[LINK] Telstra ultimatum on fibre

[George Bray]

The broadband saga escalates, and now has a deadline.

   George



<http://australianit.news.com.au/story/0,24897,21868192-15306,00.html>

Telstra ultimatum on fibre
Jennifer Hewett and Michael Sainsbury | June 08, 2007

TELSTRA chief executive Sol Trujillo has warned the Government that
Telstra will cancel any plans to build a $4.5 billion high-speed fibre
broadband network if there is no decision on who should build it by
the end of next month.
Solly

Telstra CEO Sol Trujillo has given the government a month to settle
the Broadband stalemate

The private threat came as Telstra also attempted to ratchet up the
public pressure on the Government by revealing the cheapest price for
its proposed broadband network.

In a briefing to journalists yesterday, Telstra executives said the
company would charge $59 a month to its rivals for access to a basic
service.

But this would give users relatively slow speeds of 512kbps -- only
double the current basic model and just 1 per cent ofthe maximum
speeds of 50Mbps possible with Telstra's proposed new fibre network.
Customers wanting higher speeds would have to pay much more and
Telstra is understood to have plans to withdraw its $59-a-month price
after two years.

Optus quickly denounced the entry price and speed offered by Telstra
yesterday as an "insult to all Australian businesses and consumers".

Telstra's threat to pull its metropolitan fibre network is the latest
move in an increasingly bitter political fight over the future of
high-speed broadband for all Australians.

Telstra sources said Mr Trujillo had recently warned Communications
Minister Helen Coonan that Telstra would finalise its capital
investment decisions by July, and that it would not change its mind
later.

If there is no decision by then, the telco will instead focus on
upgrading the capabilities of its existing pay-TV cable network --
which passes only 2.4 million of Australia's eight million homes --
for its broadband expansion, leaving millions of Australians with
slower speeds.

The Government has been put in a squeeze between the prices Telstra
considers acceptable for its investment and those the regulator will
approve.

In political terms, it is desperate to have an alternative to Labor's
popular plan to spend more than $4.7 billion of government money
rolling out a national high-speed fibre network.

The Government is hoping to get around the impasse with the Australian
Competition and Consumer Commission by establishing a committee of
independent experts to judge the different pricing models.

But Telstra is making it clear it will not allow this procedure to
drag out conveniently past the election later this year.

Optus leads the G9 consortium, which has submitted much lower prices
for its own broadband network to the ACCC.

Telstra has rubbished the G9's proposal and pricing as totally
unrealistic, particularly as the plan depends on Telstra's traffic and
co-operation -- which Telstra insists it will not provide.

Despite the $59 entry-level pricing announced yesterday, Telstra wants
its average wholesale price to be about $85 a month and its top price
is understood to be well over $100 a month.

That would mean those wanting higher speeds would be paying much
higher prices in order to raise that average.

But Telstra has guaranteed to keep prices the same for 14 years, while
the G9 consortium is only promising to do so for three years.

Telstra executives yesterday said G9 would either transfer the risk to
the consumer or to the taxpayer, whereas Telstra was willing to be
responsible for the risk on behalf of its shareholders.

John Howard wants to guarantee as early as next week fast broadband
services of at least 12megabits a second to all Australian homes, be
it by wireless, fibre or improved copper services.

But again this would require the co-operation of Telstra.

Some government ministers are so outraged by Telstra's behaviour they
insist they are toying with the idea of breaking the telco up into
different arms.

But this is regarded as a largely empty threat - certainly before the election.



-- 
George Bray - University of Canberra, Australia