All about separation, or all about copper?

All about separation, or all about copper?

Summary: Labor's fibre-to-the-premises NBN was meant to be an act of freedom, a breaking-free from 100 years of copper infrastructure legacy and the start of something new. So why in the world are we still discussing Telstra's copper network?

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Labor's fibre-to-the-premises NBN was meant to be an act of freedom, a breaking-free from 100 years of copper infrastructure legacy and the start of something new. So with the NBN now underway and new regulatory legislation on the table, why in the world are we still discussing Telstra's copper network?

And we are most definitely discussing it. Senator Stephen Conroy's recent mandate that Telstra separate, by hook or by crook, not only mentions the copper network, but in a speech Conroy offered some examples of how Telstra might go about it:

Importantly, the government retains an open mind on how structural separation may be achieved... For example, it may involve the creation of a new company into which Telstra could transfer some of its fixed-line assets. Alternatively, it may involve Telstra progressively migrating its fixed-line traffic to the NBN over a period of time and under set regulatory arrangements, and for it to sell or cease to use its fixed-line assets on an agreed basis.

With NBN Co apparently scouring the market for potential infrastructure buys, the former option would suit it to a T. The latter option doesn't really mandate separation, so much as an eviction order forcing Telstra to empty the copper network of traffic and dispose of the physical assets.

As the NBN slowly inches towards reality, how do we explain the government's seeming determination to acquire the copper network?

The government has clearly put a lot of thought into how it might gain access to Telstra's copper network, which is essential for current ADSL services and was crucial to the now-defunct FTTN network but has no actual role anymore. So, as the NBN slowly inches towards reality, how do we explain the government's seeming determination to acquire the copper network? In-ground copper has little to do with the NBN, after all, and the government really should be able to find land for its own fibre exchanges.

Conroy, who I noted last week has backed away from the sledgehammer approach of the initial announcement, is now painting the initiative as a victory for progress — a wake-up call for Telstra that it needs to make some concessions to partake in the "exciting" wireless future. Whatever that means. All Telstra has to do is split its copper network off into a format suitable for easy integration into the NBN.

Little wonder that some are becoming sceptical of the government's magnanimity: Conroy's interest in the copper network seems to be less about the copper itself as the labyrinthine network of underground ducts through which it passes.

Digging these ducts is not only expensive, but introduces complex access issues that will require more than a casual conversation over Friday-night beers to resolve. Conroy has previously conceded that the NBN may involve extensive overhead cabling, which would work in many areas but is hardly universally applicable; the NBN simply must have a significant underground component, and separation legislation so far seems to have been architected with this goal in mind.

Architected how? Well, given that Conroy's department received extensive and detailed maps of Telstra's entire network as part of the original NBN tender last year, it's not a stretch to assume that these maps have guided the design of the current fibre-based NBN. Overlaying the two networks must have produced a lot of overlap and cost redundancies.

Given the cost pressure on the NBN, it's likely that Conroy is counting on Telstra separation not only for its industry benefits, but its ability to deliver a more politically expedient new network. Indeed, many analysts have dismissed the separation pronouncement as nothing more than a negotiating tactic, and both the government and Telstra have indicated negotiations are indeed ongoing.

Why is Conroy proceeding on the apparent assumption that any divestiture must immediately benefit the NBN?

But why is Conroy proceeding on the apparent assumption that any divestiture must immediately benefit the NBN? Why couldn't Telstra spin off its copper network into a joint venture in which it retains a 50 per cent or 49 per cent interest, thereby retaining shareholder value while satisfying the government's desire for it to lose exclusive control over the copper network?

Heck, the other half could go to private investors, an overseas telco — or even Optus. With the NBN looming, the copper might directly benefit them more short term than long term — but if they could gain ownership of the network's rights-of-way, how would Conroy handle the resumption of the network's information highways and byways?

If one is going to poke a bear with a stick, one should make sure one is on the opposite side of a strong cage first. While the separation mandate is long overdue, assuming it's a slam dunk for competition may be optimistic.

The full extent of Conroy's real motivations are only known to him and inferred by those with whom he is negotiating. While some sort of change is now likely, whether this all results in Conroy getting unfettered access to his precious copper — and the underground ducts NBN Co needs — is still anybody's guess.

Topics: NBN, Broadband, Government AU, Telcos, Telstra

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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64 comments
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  • Take care with the bear.

    Another old saying David simplistic but true is, if you poke a bear in the eye with a stick just make sure that the stick is longer than the bears arm.
    anonymous
  • Reality Check slowly dawning on Australia

    Yes your right NBN 2.0 needs yes NEEDS Telstra ducts and other infrastucture.

