Telstra's second broadband plan, "Plan B", would have initially guaranteed faster speeds to up to four million homes.
Plan B network upgrade off
Talks between Telstra and the ACCC to build a high speed new 'Fibre to the Node' (FTTN) network have ended after reaching an impasse over the level of subsidies needed to serve rural and remote Australia.
Telstra proposed to invest about $4 billion in a new high bandwidth broadband access network. It would have delivered broadband speeds of up to 24 mega bits per second, initially to about 4 million Australians in five major cities and later be expanded to regional areas.
The new speeds would have delivered much faster download speeds than are possible today - speeds that would enable people to download a three and a quarter hour movie – like Titanic – in less than seven minutes [the 10Mbps download time] as opposed to 49 minutes and 2 seconds on a 1.5 Mbps DSL speed.
Competitor Access
Competitors were to be given the access to the network that they wanted – true wholesale access that would have allowed them to offer individual and differentiated products and services to their customers. The access regime would have maximised their ability to offer alternative, competitive products and services.
Telstra sought an access pricing regime that would permit reasonable commercial rates, a level playing field to enable it to justify this investment to its shareholders.
Telstra sought prices that reflected the actual cost of building the network and providing services to all Australians.
The sticking point
As the FTTN was to be an upgrade of the existing network, the prices for FTTN access needed to take into account the cost of providing a services nationally, i.e. to support the existing cross subsidies that exist in order to provide telecommunications services to all Australians at the same price no matter where they live, or how much their services actually cost to provide.
While the principle of providing a subsidy was recognised by the ACCC, the talks reached an impasse when the regulator refused to accept Telstra’s actual costs.
Telstra could not legally or morally invest shareholders funds in a new FTTN network if it was not entitled to recover the costs of building the new network and permitted to make a commercial return on its investment that reflected the risk of making it.
Related items:
Proposed FTTN Service Description Summary
Telstra proposed to offer a wholesale access service to be called the High-speed Access Service (“HAS”), on its Fibre To The Node (“FTTN”) broadband platform. It was anticipated that the proposed HAS would be purchased by Access Seekers (“AS”) and used to deliver broadband, voice services and applications to Australian consumers within the FTTN footprint.
The HAS consisted of the following service elements:
- Broadband access in the form of a basic Ethernet transport service, at a choice of one of several defined access rates
- Analogue PSTN telephony access
The AS was to be responsible for the following:
- Providing appropriately engineered backhaul and aggregation from the Telstra Points Of Interconnect (“POI”) to their own facilities
- Self provisioning all services and applications above the basic Ethernet transport protocol layer and managing all aspects of these
- Managing aspects of their subscribers’ services through use of the HAS Operations, Assurance and Management facility.
Telstra would also offer backhaul and aggregation of the broadband access traffic from the associated HAS POI to a central location within Telstra’s network.
When an Exchange Service Area (“ESA”) is cut over to the FTTN platform, all Services In Operation (“SIOs”) within that ESA will be provisioned with data and voice capabilities, regardless of whether both data and voice services are taken.
The construction process would take 40 months. The existing copper distribution network would be used to connect each customer premise to a Digital Subscriber Line Access Multiplexer (“DSLAM”) located either in a cabinet placed in neighbourhoods or in a Telstra exchange building.
As a general indication, exchange facilities will most likely be used for end users within approximately 1.5 km of cable distance from an existing exchange. All DSLAMs were to be connected with fibre optic cable to Ethernet Aggregation Nodes (“EANs”) located in suitable Telstra Exchange buildings.