NBN a threat to Telstra competitors says analyst

Stan Beer
Wednesday, 08 July 2009 07:23

IT Policy - Government Tech Policy

Despite the widespread ebullience about the announced Australian National Broadband Network, Telstra's competitors actually see it as a threat to their existing businesses - and they're right. This is the belief of a leading global telecommunications analyst.

David Kennedy, Research Director at Ovum, believes that the NBN will impose less favourable conditions on Telstra's major competitors than they currently enjoy using their own DSLAMs on the regulated copper network.

"Telstra’s competitors are currently abandoning DSL resale and are generating good operating margins on their installed DSLAMs," says Kennedy in a research comment about the Government's call for further submissions on the regulatory framework of the NBN.

"The NBN threatens this arrangement because it will ultimately force them off regulated ULLS (Unconditioned Local Loop Service) into the uncertainty of a wholesale fibre network, where wholesale pricing and their ability to differentiate may be less favourable.

"We think these fears are well-founded, because the NBN will be far more viable if ULLS is actually cut off as FTTH is rolled out, avoiding revenue fragmentation and reducing the need for government subsidy of the NBN.

"There is also a real prospect that the current de-averaged prices for ULLS access, with lower prices in the cities, will give way to uniform national wholesale pricing and push up access seekers’ costs in their key markets."

iTWire recently published a story explaining the genesis of a call by the Government for further input into the regulatory regime of the NBN.

However, in Kennedy's view, the short term goals of Telstra's competitors do not coincide with those of the Government (read national interest) and this is a major reason why the Government has issued a call for further input on the regulatory regime of the NBN.

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