Telstra signs first ADSL2 wholesale deal with People Telecom

Stuart Corner
Friday, 08 August 2008 08:03

IT Industry - Strategy

Competition in the ADSL2+ market is set to ramp up with People Telecom (ASX: PEO) becoming the first service provider in Australia to sign a wholesale agreement with Telstra enabling it to resell Telstra's ADSL2+ services.

People Telecom says it will rollout "in all major states and regional areas" in coming weeks. The agreement follows the $200 million wholesale agreement covering fixed wire, broadband and data services, signed by People Telecom and Telstra in February this year. CEO John Stanton told iTWire:  "We have a whole of business wholesale agreement with Telstra and we have been pushing for this [ADSL2+] every since they introduced ADSL2. At first they did not want to do it, but they have come around and we have worked with them throughout the process."

He added: "we have worked with Telstra to engineer a product that is high quality and supported by a premium network configuration – so it actually delivers on the benefits of superior technology and gives users a high-speed, hassle-free experience."

He said the deal would "provide an opportunity to debunk some of the myths around broadband technology," claiming that other ADSL2+ services failed to deliver the full bandwidth available from the technology because of high contention in the backhaul. "There tends to be a consumer perception that all ADSL2 services are higher speed and higher quality compared to standard ADSL services. That's not always the case, because many ADSL2+ offerings in the marketplace are highly-contended, low cost products that actually offer slower speeds than, for example, a high quality 8Mbps ADSL service."

Stanton would not reveal what contention ratios People aimed to achieve with the service but said that it had commited to Telstra to meet certain levels of performance in its part of the end to end service (it collects the traffic onto its own equipment in Telstra points of presence) because Telstra did not want the service to get a reputation for poor quality.

People presently resells Telstra ADSL1 services in metro (70 percent of services) and regional areas (30 percent) and Stanton said it would offer ADSL2 throughout its current footprint (it does not provide ADSL services in Tasmania). About 50 percent of the current customers are business and 50 percent consumer but "we don't operate at the low end of the market with $19.95 offerings," Stanton said.

People Telecom in March cut up to 31 percent off the price of its 8Mbps broadband ADSL1 services and added new features including peak/off-peak downloads and capacity top-ups. Stanton said at the time the recently completed upgrade of the People Telecom core network, including the incorporation of Redback Networks' ethernet -based edge technology, had enabled additional feature sets to be supported and would allow much higher numbers of customers to be accommodated.