Tassie SMEs lose out as Basslink hits delays

Tassie SMEs lose out as Basslink hits delays

Summary: The lack of choice in broadband plans in Tasmania, caused by delays to the Basslink fibre optic cable, is hitting small business in the state hard.

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TOPICS: Telcos
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The lack of choice in broadband plans in Tasmania, caused by delays to the Basslink fibre optic cable, is hitting small business in the state hard.

Although the Tasmanian government is paying AU$2 million dollars a year for access to the Basslink cable — a high speed fibre optic link between the state and Victoria — the money remains idle as would-be reseller Aurora Energy is still in negotiations with the cable's current owner, CitySpring, over access terms.

While the delays continue, Tasmania's only cable access comes by via Telstra. According to ISP Internode, rival telcos have to pay prohibitive prices to use the telco's infrastructure — which has forced it to stop offering new customers its 8Mbps plans although existing customers can still access their usual speeds.

The price of sending data from Melbourne to Hobart costs six times as much as moving data between Melbourne and the United states, according to the ISP.

"Unfortunately, the cost of bandwidth to Tasmania remains appalling, as often happens under monopoly situations," Internode MD Simon Hackett said in a statement.

Gary Price, event producer for Tasmanian SME the Grange Conference and Meeting Centre, said his business has lost out due to the broadband situation.

In his original business plan, he had laid out that the Centre would have high speed Internet and two-way video conferencing. However, Price has since found out that to get the speeds he wanted, a 4Mbps symmetrical connection, he would have to spend around AU$2,500 per month — a price not commercially viable for the business.

Price said he spent a lot of money on the new complex, and has now lost the ability to offer an important service due to the Basslink delays. "We are in a rural environment, so we have to grit our teeth sometimes and bear it," he said.

Price fears that as companies such as Internode pull out of high speed plans, the centre may never be able to afford the capacity to run two-way video conferencing.

Consumer action group Digital Tasmania, which has been set up to "get Basslink going", has been approached by a large number of small businesses which say fast and affordable broadband is essential for their business, according to a spokesperson for the organisation. Tasmania is "missing out on a lot of opportunities," the spokesperson added, as small businesses become "hamstrung by high costs".

"The lack of choice in ADSL2+ services in Tasmania is a direct result of this state government's inability to get Basslink going," the spokesperson continued.

Telecommunications analyst Paul Budde said the state government needs to get the situation sorted after years of talking. "If they sit on it much longer they can take it to the scrapheap," he said.

Budde believes the productivity and efficiency gains from high-speed connectivity could reach AU$600 million for the state, including national e-health and energy initiatives dependent on high-speed broadband.

Topic: Telcos

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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Talkback

23 comments
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  • Live and learn.

    Suzanne I ask this question from a position of ignorance concerning the CitySpring cable and hope you would be so kind as to enlighten me as to a possible answer.

    If it is a fact, as I believe, that CitySpring and Optus are owned by Temasek Holdings, the investment arm of the Singapore Government why would Optus not use this facility to supply a system to Tasmania. Thanks and best wishes.
    anonymous
  • And we wonder why Telstra is hated...

    This goes to show, after all these years of monopolistic aggrogrance from Telstra, why we as Australians are screwed when coming to affordable broadband in Australia. Telstra have done nothing to get us out of the backwater we are in. They only upgraded exchanges when given handouts, or forced by the ACCC. That is why they (ISP's including PIPE Networks) are duplicating international links and now trying to get the second link from Tassie to Melbourne up and running. To make things affordable and viable!!!

    With the squeeze on families these days with petrol, food, housing/rent etc, now we will (if Telstra win the NBN contract) being paying over $120 a month for a decent connection and quota.

    God help us all!
    anonymous
  • Listen to reason.

    "And we wonder why Telstra is hated". Wade these glib self promoting assertions, without any truthful foundation must stop if Telstra opponents are ever to challenge Telstra in the market.

