Optus this week said that although it would bypass telephone exchanges and the ADSL infrastructure within them when building its National Broadband Network, it would do so in an "orderly" manner and guarantee wholesale pricing to ISPs whose assets were made redundant.
"That asset is going to be stranded at some point in time," Optus director of government and corporate affairs Maha Krishnapillai told ZDNet.com.au, stressing that it was inevitable when rolling out a FTTN network. DSLAMs are the networking equipment in telephone exchanges that make ADSL broadband possible.
However, that did not mean that companies such as iiNet and Internode, whose businesses are currently based on having their own equipment in exchanges, were heading for sudden and disastrously high write-offs, he said.
"We will work with the suppliers who have those arrangements to have an orderly transition, which is one of the main reasons they are part of the bid," Krishnapillai said. Terria, which has as its members Internode, iiNet, Optus, Macquarie Telecom and iPrimus, is backing the Optus bid to build the national broadband network.
Not only will DSLAM-centric companies receive a smoother ride under an Optus bid, their margins will be protected, Krishnapillai said. "We will guarantee that the pricing will not be any higher than they have [now using DSLAMS]," he said.
Krishnapillai said he didn't think that there would be any hesitation by rival bidder Telstra to cut off its competitors' infrastructure as soon as possible, and he thought that the big telco wouldn't use kid gloves when it did. "I suspect there will be a couple of court cases there," he said.
Telstra was unable to comment on the issue in time for publication, however in the company's regulatory submission to the government in June Telstra said:
"The Government will need to make a decision as to whether it will compensate the owners of DSLAMs that are rendered obsolete as a result of its commitment to the rollout of the NBN. To inform this consideration, Telstra advises it has DSLAMs deployed in 2751 exchange service areas as at 17 June 2008. Telstra estimates that non-Telstra providers have deployed DSLAMs to approximately 530 exchange service areas."
Krishnapillai didn't go into the details of how this "orderly transition" would go ahead without delaying the schedule for the network's rollout.
David Kennedy, research director at analyst firm Ovum, said that the idea of the outside-in rollout could be how the company planned to progress, explaining that if the regional areas received NBN infrastructure first, the exchange infrastructure in metropolitan areas could remain in use for longer.
"It could be a little more self-interested than they're letting on," Kennedy said of the regional-first strategy Optus is proposing to let the bush have a fair go.
However, when iiNet managing director Michael Malone was sounded out on the issue, he said that over 90 per cent of households in metropolitan areas already had access to ADSL2+ speeds, meaning the priority had to be elsewhere.
"No matter who wins, I reckon that if it is done "inside then out", then regional Australia will never ever get done," he said. "If the builder is forced to start in the under-serviced areas, they are incentivised to get them done fast, so they can get to the more lucrative metropolitan exchanges as soon as possible."