Optus to be forced to upgrade its 'lazy' cable network
Telstra has moved to force SingTel Optus to invest in its lazy and under-utilised cable network by seeking an exemption from providing access to Telstra’s networks in the same areas where SingTel Optus has its own cable network.
Because SingTel Optus has access to Telstra's unbundled local loops at regulated prices, it is connecting to Telstra's network in preference to its own cable network, which passes 2.2 million homes, or mores than one in four Australian residences. SingTel Optus claims that only 1.4 million homes are "serviceable" over its cable network, meaning they don’t want to make the investment to connect nearly 40 per cent of residences to the cable running past their door.
Rather than using access to Telstra’s unconditioned local loop (ULL) to augment its HFC coverage, SingTel Optus has deployed its ULLS infrastructure right over the top of its cable, covering almost 80 per cent of its HFC network.
Telstra has enlisted the support of a leading UK economist, Prof Martin Cave, in its application for the exemption. Prof Cave was one of the first to put forward the “ladder of investment” theory, which has ostensibly been used by the ACCC to justify how it regulates access to Telstra’s network.
The theory says that regulated access can be justified at prices that encourage competitors to progressively move towards their own infrastructure (climbing the ladder).
However, SingTel Optus had already completed deployment of its HFC network before the Commission declared ULLS back in 1999, and was therefore at the top of the ladder of investment in cabled areas. It has since used cheap ULL acces to climb down the ladder of investment.
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