    Telstra is loved by Australians as a champion Australian company. As the Telstra transformation continues, under the guidance of world class management, it will become exceeding difficult for Telstra opponents to survive.

    This self deluding hate Telstra stuff is fooling no one and in fact is very damaging to your cause. Why not invest in infrastructure and challenge openly instead of the continual free-load on Telstra which must end soon.
    anonymous
  • Don't you feel like you are being ripped off?

    Sydney, I read your comments on NWAT all the time and have respected your opinions, unlike the other drones your constantly sprout news articles snippets over and over again.

    Telstra are not a loved company: you ask the guy on the street. I can't believe you actually think that is the sediment around this country?

    I am not trying to fool anyone, society as a whole are sick of being at the mercy of Telstra. We want action, we want a first class broadband service without have to part with over $100 for. Is that asking for too much?

    We are tired of Telstra whinging around regulation, when other business types conform and manage this regulation on things other than telecommunications.

    I am personally not fazed by the prospect of handing over my cash to a foreign owned company for a service. I mean seriously, we do it every day, when we buy food,fuel purchase vehicles and even alcohol - all owned by foreign companies. We don't mind as society doing that now, so why would a broadband service be any different??

    if you answer back to me is another flogged to death arguement Sydney, then maybe you should stick to NWAT where your cotton wool can protect you.
    anonymous
  • FYI

    Mr. Lawrence FYI.

    From ACCCs website: 'CitySpring is a trust listed on the Singaporean stock exchange. Temasek Holdings (Private) Limited, an investment company wholly owned by the Singaporean Government, holds 28.47% of the units in CitySpring as well as 100% of the company that manages the CitySpring trust. Temasek also owns Singapore Power Limited, which in turn owns 51% of the shares in SP AusNet (an energy Co/gas and electricity supplier in VIC).

    From Basslinks website: "CitySpring is the first infrastructure business trust registered with the Monetary Authority of Singapore (Authority). As a pioneer in a new asset class in Singapore, and with sponsorship from Temasek Holdings (Private) Limited (Temasek)" ~ "Temasek currently holds, through its wholly- owned subsidiaries, 27.8% of the Units, making it the single largest Unitholder of CitySpring".

    From Temaseks website: - Under major investments ~ media, SingTel. Held since 1993 and a link to the SingTel website (below)

    From SingTels website: "With significant operations in Singapore and Australia (through wholly-owned subsidiary SingTel Optus)"

    Regards.
    anonymous
  • Self-delusion

    Take a look in the mirror, Sydney.

    Telstra constantly blocks and delays investment in telecommunications by others in this country.

    You may say it is not their responsibility to help other companies. As the owner of the existing fully amortised network (intra-exchange backhaul, exchanges, copper network) yes, it is their role to provide wholesale access (at prices decided by the ACCC, if needed). It was part of the condition of not being split up when it was privatised.

    Whenever further infrastructure is built, Telstra complains about duplication. Do they want to provide access to others, or do they want others to build their own network? What exactly do they want?

    If they don't want duplication, charge a reasonable price. If there is no incentive to use other suppliers, Telstra will keep their customers.
    anonymous
  • Democracy in action.

    All opinions are valuable and important. Obviously people will disagree and discuss. That is good. But time will tell.
    anonymous
  • Facts and rhetoric

    FACTS

    When there is under 3 carriers that provide backhaul capacity to an area the ACCC regulates the rates that apply on a wholesale level. This applies to Telstra and all other carriers although the only difference is that Telstra will rather build their then rent from someone else when they had no more capacity in an area. There are actual cases where Telstra has had the choice of wholesaling from another company but has gone and built their own parallel infrastructure to save them paying wholesale prices. Why does Telstra choose to build rather then wholesale but others won't. The transmission to Tasmania is charged at a regulated rate as long as the BassLink project is foundering, once this Singapore funded investment actually works (if ever) then the ACCC will step back and allow market forces to determine the price.

