New fibre network would reach six million addresses

Telcos Optus, Macquarie Telecom, PowerTel, Primus, Internode, Soul and TransACT this morning outlined a proposal where they and potentially others would collectively fund the construction of a new national high-speed fibre-optic telecommunications network that all telcos could access and use to sell broadband services.

Optus chief executive Paul O'Sullivan told journalists at a media briefing this morning the new network would "roughly speaking" have a reach 30 to 50 percent greater than Telstra's proposal, which Telstra has said would reach around four million addresses.

"There's about seven and a half million homes in Australia," O'Sullivan said.

Telstra was "talking about four million homes, was my understanding," the Optus boss continued. "We're talking about a number somewhere up to maybe six [million]."

"It's not about just the cities, it's about regional areas and the areas around those centres," added Macquarie Telecom chief executive David Tudehope, who was also at the briefing.

O'Sullivan said there was "a challenge, economically" in extending the network to those last one and a half million addresses.

"These numbers are still relatively imprecise, but there has been a lot of government funding put aside, almost a billion dollars, with a view to tackling that area," he said, referring to the federal government's AU$878 million Broadband Connect program.

O'Sullivan also confirmed the new network -- built on the same "Fibre to the Node" technology as Telstra's proposal -- would deliver speeds of 12Mbps or greater.

Despite its increased reach the Optus supremo agreed with his counterpart at Macquarie Telecom that the network wouldn't cost any more to build than Telstra's plan, which the heavyweight has said has a price tag of around AU$3 billion.

"The investment would be no greater than if Telstra were to do it themselves," said Tudehope.

"Obviously it's somewhere in the region of three billion to three billion plus that I think are the numbers we heard, and certainly I think we're all comfortable and aware of those numbers," agreed O'Sullivan, speaking for the consortium of seven telcos.

Both executives claimed network design efficiencies would keep costs down.

"A lot of us have existing infrastructure and so Telstra's pricing was based on them assuming they would have to invest all on their own, and maybe with some government funding," said O'Sullivan.

"If you include the existing infrastructure that we have in our HFC [cable network], that people like TransACT have and that others have, you actually may find that you get a much more efficient build, and there is potential that you could do it for similar costs."

O'Sullivan said aggregating customer demand and traffic from many different telcos onto one network would also deliver efficiencies.

"I think one of the beauties of this approach is that it's more affordable, because you can aggregate demand, to rollout the network to more homes than you would under Telstra's proposal," he said.

Quicker rollout?
O'Sullivan said the new proposal would take less time than Telstra's to deliver services to the market.

"The process we're outlining here would offer a faster rollout for Australia, we believe, because it would provide greater certainty arrived at at a commercial basis between the parties," he said, "rather than going through the lengthy process of taking undertakings and appeals."

However the rollout would still take several years.

"Any Fibre to the Node network is going to take a number of years to build out," O'Sullivan said.

"It's not a network that we're going to build in a six month or a 12 month period," Soul chief executive Michael Simmons added. Simmons also fielded questions at the briefing.

"Geographically the expansion of it will occur over time as well," Simmons said.

Today's proposal comes in four distinct models, all of which see Telstra playing a key role. But the heavyweight's reaction demonstrated it was not keen to be involved.

"Together these companies are bigger than Telstra, yet they want to risk our shareholders' savings, not their own capital, to build their own fibre network," a Telstra spokesperson told ZDNet Australia via e-mail this morning.