Sunday, 16 September 2012

NBN: What happened on the way to the future from 2006?

In a rational world, Australia would've had a 12Mbps ADSL2+ FTTN started in early 2006 and finished around mid-2009. What happened??

Telstra had drawn up detailed plans costed at around $4 billion, exclusive of subscriber line access or rental charges, but could not reach agreement with the regulator, the ACCC.

Did anyone at the time think that it was:
  • A bad idea?
  • Unaffordable to build or for users?
  • Not commercially viable, not in the national interest or not desperately wanted by customers?
Nobody thought it shouldn't go ahead, that is, except Telstra. It'd thrown away 75% this amount on a HFC network to stymie Optus' Cable TV rollout.
Rather than allow other companies wholesale access to the sole Customer Access Network (CAN) in Australia, Telstra refused to play.

The ACCC had laid out its view, as the Independent Arbiter, that there was only room for one CAN in Australia. A view which even the Coalition now seems to think is reasonable.

If Telstra had acceded to this not unreasonable view, it would be sitting pretty now:
  • it wouldn't have been forced unwillingly into a Structural Separation
  • it's share price would not have crashed below $3. (having recovered after the SSU, we know the market wasn't impressed with its intransigence or business model)
  • it would still both own the copper network + FTTN and be collecting wholesale revenues from every ISP in Australia.
  • The cash flow generated would've paid for an incremental upgrade of the network, further locking every ISP into its wholesale network. Either:
    • more nodes and higher speeds from DSL services, or
    • increasingly more FTTP. [mentioned as their 'greenfield' deployment]
Where was the Minister for Communications, Senator Helen Coonan, or the Prime Minister, John Howard?? Batting for Telstra and their outrageous anti-competitive stance.

As the majority shareholder, even at 15%, the legislation gave "the Communications Minister’s power to direct Telstra in the public interest". The Minister had the power to direct Telstra to build its FTTN and to make it available at reasonable wholesale prices, just as the ACCC had directed it with its ADSL1 network.

Did the Howard Government inaction have anything to do with the $15.5B they were to raise in November 2006 with the final "T3" Share offer?
In lieu of any better evidence, I have to think they were terminally ignorant and without vision or blindly by the dollars.

These were deliberate actions supporting unconscionable anti-competitive conduct by the monopoly owner of the copper Customer Access Network, Telstra.

The current mess with Broadband Networks is due entirely to the Policy decisions of the 2006 Coalition government, something entirely unacknowledged by the current Opposition.


November 2005, Telstra release to the ASX. pages 6-8 have FTTN details.

The Nov-05 document says 4M addresses served by "20,000" nodes 1.5km to premises and one third addresses served directly from exchanges.

According to this document, 5,000' (~1.5km) is the break-even distance for VDSL2 and ADSL2+, though they estimate ~18Mbps not the 12Mbps Telstra used.

Paul Budde on "From the FttN hype to the ADSL2+ reality" and "Analysis of the Telstra Results"

AFR: Coalition’s NBN policy a little clearer
AFR: Turnbull’s cut-price broadband plan

ABC: Could FTTN replace the NBN?

Delimiter: Stop “hiding” your NBN policy, Conroy tells Turnbull

ABC's 7:30 Report Interview Transcript "Telstra jibbing on Australian consumers: ACCC", 15-May-2007.
[Shadow Communications Minister] STEPHEN CONROY: It's not Helen Coonan's job to decide the prices that are going to be set in the telecommunications industry. That's why we have a regulator, that's why we have an independent ACCC.

HELEN COONAN: Well, I don't think I'd call it "circumventing" the ACCC, I think it would more characterise it as accommodating the kind of adjustments that might be needed to enable a new very risky bill that's going to cost in the order of $4 billion. And if the current regulatory regime can't yield that outcome, well then I would look at what might be required.

PHIL BURGESS: As soon as we have agreement with the Government on all aspects, and we have agreement on most of them right now. But as soon as they can work their way through their relationship with the ACCC, as soon as they can decide whether they're going to rein in the ACCC and have the ACCC follow the policies of the Government, as soon as that happens, we'll put all of our prices on the table.

Telstra scraps broadband network plan, Updated Mon Aug 7, 2006 3:03pm AEST
Telstra has blamed government regulations for its decision not to invest in multi-billion-dollar broadband technology.

Telstra was planning to install a fibre-to-the-node (FTTN) broadband network to improve Internet speeds but did not want its competitors to have access to it.

The Australian Competition and Consumer Commission (ACCC) says it is not viable to have more than one network and all telcos should be allowed to use it for a reasonable price.

But Telstra spokesman Phil Burgess says it will not spend $4 billion on the technology under the current regulations.

"The ACCC holds 100 per cent of the decision-making power over the short term and can with the stroke of a pen set prices and make commitments that will advance the FTTN investment by Telstra," he said.

ACCC chairman Graeme Samuel says Telstra is grandstanding and he is surprised by Telstra's position.

"Phil Burgess, with whom we've been dealing, has been saying as recently as a week ago that we were 98 per cent of the way there and there was 2 per cent to go," he said.

"That seems a strange starting point from which to suddenly say that we're terminating the whole proposal."

ACCC 2005-6 Telecomms report
Telstra announced in November 2005 that it was exploring an FTTN upgrade to its network in metropolitan areas. In March 2006, Telstra began discussions with the ACCC on mechanisms for enabling competitors to access the proposed network and for Telstra to receive an appropriate return on investment. Telstra withdrew the proposal in August 2006 without lodging a formal access undertaking.

A second proposal for an FTTN upgrade was later raised by a group of nine carriers. A central feature of this model is the separation of the network ownership and management from downstream retail service provision with open network access on equivalent terms to all access seekers, regardless of their ownership interests in the network. The G9 continued to discuss the regulatory aspects of its proposal with the ACCC in early 2007.

The unresolved status of Telstra’s proposed FTTN deployment, however, risks substantially inhibiting ongoing investments in competing DSLAMs and backhaul infrastructure for all carriers other than Telstra.

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