apartments in major Australian capital cities, in a move which will compete directly with the new Coalition Government’s plans to conduct similar rollouts under the Coalition’s Broadband Network (CBN) scheme. Shortly after, Optus confirmed that it was investigating a similar option.
Although it is illegal for telcos to deploy infrastructure which competes directly with the CBN, under legislation enacted by the previous Labor Federal Government, both telcos are taking advantage of a loophole in the law which allows extensions of a certain length to existing infrastructure. Both TPG and Optus have existing fibre infrastructure in many areas in major cities.
In an interview with the Financial Review newspaper published this morning (we recommend you click here for the full article), Telstra chief executive David Thodey confirmed Telstra would follow TPG and Optus if they deployed FTTB infrastructure. “We’ve got an FTTB trial going now and we’ve had them for a few months,” Thodey said.
Despite the FTTB trials currently being conducted by all three telcos, it remains unlikely that any of the three will go ahead with a full-scale commercial rollout until they can achieve regulatory certainty about the fate of any such rollout.
In early February, Communications Minister Malcolm Turnbull made a public statement on the matter, also to the Financial Review, noting that it wasn’t clear how much scope the telcos had under the law to extend their networks. Turnbull added at the time that the issue would be examined by the Panel of Experts conducting a cost/benefit analysis of broadband and associated regulation.
The comments threw both potential rollouts — likely representing investments worth at the least, tens of millions of dollars — into jeopardy, as they opened the door for new legislation to stop the rollouts from going ahead, even if they are already partway through. The Coalition’s initial broadband policy stated that the cost/benefit study was due to be delivered within six months, meaning that it is not likely to be finalised before mid-2014, given that the Panel of Experts was appointed in mid-December.
Thodey’s comments also create a complicated situation for the Federal Government.
Turnbull has repeatedly stated that he is in favour of infrastructure-based competition in Australia’s broadband environment — even in competition with the Coalition’s Broadband Network. All of the network rollouts being canvassed by TPG, Optus and now Telstrawould be likely to provide infrastructure-based competition with the Coalition’s Broadband Network when it was eventually constructed, and hence undercut the finances of NBN Co in some regions.
In addition, the situation is further complicated with respect to Telstra because the telco is currently negotiating with NBN Co on the terms under which NBN Co could gain access to Telstra’s copper and HFC cable networks for the purpose of deploying FTTB, Fibre to the Node and HFC cable infrastructure. Those negotiations may also include discussions about the possibility of Telstra taking over construction for some sections of the CBN. It is likely that the Federal Government would see Telstra’s plans to deploy a FTTB network as impacting on its talks with NBN Co.
The situation also mimics events more than a decade ago when Telstra precisely duplicated the rollout of Optus’ HFC cable network.
Image credit: Telstra