Home Business IT Networking Telstra's Tasmanian monopoly about to end


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ISPs trying to crack the Tasmanian market are up in arms at the prices charged by Telstra for backhaul to the mainland, but Telstra's monopoly as the only operator of a fibre link across Bass Strait is about to come to an end, and ISPs and Telstra are likely to face stiff competition from major new entrants.
Stuart Marburg, managing director of ISP Netspace said: "We have seen a continuous drop in the price of bandwidth in every other Australian state, however the price whilst already double that of the rest of Australia, is on the up in Tasmania."

He claimed that "for example, it's more than twice as expensive to move Internet traffic between Melbourne and Hobart as it is between Melbourne and the USA and up to five times more expensive than Melbourne to Canberra."

Marburg called for the Tasmanian Government to look to alleviate the situation either by "placing pressure on Telstra to review their pricing over this vital link for the state, or through opening up the Basslink fibre connection to the mainland to provide an alternative channel for ISPs to service the Tasmanian market."

However the indications are that Marburg might get much more competition than he bargained for: from possibly two major new entrants who will have access to fibre, at cost, all the way from the mainland to the centre of Tasmania's main towns and cities which they will use to deliver a full gamut of communications services.

The Government issued a request for expression of interest from potential strategic telecoms partners in late 2003 and in a briefing on that in January 2004 gave as is preferred option appointing two strategic partners each of which would be granted access on a cost recovery basis to Government owned or controlled telecoms assets including the Basslink fibre and a network linking Tasmania's major centres.

These partners would then use these assets to: "offer a full range of telecommunications services to Tasmanians (on a wholesale and retail basis); offer new competitive broadband services to Tasmanian market; and provide facilities maintenance and management services to the Government," according to the briefing paper.

According to the website of the Government's Infrastructure and Resource Information Service (IRIS) "The existence of these Telstra-independent backbone cables could make a significant difference to the dynamics of the market from 2005. The roll-out of optic fibre across Tasmania will deliver wider choice of competitive telecommunications to homes, businesses and schools and provide opportunities for new and emerging industries to expand and innovate. Ultimately this will create a strong competitor in a market currently dominated by Telstra."

iTWire understands that an announcement detailing how the Government aims to realise this vision is imminent.

The Basslink power-cable under Bass Strait which came into service in May was laid with several fibre pairs and the intention has long been that at least some of these would be used to provide commercial services in competition to Telstra. Basslink told the author in 2002 that the fibre would have "abundant spare capacity" for commercial use.

A Spokesman for Basslink, now owned by National Grid Australia, referred questions last week on the possible commercial use of the fibre to the Tasmanian Government, saying an announcement would be made in du course.

The press of office of the Department of Prime Minister and Cabinet initially agreed to answer a set of emailed questions but failed to do so. However, the Government's 2006-2007 Budget statement, issued on 15 June 2006, said: "The Government expects shortly to enter into an agreement with National Grid Australia that will result in its fibre capacity being joined together with the Government's for the purpose of commercialising both assets. The Government will, as part of the revenue sharing arrangements, pay $2.0 million per year for exclusive arrangements over the Basslink optic fibre network. Together with the operation and maintenance costs, the total cost is estimated to be $3.0 million in 2006-07."

The Government fibre referred to in this statement is a network laid alongside the trunk gas network by Downer Engineering subsidiary Tas21 and bought by the government in May 2003 for $23.1 million. The 420km backbone connects North, North West and Southern Tasmania. It has links into centres of Hobart, Launceston, Burnie and Devonport. Downer provides operations and maintenance services on this cable under contract to the Government.

The Tasmanian Government has a long established, although now somewhat compromised, plan to bring fibre to tens thousands of Tasmanian homes and businesses by laying fibre in conjunction with a gas pipeline network that would distribute to individual users the gas now being piped in from the mainland under a sub-sea pipeline. The initial planned rollout of that network was significantly reduced, and with it the opportunity to fibre up large numbers of end users.


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