Tuesday, November 25, 2008

Telstra Submits its NBN Proposal but Sees Regulatory Uncertainty

Telstra formally submitted its proposal to build an open access National Broadband Network (NBN) capable of delivering high-speed access to up to 90 per cent of Australians. Key elements of the proposal include:

  • Telstra would invest up to $5 billion of its own capital.

  • The Government would provide $4.7 billion in the form of a concessional loan.

  • Up to 90 percent of the population would be covered.

  • The network will be capable of providing downlink speeds between 25 Mbps and 50 Mbps in 65 percent to 75 percent of the footprint, with downlink speeds of between 12 Mbps and 20 Mbps in the remainder of the footprint.

  • The network would be designed to be upgradeable.

  • A wide range of services including IP telephony, high-speed internet, IPTV, video-conferencing and telemedicine would be supported.

  • A $29.95 per month entry level 1Mbps retail broadband pricing plan (four times faster than the existing plan at the same price) for customers with a Telstra fixed line telephone service would be available.


The NBN, which is essentially an upgrade of Telstra's fixed network, is described as one of the largest infrastructure projects ever undertaken in Australia. It will be the world's largest fiber to the node networks in geographic terms, requiring some 4000 staff throughout the life of the project. Telstra said it is ready to begin the rollout as soon as possible across multiple locations in metropolitan and regional Australia. The company claims its rollout could be completed far quicker than any alternative.


Telstra also noted that the financial climate has changed dramatically since the RFP was issued in April, fundamentally altering assumptions on which earlier business cases were built. On this note, Telstra expressed concern over the lack of clarity around possible further separation of network elements. Telstra stated that such a separation would be extremely damaging for Telstra's shareholders, customers and the Australian telecommunications industry. Simply put, Telstra claims that with separation, the NBN simply cannot and will not be built, "There is no business case. The economics don't work. A separated network would be impossible to build or to maintain." Due to these uncertainties, Telstra has decided not to put forward a more fully detailed bid at this time.In early September, Stephen Conroy, Australia's Minister for Broadband, Communications and the Digital Economy, set 26-November-2008 as the closing date for the submission of National Broadband Network proposals.


The Government issued its Request for Proposals for the National Broadband Network on 11-April-2008. The closing time has been amended to account for time taken by the Government to necessarily work with carriers to ensure that proponents have access to information about existing networks and time to consider it. The intention is that this will help them prepare robust, competitive proposals.


Key provisions of this RFP issued in April include the ability to:

  • deliver minimum download speeds of 12 Mbps to 98% of Australian homes and businesses;


  • have the network rolled out and made operational progressively over five years using fibre-to-the-node or fibre-to-the-premises technology;


  • support high quality voice, data and video services including symmetric applications such as high-definition video-conferencing;


  • earn the Commonwealth a return on its investment;


  • facilitate competition in the telecommunications sector through open access arrangements that allow all service providers access to the network on equivalent terms; and


  • enable uniform and affordable retail prices to consumers, no matter where they live.

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