Alex Zaharov-Reutt
Thursday, 05 June 2008 18:25
Opinion and Analysis
Page 1 of 3
The T4: Tell the
Truth Telstra website, has published a report from the Centre for
International Economics (CIE) claiming Telstra would charge 15% more
for broadband services if it wins the FTTN network. Telstra has slammed
the report as “bogus” – who’s right?
The report, titled “The Telstra Return on a National FTTN Network: Community Impacts”, says consumers would pay nearly an additional $1 billion ($897 million) a year “to Telstra for high-speed broadband services, based on Telstra’s initial estimate that the network would cost about $9 billion to build (scenario 1)”.
Although dormant for some time, the T4: Tell the Truth Telstra website has recently roared back into life, not only with a host of consumer complaints against Telstra over the past few months, but now with a
report slamming Telstra’s attempt to win the bid to build the National Broadband Network (NBN) with Fibre to the Node (FTTN) technology.
The report claims that Telstra has “publicly said [the rate of return] it would demand was relatively high” and “may be consistent with the abuse of market or monopoly power.”
An executive summary of the report is available
here, while the full report is also available to
download.
A second scenario from the report says that: “Telstra CEO Sol Trujillo has recently claimed that network build costs could escalate to $15 billion. If this was the case, Australian’s would pay an additional $1.4 billion a year for broadband services.”
A third scenario from the report says: “Last year Telstra proposed with the then federal government to build a broadband network to capital cities and the Gold Coast at a cost of $4.6 billion. If Telstra were just to build this network, it would cost consumers an additional $443 million per annum.”
The CIE report then claims: “Based on the $9 billion build cost (scenario 1), were Telstra to maintain its plan to seek protection on broadband prices for 14 years it would extract $12.6 billion from Australian consumers.”
The report suggests that “all of these build-cost scenarios would increase inflation, reduce national growth, lower wages and reduce national consumption.”
David Forman, executive director, Competitive Carriers’ Coalition said that: “The CIE Report supports the industry’s greatest concerns: if Telstra is allowed provide a monopoly high-speed broadband service it will have a significant negative impact on Australian consumers and the economy.”
Please read on to page 2 for more from Forman and for Telstra's response!