    RHETORIC

    Why can Pipe and Telstra both run 9,000 plus km of fibre half way around the globe but SingTel CitySpring can not seem to get 500km of cable to work. I am still trying to get my head around how Telstra can be to blame for a company not having the skills to build a service, a government without the diligence to eliminate incompetent bids for infrastructure or for a company with a poor business model wanting to blame everyone else except themselves. Internode's CEO is an armature operator who may have done well when there was plenty of money and margin to go around but now that the industry is entering a consolidation phase a player like this will be taken over or shut down pretty quickly.

    And to Gregory who closes of by saying "If they don't want duplication, charge a reasonable price. If there is no incentive to use other suppliers, Telstra will keep their customers." If Telstra slashed their prices by 50% right now I am sure you would be at the front of the line of people complaining Telstra is being predatory and is not allowing new players to enter the market and make a profit. This is an impossible situation, price high and invite competition (as you all claim Telstra are doing) or price low and suffer regulatory attacks for being too cheap (as has happened in the past). People such as you and me will never truly understand all of the reasoning behind Telstra's pricing regime and infrastructure choices but at least I have confidence that they understand it themselves.
    anonymous
  • Stephen some of your "facts" are incorrect

    The backhaul you speak of to Tasmania is not regulated by the ACCC. Just thought you may like to know.
    anonymous
  • Self delusion indeed!

    Charles, Telstra blocks investment by others? You did actually read the article before launching into your Telstra tirade?

    It appears as though Optus' owners already have a cable sitting idle, which they could be utilizing, but aren't? I could imagine the uproar and carry on from the likes of you, if it was Telstra doing so. But hey, it's not so, that's ok!

    Also, do you remember Telstra offering to build and fund FTTN in 2005? But the bleeding hearts and the ACCC said it's not affordable, lets do without! And we have done without ever since ~ brilliant! Just think, ironically had this network been granted to Telstra in the Metro areas, perhaps subsequently and as a consequence to appease, hOPELess may not have been canned in the rural areas? Karma, I believe it's known as. Anyway, Telstras main FTTN competitor, the G9, united soon after Telstras initial proposal, so we wait.

    Fast forward ~ it is now 2008, still waiting, no FTTN and what do the G9 now demand? Another 5 months (so they will have had, 3 years + 5 months)! But yes, its Telstra blocking investment?

    As for duplication, this complaint was in relation to hOPELess. As the hOPELess grant was meant for those in under-serviced areas, not to be used simply as a means to "duplicate and compete with NextG"!

    Yes, Telstras original infrastructure has access conditions, with the rules determined by the ACCC, agreed! But guess what? The ACCC has now determined that in many instances, where multiple competitors now have their own equipment installed (i.e. they've started to finally move away from total dependence on Telstra) it is no longer fair on Telstra, to continue this regulated subsidization. Why? Because the ACCC can finally see the ridiculousness, in a system when even those who have their own equipment installed can still choose to utilize Telstras, rather than their own, if they wish!

    Hence the long overdue overhaul of regulations has begun ~ hooray!
    anonymous
  • The good old "Optus own a cable" diversion

    SJT,

    The cable "Optus' owners" purchased at the end of last year cannot be used for commercial purposes until an agreement is reached and Aurora permit them to; however putting this argument aside the fact remains that Telstra is currently the only commercial backhaul provider to the state. It is also generally accepted by many (including the Tasmanian Government) that Telstra charge significantly high rates to access this backhaul. In the above article the MD of Internode has labelled their core reason to cease selling the bulk of their products to the entire state of Tasmania is because the backhaul is too expensive. He's publically stated it costs them 8 times more to transfer data from Victoria to Tasmania than it does from the US! Now even those like yourself who seem to believe the sun shines out from Telstra's backside could not deny that a company such as Internode isn't going to cut off market access to nearly half a million prospective customers unless the costs to provide the services are outweighing the benefits.

