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Friday, 04 May 2007 08:42

Gov't faces law suits over any FTTN deal with Telstra

As speculation heightens that the Government is about to do a deal with Telstra on an FTTN rollout, competitors are warning of legal action by Telstra's competitors and end users alike.

Telstra has been widely reported, and has admitted, that the price for wholesale access to its FTTN network would be about $85 per month. Also, Telstra has said that it plans to use VDSL from the fibre node into home. This would render any other DSL services unusable (because of interference) stranding many millions of dollars of DSLAM investments made by its competitors and leave consumers with no option but to buy services on the new FTTN network, either direct from Telstra or from its competitors.

Simon Hackett, managing director of broadband ISP Internode, said: "If Telstra receives the green light to establish an FTTN monopoly, then prices for high-speed broadband will increase dramatically, which will throttle the adoption of broadband in this country...Any form of 'deal' that allows Telstra to wind back infrastructure-based competition in broadband will invite legal action by the industry and a likely class action on behalf of the majority of retail customers who use ISPs other than Telstra BigPond."

Internode is a member of the G9 group that has proposed to the government an alternative FTTN rollout with an indicative wholesale price of around $20 per month. However, it is dependent on gaining access to all Telstra copper at each node and on Telstra then becoming a reseller of services like every other carrier. Not surprisingly Telstra has rejected this proposal outright.

Internode is a $100 million revenue broadband company that has 120,000 customers throughout Australia that has invested heavily in DSLAMs enabling it to deliver ADSL2+ services at speeds of up to 20Mbps for those living close to an exchange.

According to Hackett,
“Telstra's FTTN model will strand more than $500m of existing investments made by its competitors to deliver ADSL2+ broadband to their customers. That means the current generation of affordable high-speed broadband will be gutted if Telstra gets the go-ahead."

Telstra CEO Sol Trujillo made clear early in his tenure that one of his key objectives is to boost Telstra's gross profit margins to 46-48 percent by 2010, and according to Hackett its FTTN proposal is one of the main avenues by which it aims to achieve this goal.

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