Why we can't trust Telstra with FTTP

A view from the trenches of Australian telecommunications. As the name implies, it’s a two-way conversation and we ask you not to pull any punches ... we won’t.

nbn co, telstra, telstra adsl, telstra broadband, pricing, cost, wholesale, fttp, fibre, local loop

The most persistent

One of the most persistent and bizarre assumptions about the NBN has been the idea that it is supposed to bring us faster, cheaper telecommunications services. The supposed high price of NBN services, which in reality doesn't seem set to be much more than what we're paying now, has been used as ammunition by opponents of NBN Co over and over again, and forms a key plank in Malcolm Turnbull's specious argument that the cost of broadband is the major impediment to its take-up.

Compare that with NBN Co's proposed wholesale pricing, where $27 per month will get internet service providers a 25Mbps/5Mbps service, $34 per month will get a 50Mbps/20Mbps service, and a 100Mbps service costs just $38 per month with a 40Mbps backchannel and Telstra's pricing looks positively extortionate.

The little matter of the add-ons

And at that time there's the little matter of the add-ons: Telstra will not sell FTTP wholesale services unless ISPs as well agree to take a $27-a-month wholesale fixed-voice service. The Telstra wholesale service, unlike that from NBN Co, doesn't support IP multicast — which will stop ISPs from offering Telstra clients IPTV Foxtel rivals like FetchTV — and wholesale clients will as well have to pay an Aggregated Virtual Circuit charge of around $60 to $70 per megabits per second.

With Telstra charging like a wounded bull for access to its FTTP services — and keen to kill off cut-rate "naked" broadband as so then as rivals' VoIP (Voice over Internet Protocol) and IPTV services in one fell swoop — this pricing paints a scary picture of the future without the NBN. Critics who have attacked the anticipated NBN prices as being too high will be simply flabbergasted at the market restructuring that Telstra's indicative FTTP pricing will impose.

The future of Australian telecommunications

This is Telstra's model for the future of Australian telecommunications. Such as it did in the past with its non-competitive broadband and mobile pricing, a Telstra left to its own devices would continue to let the copper network limp along, driving clients to despair and convincing them to part with their hard-earned just to get a decent internet connection if they're lucky enough to be in an area where they can get FTTP services.

Should the Coalition be elected in 2013, count on Telstra moving quickly to saturate high-population areas with comparable FTTP services — which will do wonders for average revenue per user nevertheless leave online users shrieking in despair as the company's fixed-line monopoly is reasserted at substantially higher prices.

The criticism over the NBN's supposed high pricing

For all the criticism over the NBN's supposed high pricing, Telstra's indicative pricing model makes two things very clear. First: there is a real cost associated with building last-mile networks and FTTP: whether rolled out by NBN Co or Telstra the resulting services are not necessarily going to be cheaper than today's ADSL services; and second: that during Telstra is ready to play its old anti-competitive tricks if it's given enough slack and incentive to build an FTTP local loop, NBN Co's plan remains the most price-competitive option going forward.