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
So, whilst Telstra is going to lease some of its infrastructure to the Government as part of the CBN it’s also going to build FttB infrastructure to compete with the CBN.
Telstra is making the government look silly. I thought Telstra would be more likely to play nice given that they’re going into negotiations for the copper leasing / rental arrangement. Maybe this is a power play intended to directly affect those negotiations in Telstra’s favour – which is understandable, and par for the course, for a private enterprise.
Either way, they’re making the CBN and the Government look silly, and it must be intentional, there’s little chance that it’s just collateral damage.
Sorry this what CBN wanted
Liberals wanted private sector to invest and build infrastructure. Where the NBN/CBN would make it unprofitable for any company to build their own alternative network
Right now Foxtel will be rollout a greenfield fibre network
So when you look back it on the situation now. You’ll remember why Liberals CBN plan was announced inside of a Foxtel studio and how ironic now
+1
Don’t get me started how Simon Hackett just been hired by CBN as publicity stunt. When most likely he’ll have zero effect CBN rollout
He’ll have a better effect running his own NBN
If these projects go ahead the NBN will not be able to make a return EVER.
This was the main reason for a full FttH rollout so that there was no way for potential competitors to offer a better or similar product. Now because the coalitions network will be so poor competitors can offer better products and I don’t see how Turnbull can say no.
If I was in line to get FttP faster than from the NBN I would be pissed if the Government said no.
“If I was in line to get FttP faster than from the NBN I would be pissed if the Government said no.”
You make it sound like the government cares if it pisses us off.
The whole point of CBN is to encourage private investment and sabotage or reduce the government rollout
In other-words government offers consumers a dud product and quietly reduced the rollout. Meanwhile private company swoop in to sign customers up to their faster/better alternative
So now we can see the intention of Industry to follow the path as predicted by those of us who read the Coalition’s NBN policy last April and described the problems inherent in their statements about the introduction of infrastructure competition. Clearly those statements suggest to large telcos precisely what we thought they meant, or they wouldn’t be gearing up for this.
Now that Telstra have officially and publicly joined the fray, we just have to wait for the Government to play it’s hand – they can either go back on their stated policy and block the telcos, or let them proceed and doom the NBN/CBN to collapse .
Personally, I think there will be a public display of hand wringing followed by provisional acquiescence to the telcos, followed by the revelation that the telcos had already proceeded down this path months before and the government wasn’t willing to risk wasting millions of private investment in ‘Nation building infrastructure’ by these good and patriotic companies, trying their best to succeed where the NBN had failed and bring affordable next generation broadband to working Australians.
Agree wholeheartedly. This is why work has stalled, and precisely why the government allowed infrastructure competition. At least there will be the provision for other networks than Telstra. Let’s all remember how horrible resold Telstra ADSL1 is to the average user. I for one would not want a Telstra FttB service, no matter the potential speed.
work has stalled? what? you better tell the guys working outside my place and down the road. they obviously missed the memo
“work has stalled?”
For the most part, yes…no new FSAMs, and the only work carrying on has been a very slow continuation of Labor’s NBN rollout.
when you have contractors protesting the lack of work, yes, the rollout is going slower than it could be.
Perhaps the guy working down the street is working for Telstra, not the NBN.
I have a friend with a cable connection. It’s been down more than it’s been up over the past month. When he finally got past the Telstra call centre fire walls, he was told it was because of all the work being done for the NBN. That caught him by surprise, mainly because no NBN map shows any work will be done for him or anybody near him in the foreseeable future.
So he asked what sort of work. The person explained they didn’t know, but work on the NBN has become a top priority since the change of government. That raised more questions that it answered (like what on earth does Foxtel HFC have to do with the NBN given no decisions have been announced), but the person he was talking to didn’t know anything more.
You know the tragedy here?
The Coalition will spin this as a “good” thing. Showing their much more and better improved “network” and “vision” has already borne fruit for competition in Australia. =/
And people *will* fall for that spin…. until they find out we’re back where we started. Telstra on top and we’re picking at the other left over networks for “2nd best” service.
Things won’t change for those people at any point – there are still plenty of people who believe the Telstra privatisation was a brilliant move.
