In a move that the company admits will provide some of its customers with an inferior service, iiNet has signed an agreement to transfer its customers onto Telstra's fibre network in South Brisbane.
Telstra opted to replace the copper network connecting around 18,000 premises in South Brisbane, because the South Brisbane telephone exchange is set to close to make way for the construction of the new Queensland Children's Hospital. In June, the telco began connecting its customers to the new fibre, and had begun discussions with its wholesale customers, such as iiNet, to move over.
Although customers can get services with download speeds of up to 100 megabits per second (Mbps) over the fibre, iiNet CEO Michael Malone had said last month that Telstra wasn't allowing retailers to offer services like IPTV, meaning that customers in the area would miss out on iiNet's FetchTV product.
However, after describing the situation as being like having a gun to its head, iiNet has now given in to Telstra's demands, with the company's chief regulatory officer Steve Dalby posting on broadband enthusiast forum Whirlpool yesterday that that company had reluctantly agreed to move customers.
"iiNet has now signed a fibre schedule after a lengthy and difficult process with the incumbent. Our new customer plans are being finalised, and we expect to commence the migration of our customers in the next few weeks," he said. "The agreement is unsatisfactory, and is signed with the knowledge that we have no choice, given Telstra's massive power and the option of 'sign before we cut your customers off.'"
Dalby pointed to Telstra's refusal to offer similar services to ISPs that they are currently able to provide over ADSL2+, such as IPTV, saying that the moved resulted in the ISPs having access to "a fibre network that won't cater for products currently being delivered on 50-year-old copper".
The executive added that the situation that iiNet was placed in by Telstra showed the need for structural separation of the company's wholesale and retail arms.
"This is a clear example as to why Telstra must never again be allowed to operate the national telecommunications infrastructure; it's why the ACCC must be hard-nosed about the structural separation undertaking, and why I will never recommend Telstra to anyone."
When queried as to whether iiNet could offer an alternative service to customers over wireless, Dalby said that it wouldn't be viable.
"Because we don't think that wireless will ever compete effectively with fixed-line for traffic capacity, reliability and cost," he said. "Wireless is great for individuals and mobility, but would I, could I, run my household or business over wireless? Nope."
Telstra plans to complete migrating customers to fibre by December 2012, when Telstra's exchange building will be knocked down to make way for the new hospital.