One of the biggest issues – particularly in terms of cost – for Australian ISPs at this time, is access to the local copper loop to provide DSL service. DSL services – (whether they be ADSL, ADSL2, SHDSL or any other xDSL based service) – cover the vast majority of all internet connections in Australia.
Given their monopoly over the copper network, Telstra has been able to charge pretty much anything they like on a service-by-service basis for access to the local loop into any premise. The larger ISPs have been getting a reasonable deal – (simply due to volume) – but smaller ISPs have almost no ability to compete on price, as due to their lower volumes, are generally stung with a higher access charge per subscriber.
This has seen many in the industry calling for the “structural separation” of Telstra into separate retail and wholesale arms, and some kind of governance being put in place to ensure a level playing field for all ISPs in terms of the wholesale charges incurred to access the network.
Telstra have, naturally, been steadfast in their resistance to such a plan, which would obviously hurt their bottom line if the level of access charge became effectively out of their control.
Today has seen a landmark compromise with the signing of an effectively $11B deal between Telstra, the Australian Government, and the National Broadband Network (NBN Co). NBN Co is responsible for the design, and construction of Australia’s forthcoming Fibre-to-the-Premise (FttP) wholesale network.
| Telstra Agrees to $11bn Transfer Deal |
In effect, NBN is buying the network assets of Telstra – (pits, ducting, cabling) – in return for $9B cash over time, and another $2B in sweeteners to assist in the migration of all Telstra services currently on the ancient copper network, onto the NBN. Telstra would then have little to do with eventual, actual wholesale fibre network.
In effect, structural separation by another name.
While the $11B deal appears to suit Telstra’s board, something more important, and worth far, far more comes from the deal. The effective abandoning of the copper network means that the millions of xDSL connections in place around the country must transfer to the NBN, as the copper network will gradually disappear.
There have always been questions on whether the NBN would be taken up in significant enough numbers – today’s deal basically ensures that almost everyone will be on the NBN in some form or another, even if it is just for basic telephony.
The NBN has just taken a massive step towards reality, and the much needed structural separation of Telstra has come about.
Finally.