Labor foretold this with their expert panel, and ABC Interview (Four Corners) with Conroy and now defunct Phil Burgess.
This is another reason why Labor went to FTTP in the first place.
Your a bit slow Dave why didn’t you start rollout of FTTB say 4/5 years ago when you had control of the shop and there was no NBN?
It’s only when TPG suggest doing this Dave wakes up!
Is there a problem Dave?
So now it’s back to the cable rollout race between 3 runners (Optus, Telstra, TPG) now instead of the Foxtel 2?
Are we going to now have in the big cities 3 sets of cable run out (in profitable areas) and jackshit in the regions?
Is NBN Co just going to be left with unprofitable areas and disastrously unprofitable areas in constant need of subsidy without the revenue from the profitable areas?
How long is Mr Fraudband going to run around with the bizarre idea that we can have infrastructure competition in Telco’s, when it’s just doubling or tripling of investment competing for revenue in a zero sum game of revenue extraction?
It’s OK to believe in free markets and competition, in the cases of public infrastructure like water, gas reticulation, electricity and sewerage it just doesn’t exist and never will.
Politicians like to pretend they can generate “competition” and have “artificial competition” in electricity when the providers all charge the same regulated rates and compete on free teddy bears and not price!
It’s really amazing these believers in private enterprise love to subsidise agriculture in the usual drought gift frenzy instead of just letting non viable business models sink.
They also love to sink fast fortunes of public moneys into a huge subsidised sinkhole of a road system with never a word about privatising the whole road edifice.
Politicians are nothing but two faced unprincipled frauds that inflict their bi polar personalities on the people, they’re lawyers so you would have to expect that.
Kevin – you’re a genius. You should be Minister. Too bad we’ve got the Fraudband Fop, Malcolm Turnbull
There is a reason he did nothing. Cause Telstra was making a butt load of money with no extrainvestment
All this does is further demonstrate how flawed the LNP ideology is and makes us as a country look like a bunch of halfwits!
Dave get that huge set of Telstra 16″ guns trained, take aim at Mr Fraudband and fire!
I hope Telstra starts to deploy the fttb, and this forces the government to HAVE to deploy fttp.
I know I have said this before…. But I am sure this will change nothing for the better of the NBN. If anything, they will use it as an excuse to scale back their NBN plans even further, claiming that Telstra and Optus can just do the HFC work to fill in HFC black spots and they will build FTTP to the new estates.
It will likely just come up as “proof” that the private market ~can~ provide high speed broadband infrastructure, so scrapping the NBN as a whole is the best for the future of the Australian market and its industries.
We buy the copper from Telstra
Telstra use all the money and build it’s own FTTH over the top and undercuts the CBN
win win for aus i am sure
:)
I think the previous minister may have said words to that effect, if not exactly the same, on 4 Corners a couple of years ago, and bluntly stated that it was the SOLE reason they changed to an FttP model from the original NBN plan.
“STEPHEN LONG: And to make matters worse, the Government received some shocking legal advice.
STEPHEN CONROY: If we were to go ahead with the fibre to the node proposal, we would essentially have to, not to put too scientific a point on it, cut the copper. That would’ve meant effectively that we would’ve appropriated Telstra’s property rights, and under our constitution if you- you have to have fair compensation if you take someone’s property rights. And no expert in the field, nowhere in the legal field, commercial field, would give us a suggestion that the sort of bill you’d pay to Telstra was anything less than $15-20 billion.
STEPHEN LONG: Plus, the expert panel advising the Government warned that a company – read Telstra – could retaliate by building its own separate network in profitable city areas, killing the value of the fibre to the node investment.
STEPHEN CONROY: The Government could spend $15 billion to build a fibre to the node network, pay $15-20 billion to Telstra for compensation, and then Telstra could take that money and build a fibre to the home network past you and strand 70 per cent of $15 billion on the side of the road.
STEPHEN LONG: And Phil Burgess says that’s exactly what Telstra would have done
PHIL BURGESS: Absolutely, that’s the way competition works. The only way it’ll be stopped is if they have laws that prevent it.”
source: http://www.abc.net.au/4corners/content/2011/s3188338.htm
Senator Conroy must be chuffed to bits about being proven right
Labor has been right on a number of times so far.