    But since its only taken 18mths to get here.
    let me help, and completely spell it out.

    There is NO NBN without 2 simple essential conditions. Everything done in the name of the NBN until now is completely and utterly redundant without these conditions fullfilled.

    And everything done till now is progressing with that "inevitability" in mind.

    A/ There can be no competing (fixed) network against the NBN

    i.e no Telstra supplying ADSL, ADSL 2+, VDSL or DOCSIS 3.0 or anything else that may come along in future to be used on copper or HFC. Supplied directly to retail and or to wholesale.

    B/ Telstra MUST put its revenue / traffic across the NBN. (even with this revenue viabilty is not assured. At least not for many many years. A term well beyond the commercial scope of ANY private enterprise.

    C/ In achieving point A/ and point B/ the NBNco will be built entirely on Telstra wholesale the company. That is the thousands of people, the offices, the process's, the programs, ALL THE TELSTRA INFRASTRUCTURE.. All other possible infrastructure from others is peripheral and minor.

    That is why and only why, Telstra must be seperated and not only that, but it must be made to support and have an interest in the NBN.

    Loss's forced onto shareholders to not only stop competing with a new govt project but also made to support it with assets people and revenue.

    Running comms let alone fibre to rural and regional Aust. is unprofitable. That does not mean it should not be done, but rather it should be done by Govt. And not . . . . . . . . . . .

    Absolutely disgusting, Mugabe policy arrives in Australia.


    p.s.

    Beautifully played Optus, Its close to, but it aint over yet.

    Even though the delay you caused means you won along time ago either way.

    The loss to Telstra will unequivocally be huge, but the loss to Australian society's principles and values is much greater.
    anonymous
  • Telstra shot themselves in the foot

    They could have built their own NBN, but they were too greedy and held the country to ransom.

    Racketeers always lose in the end.
    anonymous
  • no-high-taxes-for-nbn

    OP wrote: "While the separation mandate is long overdue".

    Spoken like a true socialist.

    Why should Telstra be broken up?

    First Rudd ditches Opel, then says he'll build his own fibre network & now says he wants Telstra's assets. What total BS.
    anonymous
  • no-high-taxes-for-nbn

    Racketeers???

    They're a public company, there's no racket & no reason to break them up. Period.

    Rudd would make Stalin proud.
    anonymous
  • It;s all about internet censorship and media control

    The nbn will never be built,telstra will never sell assetts or seprate as they need shareholder approval to do so.it will all end up in court.
    The only reason the goverment wants to build the NBN is to implement true internet censorship and media control-they carn't handle the fact the the genral public can access what ever content they want when they want.no rules =no control =less tax revenue.
    anonymous
  • Shame on Rudd.

    Fellow Australians, never believe that Australia is a free country or the land of a "fair go" if Mr Rudd succeeds with his blackmail and destruction of Telstra.
    anonymous
  • well done rudd

    ending telstra's obvious dominance, which they didn't earn, it was gifted by us the tax payer, is "a fair go at last".
    anonymous
  • yes, it is a free country...

    Sydney, it is a free country, nobody holds a gun to your head and forces you to buy Telstra shares. The risks are stated in the Prospectus:

    "Telstra faces substantial regulatory risks that it believes have, and will continue to have, substantial adverse effects on its business."

    You took the risks, nobody forces you to buy it, that's "fair go" isn't it? You bought it, knowing all along there's risk involved, so why are you complaining now? Fernando has stopped posting his fake Rudd rant because he finally sees the value of the NBN and everything made sense to him now, good on ya Fernando. Now there's only two left, of course i might be wrong.
    anonymous
  • why?

    if you don't know by now why they are being broken up, there's no hope for you. get back under your rock.
    anonymous
  • All about separation, or all about copper?

    Neither. It's utter disarray.

    The following link elucidates.

    http://www.businessspectator.com.au/bs.nsf/Article/nbn-stephen-conroy-telstra-optus-nbnco-sol-trujill-pd20091002-WF58M?OpenDocument&src=sph
    anonymous
  • BS & AFR = LOL

    Thanks for that link to "Business Spectator" Vasso.

    Please now supply another to the "Financial Review", so that you can show us your other source of comms knowledge [sic]!
    anonymous
  • Never be built?

    Never be built?
    It is currently being constructed in Tasmania. As for censorship. That is not possible, this is just wholesale infrastrucutre.
    anonymous
  • The inherent conflicts between social and competition policies

    Excellent article to educate the uninformed of the economic and political realities of this complex issue - thank you!!
    anonymous
  • All about separation, or all about copper?

    An Addendum.

