Telstra rivals outline 'SpeedReach' fibre proposal

The group of nine telcos -- AAPT, Internode, iiNet, Macquarie Telecom, Optus, PowerTel, Primus, Soul and TransACT -- are responding to Telstra's plans to build such a network, known as "fibre to the node" or FTTN due to its extension of fibre cables from telephone exchanges out to neighbourhood cabinets or "nodes".

Telstra and the Australian Competition and Consumer Commission (ACCC) have for some months been discussing the terms under which Telstra would make that network available to competitors as it currently does its copper network.

Under the rival group's proposal, that FTTN network would be controlled by a new, industry-owned company dubbed "SpeedReach", which would provide all telcos with equal access to the infrastructure.

SpeedReach would be composed of representatives from all telcos which use the network to provide services, with access prices set by the ACCC.

"SpeedReach would have a very specific mandate and goal, which is to maximise utilisation of the network by all parties," said Optus chief executive Paul O'Sullivan in a press conference held today to present the alternative model.

O'Sullivan said Telstra should not be allowed to build its network without the SpeedReach model being set in place. Otherwise, he said, the burgeoning competition in the Australian telecommunications market would be stifled.

Taking ownership
The group of nine also outlined various financial options for funding the construction of a national FTTN network, including the ongoing ownership of the asset:

• Telstra alone funding and owning the network
• Telstra, other telcos and/or other investors jointly funding and owning the network
• The group of nine and/or other investors owning the network, without Telstra

O'Sullivan said the best outcome would be a joint arrangement. "The work our consultants have done, has shown that shared or independent ownership will be the best outcome in the national interest," he said.

If Telstra were to build a FTTN network in cooperation with the group of nine, O'Sullivan said, the extra participation could extend the network beyond Telstra's initial plans.

Telstra has said its network would provide 12Mbps or greater broadband to four million addresses, while a joint model could reach an additional million, O'Sullivan said.

But the group of nine has also thrown down the gauntlet, saying if Telstra cancels its fibre plans entirely, they will build their own, smaller network.

"We invite Telstra to join us," said O'Sullivan. "Regardless of whether Telstra joins us or not though, we will continue to move forward, firstly by testing the investor market for interest and for the required terms."

The group of nine will also start working on issues such as network design, governance arrangements, access pricing, and a timeline for construction.

One aspect of Telstra's proposal that worries the group of nine particularly is the potential to cut off current broadband services based on the existing copper network (known as unbundled local loop or ULL).

Telcos like Optus and iiNet have a substantial investment in providing services over the existing copper network. The group of nine proposal includes a "managed process" for transition from ULL to FTTN services.

Despite the next-generation proposal, several of the group of nine such as Optus and Soul indicated they were continuing to invest in the copper network by putting their own broadband hardware into Telstra's telephone exchanges.

The complete Dandolo Partners and Allen Consulting Group report is available on Optus' Web site here.