I would have to question one of the claims made in this article, specifically in the first par.
“…. in a move designed to both head off rivals and capitalise on delays suffered in Labor’s National Broadband Network project.”
1. The Broadband project has well and truly moved on from Labor’s NBN.
2. There were no moves by either Telstra or TPG to make such investments while the Labor NBN prevailed
3. Unfortunately your wording suggests that the Labor Govt is to blame for not nailing down MDU connections prior to the last election, which would be a very long bow to draw.
Telstra’s and TPG’s actions are a direct result of the current Govt and their dismantling of the original NBN. No more, no less. And imo they are indicative of the complete dogs breakfast that will result from the Liberal policy.
“Telstra’s and TPG’s actions are a direct result of the current Govt and their dismantling of the original NBN. No more, no less.”
This. Exactly. As soon as it became apparent the fibre network build was to be scrubbed; as per the Coalition final release prior to election, we could see this inevitable outcome.
And the bitch of it is, the ACCC may rule that Telstra and TPG and others doing this, constitutes sufficient competition (infrastructure) that they won’t block or rule against it. If the Minister relaxes the legislation, that’s it. Game over.
This is going to result in a massively fractured market, with varying technologies and suppliers; and will all but ensure NBNco does not remain financially viable. I’ve held this view, based on the evidence available (particularly since Turnbull began to have his thought-bubbles, and by proxy the market that that would result in).
Turnbull’s own report, makes this risk VERY clear. He is now stuck between needing to NOT change cherry-picking rules to ensure NBNco makes a return, and relaxing them to allow ‘free market’ forces to prevail (and thus destroying NBNco’s income).
That Telstra is already effectively publicly stating it will overbuild, and or directly compete against the NBN, suggests they are happy to profit from both income derived from leasing copper, and the income from a network that will compete against it.
Why not. Turnbull has all but handed them the golden egg.
The entire thing has turned into a (sick) joke.
And of course there is the conspiracy view (with all the ex-Telstra people on the board of NBNCo and all) that there is every intention to publicly build a white elephant with the view that it will fail, leaving it to be sold off to the only company – read Telstra – that can afford to buy it, and would do so for a pittance in the dollar
I think the CBN should be stopped completely. I’m happy with my 3G that delivers quality speeds at affordable prices.
“Market forces” will deliver me broadband way before the government *cough cough cough cough*.
Back to reality. Telstra is only saying this because TPG provides a real threat to their monopoly copper profits.
All the more reason why we should do the NBN properly. Turnbull loves his HFC, however, he forgets to mention that the HFC rollout was stopped because of anti-competitive practices.
It’s the government which is embarrassing the government. They are so wedded to competition, they don’t understand there are times (like building the Harbour Bridge or the rail network) when infrastructure does not lend itself to competition.
Turnbull has been on about infrastructure competition for the CBN for a long time. Perhaps he is almost ready to realise it is a really bad idea. We saw what this sort of competition cost Optus and Telstra with the HFC rollout (and now the airline industry). Pity government members are such slow learners.
I think that is great! Having one line (NBN) makes no competition. If each Telco does there own there will be more comp – And less lag on the lines :)
But there won’t be any real competition.
The 3 Telco’s will start their rollout, and just like HFC in the 90’s, will realise that they can’t all go into the same MDU because they will massively reduce their profits in trying to compete for a small amount of people.
Lets assume each MDU has 9 apartments (math on a friday arvo makes my head hurt :))
If all 3 Telco’s were to put FTTB in that apartment block, either 1 of them will get all 9 apartments, or between the 3 of them, they could have a split of 3 apartments each.
In that example, if 1 Telco got all 9 apartments, then the others have invested in putting FTTB there with 0 chance of making a return on it, if they each got a piece of the pie, the chances of an RoI are still pretty darned slim.
” If each Telco does there own there will be more comp – And less lag on the lines”
Not how it works…if a telco signs up a building for their FTTB, they own all the internet for that building in perpetuity. Read NO competition…you cannot change providers next year, you are stuck with the first guy you bring in.