    Now I'm not saying Telstra is necessarily in the wrong in this instance; afterall their backhaul to Tasmania is not regulated and they're free to charge whatever they like. What this does highlight however is yet another example where without competition and/or regulation Telstra will continue to charge whatever it likes to the detriment of consumers.

    Also I do remember the incumbent requesting to build a FTTN to capital cities in 2005 and I'm also fairly certain at the time it didn't cover Tasmania. In any case Telstra were only prepared to construct it with anticompetitive conditions in place including a regulatory holiday on pricing and exclusive access rights. Well we've seen there's clearly problems with how much Telstra will charge on backhaul pricing if there's no competition, so I'd rather not think about what Telstra would have charged if their fruitless stunt back in 2005 somehow got approved. The prospect of a vertically integrated Telstra controlled National Broadband Network is of great concern.
    anonymous
  • Another diversion - lol!

    James I hate to disappoint you my friend, as I know you are a try hard.

    But I have tired of your incessant anti-Telstra rhetoric and your refusal to accept reality ~ think hOPELess! Or the fact that you are so full of your own self importance, that you actually claim NWAT edits/omits your, and only your, groundbreaking comments, etc - lol!

    There's obviously a huge difference between stating a simple opinion and claiming fact. My friend this is your grey area, because you are unfortunately unable to differentiate between the two!

    I admit I do not know it all! Therefore unlike you, rather than simply coming to forums/blogs etc to blurt out unsubstantiated, made up, hate filled, opinions and claiming them as factual, I forward either my simple opinion/perception or offer independent expert analysis as basis, to prove the comments I represent as factual, when need be.

    Conversely, you do not do this, simply because you do not have basis and because you believe you do not need basis! Why don't you believe you need basis? Obviously, because you also strangely believe you know better than even the experts? E.g. remember when you disagreed so much with a very knowledgeable independent telecoms analyst on NWAT, that in reply, he actually mentioned the word libel, in relation to your silly comments?

    As such, it is obviously fruitless for lil' ol' me, to try to explain anything of factual significance to you. Facts which I have gathered from experts and simply wish to pass on! Because unfortunately, you just can't let go of that tall poppy disliking of Telstra and as such, it clouds your judgement! Even when presented with overwhelming expert proof, which is totally contrary to your incorrect assumptions/claims?

    No disrespect intended my friend, but taking all of this into consideration, I frankly believe I would have more luck corresponding with and explaining the "facts", to the dog!
    anonymous
  • Well done!

    STJ,

    You've actually succeeded in making me laugh for a change. Don't worry there was certainly no disrespect taken, as I take your inability to respond with anything of substance and instead reverting to getting personal as a compliment. And the notion that I'm on some sort of hell-bent crusade against Telstra which clouds my judgement is a laugh. Perhaps you're the one that needs to take a step back and at least try to look at things from a different perspective? Hopefully this way you'll then be able to accept reality and stop claiming your fiction as fact.

    lol You remember me questioning the independence of "a very knowledgeable independent telecoms analyst"? I'm assuming Kevin Morgan is the person whom you refer to? Kevin just so happens to be the same analyst who's had articles posted on NWAT and I'm sorry SJT, but as soon as your articles are published on NWAT you immediately lose the ability to proclaim yourself as being "independent".
    anonymous
  • James the expert

    Throwing one liners disputing claims.

    If it is not regulated then it is either not classed as backhaul or there is already alternative competing services.

    I will say again ... When there is under 3 carriers that provide backhaul capacity to an area the ACCC regulates the rates that apply on a wholesale level.

    The A in ACCC can stand for many things but in relation to the above Tasmania is considered part of Australia.
    anonymous
  • Show the evidence then Stephen

    If you believe the cable in question is regulated and the pricing Telstra charge has in fact been set by the ACCC then show your evidence to support this claim. I've been unable to find anything stating this on the ACCC website, and no articles I've read regarding this matter have mentioned ACCC jurisdiction .
    anonymous
  • Here it is James, I stand by my claims, can you?

