Reading the runes on FTTN

Stuart Corner
Friday, 03 March 2006 18:32

Opinion and Analysis

It's the $6 billion question that's been preoccupying the telecoms industry for weeks: Is Telstra bluffing when it says there'll be no FTTN rollout until it gets the OK from Government on denying access to other carriers?

There's a good deal of scepticism and suspicion that Telstra is playing a game of brinkmanship with the Government. Trying to interpret the nuances of Telstra's various public utterances on the subject is a bit like casting the runes or reading the tea leaves.

Meanwhile rumours abound that preparations for the rollout are rolling along regardless. Only this week an executive from one of the main contactors engaged by Telstra for network rollout and maintenance around Australia told me "everything is happening within Telstra as if it's going ahead."

Telstra meanwhile keeps restating the message with, seemingly greater definitiveness. It started out as unconfirmed reports in the press, took form in executive comments at briefings late last year and became official on 21 December when company secretary, Doug Gration, wrote to the ASX saying:

"Telstra has previously indicated that regulations that will protect investment risk assumed by shareholders are necessary for Telstra to proceed with some parts of the Next Generation Network program (NGN) particularly fibre to the node as announced at the 15 November 2005 strategy briefing. Telstra confirms that the 'fibre-to-the-node" component of the NGN remains on hold and vendors have been notified accordingly."

'On hold' was the exact phrase used by CEO Sol Trujillo at Telstra's half year results briefing last month when I queried him about the plans, and I commented then that there was a degree of ambiguity in Telstra's ASX announcement. It did not actually say "we won't go ahead unless we get the concessions we want."

Well, Telstra now seems to be saying 'no' more unequivocally. In its submission to the ACCC's strategic review of the regulation of fixed line services this week, Telstra said:

"The [ACCC] and others have questioned Telstra's sincerity on this issue. Telstra has made clear in a statement to the ASX that it will not roll out a broad scale FTTN network unless and until the necessary regulatory safeguards are in place. The company is aware of its legal obligations in making such a statement."


This seems to have done the trick, in some quarters at least. Sydney Morning Herald columnist Stephen Bartholomeusz observed "the submission uses stronger and clearer language than Telstra's ASX announcement in December when it said....[the FTTN network] remains on hold."

He added that the sentence "The company is aware of its legal obligations in making such a statement" was an acknowledgement that the ASX statement "now binds Telstra".

True but there is still a loophole. Note that the submission said: "will not roll out a broad scale FTTN network."

So when is an FTTN network broad scale and when isn't it? Telstra has talked of 20,000 nodes. What's small scale? Five percent of that, 10 percent, or 20 percent? A legally binding statement? If it ever comes to the crunch, it will be fun to watch the lawyers argue over that one.