“If all 3 Telco’s were to put FTTB in that apartment block, either 1 of them will get all 9 apartments, or between the 3 of them, they could have a split of 3 apartments each.”
I don’t see them all being able to install in the same building. That means they would have to each have nodes in the basement, and there just isn’t room or logistics for that.
By logistics, I mean multiple patch panels and frames for all the lines and nodes.
Does anyone else feel like someone just ran into the room, ate their own excrement and stood proudly awaiting recognition for their cleverness? How are there people this stupid allowed to walk around with the same rights as humans with actual brains? Can’t we put them in a zoo or something?
We live in interesting times. The next few months are going to be quite fascinating. After all, wanting to dismantle Labor’s policy with an added dose of ideology are obviously not the perfect recipe for vision.
I suppose with Telstra, they will be more inclined to roll it out nationally to these complexes, unlike TPG who will cherry pick where they want to deliver the service.
It should also be remembered Telstra wanted to build a network for it’s exclusive use, but was refused a regulatory guarantee for it’s exclusive use. Then there was the famous group of 5 that were willing to build the NBN mark 1 of FTTN. Those famous five is now a group of two.
In my opinion cherry picking should be outlawed for a better outcome for all consumers.
It’s funny how the big 3 are only talking about FTTB and nothing about FTTN.
Could it be because they know how bad the copper is outside of the MDU’s are.
FTTN relies on owning Copper to the Home… Only 1 company owns Copper to the Home.
The Copper in MDU’s is owned by the Strata Corporation of that MDU therefore anyone (with the Strata Corporation’s blessing) can run fibre to it and hook into the Copper.
this was embarrassing now its shameful. the telco/internet industry under the original NBN plan was relatively simple and manageable. there were issues with construction, but that aside businesses had a clear path to access or work with NBNco, clear understanding of what would be involved with install, clear ownership laid out, clear as to what and where the telco investment paths would lie and clear as to regulation.
now this? a fractured market is the least you can say – so far it looks like a completely unmanageable snarl with more ways to waste a buck than you can shake a stick at. it is just not tenable – and the sad thing is despite this all being obvious on the face of it; obvious and happening even before the ‘expert’ panel reports – there will most likely be 0 registration of these issues in it. i fully expect Ergas in particular to waltz out with a blindfold on telling us all how good this is going to be, there will be loads of competition under the CBN with a heaping side of how much of a mess the last lot made of it.
and the prospect of ACCC possibly giving this the nod as “competition” and entrenching this clusterfuck? noone is guilt free on this – i blame the libs for their stonking lack of vision and labor for being so stuck in their own navels the electorate rightly moved on without them, and left what good they did manage high and dry.
thanks fellas. no really, thanks.
I don’t know where to start but guys Telstra has a ginormous amounts of fibre already rolled out to the basement of every building in the CBD of every city in this country and even its outer CBD/fibre loops have a lotta of basements they pass. You can right now get it if your prepared to pay the price and there in lies the rub.
Funny enough one of the few companies that already have FTTB, a large fibre network and and powerful secret weapon, AAPT (All About PowerTel) was funnily enough bought out by TPG last month who, as the article notes announced their own FTTB product.
AAPT’s not-so secret weapon is an exclusive access agreement picked up via PowerTel allows for the use of EnergyAustralia, CitiPower and Energex conduits.
Obviously fibre products require a lot of wholesale bandwidth but as we all know TPG aren’t too fussed with offering a sickeningly oversubscribed service to customers. Word in the NOC sewing circles is they operate at 100:1.
The fact that this has happening now is because
1. The government has flagged to the industry that it will allow for a variety of last mile solutions in the NBN. This is a huge flag to the industry that NBN will buy your networks, be it xDSL, HFC, FTTB, FTTN and FTTN. See with the ALP plan if you had a fibre/HFC network great you’d be bought out but all those sad face xDSL network owners, who had plowed hundreds of millions into DSLAMS, oooh boo hoo, weren’t getting bought out.
