The Australian Competition and Consumer Commission has felt in necessary to reassure the Australian telecommunications industry and the public that decisions about access to any Telstra-built fibre-to-the-node (FTTN) network would only be made after thorough public scrutiny and due process.
 
The ACCC and Telstra have been discussing a possible A$3bn investment by Telstra in a FTTN network upgrade. At this preliminary stage, says the ACCC, Telstra has been explaining its need for regulatory certainty as to access arrangements before making an investment decision. The telco also wishes to ensure that it can recover the costs of investment in new infrastructure before it proceeds with any investment. The Australian incumbent’s stance is not a million miles away from that of its German counterpart Deutsche Telekom which has famously (click here) suggested it might pull the plug on a €3bn investment in a new VDSL network if it had to provide its competitors with unfettered access to the new facilities.
 
For its part the ACCC has signalled its longstanding view that regulatory arrangements should provide incentives in the long term for both facilities-based competition and competition in downstream services. “The discussions have been constructive,” ACCC chairman Graeme Samuel reports. “However, no decisions have been made, nor any agreement reached.”
 
In the ACCC’s view the discussions should put Telstra in a position to develop a comprehensive undertaking, which can be submitted to full public consultation. The ACCC would then be able to receive and fully consider the views of the industry and the public before making any decision on access arrangements, including whether and how the existing unbundled local loop ULL declaration should continue to apply either where FTTN has been rolled out or elsewhere. Ultimately any regulatory outcome should take into account the incentives for investment in a FTTN network upgrade, the desirability of promoting competition and the interests of all stakeholders – including those carriers who have already made broadband investments based on the existing unbundled local loop declaration.
 
The ACCC anticipates that public consultation on a proposal will be sought as early as May 2006. Telstra's FTTN proposal is for an upgrade to the fixed telecommunications network that brings fibre closer to the home for four million businesses and homes that are currently too far from an exchange to receive advanced broadband speeds of 12Mbits/s or more.
 
But, meantime, some of Telstra’s arguments for exemption from opening up any FTTN network to its competitors are being hotly disputed - and characterised as ‘self-serving’ - by Australia’s Competitive Carriers’ Coalition (CCC). This body says that the experience of actual broadband performance delivered to customers by competitive DSL networks has raised serious questions about recent claims by Telstra. In particular CCC member Internode has recently measured the download speeds its customers are actually achieving from broadband services delivered from Internode’s equipment connected to the existing copper customer access network. Internode rents this copper from Telstra to connect to its customers under competition arrangements that require Telstra to make it available.
 
Internode has found:
· some customers can receive speeds of 14Mbits/s up to 7km from the exchange, (which is as far as the equipment can measure);
· more than half of all customers up to 4km from the exchange are receiving 8Mbits/s or better, and some about 20Mbits/s;
·  and a significant proportion of customer within 1.5km of the exchange receive very poor speeds. This is because of connection faults either in their premises or in the Telstra copper network very close to their homes. These faults in the copper must be repaired before any broadband service could achieve close to its potential.
 
According to the CCC these findings raise very serious issues about Telstra’s stated rationale for wishing to build an FTTN that would not be made available to competitors such as InterNode. Telstra has claimed that this network is required to deliver higher speed services to customers more than 1.5km from local exchanges. To deliver faster speeds to these homes, Telstra would cut the copper that competitors such as InterNode and other CCC members are presently using to deliver competitive broadband.
 
But the actual performance being recorded by InterNode indicates two important questions about Telstra’s plan. Firstly, the 1.5km limit Telstra has placed on true broadband seems arbitrary and very conservative. Secondly, the majority of problems in the network that prevent fast download speeds seem to be close to the customer premises, and would remain even after Telstra installed fibre to remote integrated multiplexers (RIMs) or nodes between customers and exchanges.
 
In other words, many customers that would be connected to the proposed fibre to the node network would still have faults in their lines that needed to be repaired before they could get the broadband performance Telstra has been promising. But those customers would have already lost the opportunity to go to competitors for their broadband.
 
“Telstra is lobbying the Government to get special exemptions from competition laws if it upgrades its network by installing fibre to the node. It is saying it will only upgrade the network if competitors are locked out of it” claims a recent CCC statement. “However, Telstra is clearly selectively installing these network upgrades in selected locations already, and there is now reason to doubt that it has given the whole truth to the Government, regulator and competitors about the true capacity of the copper.”
John Williamson