    Direct quote from the ACCC web site. This has references to calculation spreadsheets and documents. Looks like your bias also limits your ability to find the facts.

    At the end of the day the real purpose of Internode's actions is to place political pressure on the ACCC to revise their determinations and reduce the backhaul charges to Tasmania. Internode do not wish to admit that they priced their services in Tasmania on an assumption that the ACCC would reduce the rates in their determination last month and when it didn't happen they cried poor and blamed Telstra.

    You claim to know the industry, this is just another example of how your childish attitude towards Telstra has caused you to become blind to the real issues in this country.

    *****************************************

    ACCC issues final Telecommunications Transmission Cost Model to guide pricing of the service

    The Australian Competition and Consumer Commission has issued the final version of the Telecommunications Transmission Cost Model. The model has been designed with the flexibility to calculate cost-based pricing for backhaul on any land based (terrestrial) or under sea (submarine) telecommunications transmission route in Australia.

    "Transmission capacity services are a critical input to the supply of broadband services to end-users across Australia and with increased numbers of fixed and wireless networks, the pricing of these services will become increasingly important," ACCC Chairman, Mr Graeme Samuel, said today.

    The price of backhaul on routes without effective competition has often been cited by access seekers as a key obstacle to the roll-out of high-speed broadband into regional and rural Australia.

    The ACCC will use this model to assess the costs of supplying transmission services in different regions of Australia as it carries out its regulation of transmission services and arbitration of access disputes.

    Transmission or backhaul costing is highly route dependent and thus does not easily lend itself to simple pricing structures or models. For example, the backhaul route to Tasmania has a unique and significant submarine component as it crosses Bass Strait. The model has been developed over a period of time to take this complexity into account to provide cost-based pricing for individual routes.

    Users of the model will need to supply the equipment cost and dimensioning data for the particular transmission route they seek to assess. The model is supplied with full user documentation and can be freely downloaded from the ACCC website.

    The ACCC is particularly interested in hearing from users of the model in relation to the appropriate cost and dimensioning parameters to set in the model for each route of interest to them. The ACCC intends to prepare indicative prices for the transmission service across a variety of routes and commence a short consultation process.

    Issued: 16th April 2008

    *********************************************
    anonymous
  • Some background for those wanting more detail

    From the ACCC web site, this clearly demonstrates that Telstra does not control the backhaul rates in this country and has not done so for many years. The rates are set by the ACCC and verified by a global and truly "independent expert consultant – Gibson Quai-AAS"

    *********************************************

    Under Part XIC of the Trade Practices Act 1974, the ACCC may 'declare' services where it determines that this would be in the long-term interests of end-users. Once a service is declared, carriage services providers are required to comply with standard access obligations in the supply of this service. This includes that CSPs are required to allow service providers to provide carriage and/or content services to end-users.

    The Domestic Transmission Capacity Service was originally deemed declared on 30 June 1997. Since that time, the ACCC has conducted public inquiries in 1998, 2001 and 2004 to review this declaration.

    In April 2004, the ACCC re-declared the Domestic Transmission Service for a period of five years. The current scope of declaration includes 'inter-capital' transmission, 'inter-exchange transmission', 'other' transmission and 'tail-end transmission' (these are defined in the discussion paper issued today). However, the scope of the declaration was revised to exclude transmission capacity:

    * between the main capital cities (i.e. inter-capital transmission between Adelaide, Brisbane, Canberra, Melbourne, Perth and Sydney), and
    * on 14 nominated capital-regional routes.

    The current declaration will expire on 31 March 2009. The ACCC must commence a declaration inquiry in the 12 month period prior to the expiry of the declaration.

    Pricing
    The pricing principles for the transmission capacity service were released by the ACCC in September 2004. The Pricing Principles state that where it is practicable to do so, the price of the domestic transmission capacity service should be equal to the Total Service Long Run Incremental Cost (TSLRIC+) of the service.