So in a back room deal the industry has agreed to sell a hodgepodge of overpriced, last mile solution to a government desperate to have 75% of the population signed up by 2015 to the NBN.
Hell its almost too easy to take advantage of the federal government, it’d almost be considered unfair until you realised that their all in cahoots and simply paying off the members of the own party.
Almost all of the couple hundred Directors, executives and senior General Managers in the telco industry are proud liberal party supporters/members.
2. Wholesale Back haul has dropped massively in costs (which should be a much bigger story). Even though we pay an arm and a leg for congested oversubscribed mobile and fixed line Broadband the price per mbps of bandwidth to supply has dropped almost to the equivalent of US prices.
The last wholesale pricing deal I saw had the rates pegged at around $35 per mbps and that was back in 2011, for a couple gbps of bandwidth. I could easily seeing it below $10 now which makes you wonder what your paying for when your paying $60-$100 a month for your internet.
So now you could offer say 100:1 customers per 10 mbps of bandwidth, all with 100mbps services and still make a ridiculous amount of margin.
3. Having connected customers, especially in the SME space allows you to hock off, especially to these captured customers, variously over priced layer 3+ services or “cloud”, “Managed Services”, “network access service cloud managed technology solutions….whatever, just another way of describing the racks and spare servers they have in their over-capitalised data rooms is where they can sucker customers with huge margins.
Telstra, TPG and co all know this but they don’t care. They can hock these NTTB networks off to the government for massive profit before the crap hits the fan.
Just on the political thing don’t think i’m an ALP supporter either. The NBN has shredded dozens of people, mainly ALP insiders installed to “control” the flow of information coming out of the NBN. These people were getting paid hundreds of thousands of dollars with little to no knowledge of how to deploy a fibre network but were tasked to ensure positive news was perfectly timed for maximum benefit whilst negative information was buried.
Considering all of the corruption that is going on its little wonder its just a free for all these days. The only people won’t don’t realise it are the public who are basically paying for this.
Its just like prohibition/drug interdiction (which has failed us utterly as well) for every big corruption that gets discovered dozens are slipping by.
There’s always a way for politicians to claim they have succeeded…
Obviously if companies such as Telstra and TPG, start investing in FttB, MT will suggest his policy of reliance upon private enterprise was correct and he alone saved taxpayers $b’s…
Of course the media will agree, the average cretinous Tele reader/2GB radio listener/Bolt fan will agree (although totally unaware at what he/she is agreeing with)… and MT, although setting us back decades, will be re-elected and heralded.
And we all live unhappily ever after…
:/ amazing
If the LNP’s popularity continues at to be at this level at the next election, they won’t get in again.
“Now that Telstra have officially and publicly joined the fray, we just have to wait for the Government to play it’s hand – they can either go back on their stated policy and block the telcos, or let them proceed and doom the NBN/CBN to collapse.” (TrevorX)
For the current government, those are the only two options now and do you really think the Liberal Party would go back on its stated policy that has been stuck on a certain way through several years of a hot-button issue? Hello, infrastructure competition. All the signs have been pointing to it since last September. You know the Liberal Party. “Just get the private sector to do it.” The Tasmanian affair is a short-term sideshow. When the polls start looking positive again (and they will), look for the bill to be introduced to parliament. In the meantime, expect more stalling and appeasement like the Tasmania thing.
“Infrastructure competition” – which in fixed-line telecommunications is not competition, I know.
Renai – you often give comment and opinion when reporting news like this – I am keen to hear your views
I’m planning a longer piece on this.
Isn’t this what Malcolm Turnbull touted before the election, “Infrastructure Competition” so that he can do less.
Now that 2 big Telco’s are doing FTTB, which is a majority of Malcolm’s MTM model, which chess piece do you think he will move next?
Wireless isn’t the answer, FTTN isn’t the answer (because they don’t go into Apartments (like FTTB does).
Two options, cancel all together, and string some dodgy regulations, or rollout FTTP as planned.
Very limited time to make a decision, especially with May Budget coming.
And the mini-monopolies will spring up like mushrooms and the great pile of BS that is the Libs broadband disaster.
Australia… the joke is on you.
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