    Alan Kohler exposed the NBN fallacy for what it's worth during the ABC's Inside Business broadcast on 04/10/2009 whilst interviewing former ACCC chairman Allan Fels.

    Here are a few pertinent points which prolong the disarray agony:

    ALAN KOHLER: Do you regard the legislation as proposed in regard to Telstra to structurally separate it as a victory for the ACCC?

    ALLAN FELS: Yes and for consumer. This had to happen. The access law was very weak and it was introduced at a time when the Government wanted to privatise Telstra, so it made it weak and kept it weak. And so the true objectives of policy weren't achieved.

    The real issue, I see now, is that not only should we strengthen regulation but we have to consider the relationship of these moves to the establishment of the national broadband network. There are a lot of tricky questions; are we going to restructure Telstra now once and then soon after maybe restructure it again for the NBN?

    ALAN KOHLER: What because the NBN will be a monopoly?

    ALLAN FELS: Well, that's a further concern. Obviously I would be quite concerned if all the main players now like Telstra and Optus and everyone got into the NBN and it had monopoly power. That is a real dilemma.

    ALAN KOHLER: You were running the ACCC at the time roughly when they were privatising Telstra, are you saying, do you think that the Government was deliberately weak on the regulation of Telstra in Order to maximise its price?

    ALLAN FELS: Absolutely and that has been said by people in the government. It's in the book by Fletcher who was an adviser and everyone knew that the government went soft on Telstra during that time.

    ALAN KOHLER: Thanks for joining us, Allan Fels.

    ALLAN FELS: Thank you.
    anonymous
  • More Telstra lies highlighted by Vasso, thanks mate!

    So everyone now admits the government was "too soft on Telstra, regulations wise", Vasso!

    You even highlight the fact. But that's not what you and the other Telstra puppets have been saying for the last 5 years, is it? Curious.

    ALAN KOHLER: You were running the ACCC at the time roughly when they were privatising Telstra, are you saying, DO YOU THINK THAT THE GOVERNMENT WAS DELIBERATELY WEAK ON THE REGULATION OF TELSTRA in order to maximise its price?

    ALLAN FELS: ABSOLUTELY AND THAT HAS BEEN SAID BY PEOPLE IN THE GOVERNMENT. It's in the book by Fletcher who was an adviser and everyone knew that the government went soft on Telstra during that time".

    So the (harsh) regulations campaign mounted by Dr. Burgess, NWAT and a few greedy shareholders, was yet another lie from Telstra and you puppets! They weren't harsh at all they were WEAK - so you just claimed above!

    You cried about the harshness of regulations and "those terrible foreign leeches", but now that the wheels have fallen off, you typically do a back flip?

    Do you Telstra shills ever have a definite position and actually stick to it?

    So you now advocate separation, due to the WEAKNESS of Telstra regulations, lol!

    Regardless, thanks for disclosing more Telstra lies Vasso.
    anonymous
  • The inherent conflicts between social and competition policies

    MAX, ah! I clearly now see what you meant by..."to educate the uninformed of the economic and political realities of this complex issue "
    anonymous
  • Informed?

    So are you informed now Vasso, oops, sorry Max?
    anonymous
  • TLS shareholder skullduggery, lol!

    Nice try, NOT, Vasso.

    Funny, apart from my comments and your reply, there's only been 2 other comments today on this topic. Yours and the mysterious Max's.

    Strangely convenient too that these other 2 comments (the only other 2 in 24 hours) are within minutes of each other and one straight after the other. Max's at 1.38 and yours the very next comment at 1.58. Hmmm!

    Coincidence too eh, that the mysterious Max (who I've never seen comment here before) was just happening to read and decided to comment perhaps for the first time, praising your link, at the exact time you were reading!

    "Gee and all this frenetic action - the reading of comments, actual writing of repliy comments, copying and checking quotes from a broadcast contained within, reciprocal praise, comments submission, to and fro ...

    "all happened in just a mere 20 minutes, wow"..
    doesn't seem possible! Conveniently coincidental I guess? lol!

    But what about those Telstra lies, you kindly highlighted and I mentioned (about the regulations)?

    More disgraceful Telstra lies, eh? Thanks again for bringing that to everyone's attention.

    You are a true "Telstra hater/Anti-Telstra Brigade" member, Vasso, lol!
    anonymous
  • Open up RS, honesty demands it.

    RS while I hesitate to place additional pressure on you, I do request that you answer my previous question. It was quite simple.

    Do you think that Telstra should be allowed to compere with the proposed NBN or do you believe that the Rudd Government should, by blackmail and threats of dis-membership, destroy Telstra and allow the NBN to become a monopoly without competition.
    anonymous