    Where it is not practicable to set prices on the basis of TSLRIC+, the price should be set having regard to an appropriate benchmark. For example, a service price may be an appropriate benchmark where it is supplied in a competitive market or its physical attributes are comparable to the Domestic Transmission Capacity Service on the route in question.

    The Model
    The model has been configured to estimate the cost of supplying transmission services between various capital–regional locations in Australia and was developed by an independent expert consultant – Gibson Quai-AAS.

    The model was first released for industry comment in May 2007.

    A number of changes have been made to the model following public submissions and an independent review of the model by Frontier Economics.
    anonymous
  • I can actually

    You've proven that the ACCC is currently investigating backhaul pricing due to existing concerns with access costs; however what you've also highlighted is that the pricing Telstra currently charge has not in fact been set by the ACCC. Once the ACCC finally do prepare indicative pricing they would then face the challenge of actually trying to enforce it. Would it not surprise you if Telstra were to drag this through the courts as with the majority of ACCC determinations? As already stated by the ACCC they currently have over 47 legal actions against it initiated by Telstra and as with many access disputes one such as this could take years before we ever see an outcome. If a company such as Internode is losing money through providing their services, I doubt they'd be prepared to wait for the process to complete itself while facing the financial risk of it not succeeding. It's bold to assume a company is going to cut their reach by 400-500 odd thousand subscribers to simply "place political pressure" on a regulatory body.
    anonymous
  • Thank you - oh special one!

    JB, you take my (so called) inability to respond with anything of substance and instead reverting to getting personal as a compliment? You are indeed a funny, delusional man.

    Firstly, don't mistake highlighting ones credibility, or in your case total lack thereof, for personal attack. When you come here with unsubstantiated BS and expect people to believe you, they deserve to know the "full story"! As such...

    Once again! As you are well aware, but obviously not man enough to admit, I have always responded with substance, by providing where needed, links to expert opinion to back me up - earth to planet James do you read me, over? Unfortunately however, when the expert opinion gets to you, because you disagree (and know better, of course) it appears to go in one ear, bounces around for a while, hopefully misses the little mouse/wheel and then goes out the other ear.

    Funny, how you demand substance/proof from me and anyone else who dares disagree with you - "the special one", but never supply it yourself! But that's understandable, because obviously, BS has no proof. Strangely however, when the proof "you demand" is provided, you simply ignore or dismiss it anyway and then return, claiming the same "disproved BS" over and over again (so what's the point in you asking for or me supplying?). Either that or you simply contradict yourself and then "blame me for taking you out of context"- lol! Go figure. I guess some people are just too proud or pig-headed to admit, when they are proven wrong!

    So, as a defence mechanism, you simply turn to making-up your own stupid rules in a vain attempt to cover your ineptness? You dismiss esteemed telecoms analyst Kevin Morgan's opinion (more libel? - lol) simply because Kevin's articles have been published on NWAT - lmfao! Who made these new wonder rules regarding what constitutes independence, the government, ACCC, God? No better, James - lol! Funny too, an anti-Telstra poster boy from APC, has commented on NWAT? So is he also tainted? No apparently not, he's OK because the "special ones" rules clearly say, only articles, not comments! My, my, some people!

    James you can say as you wish, but the FACT is and you know it, I provide PROOF and FACTS when asked and you do not and cannot.

    Ooh BTW, seems there's a little rumour that the G9 and Telstra execs are "talking" - now we are talking perhaps? What will you do if the evil company and the perfectly perfect G9 join forces. Perhaps the poor, little mouse will have a heart attack trying to keep up with all that love/hate info going on up there - lol!

    Ta ta for now.
    anonymous
  • Take 4

    Cutting their reach by 400,000 to 500,000 subscribers? There just over 500,000 Tasmanians in total. Assuming normal broadband penetration of 40% of possible subscribers, 90% of population being within reach of ADSL, a market share of 15% and 3 people per household then we are looking at a customer base of about 9,000 services, even if you vary these percentages the overall service numbers are not even 50,000 let alone 10 times that. If each person spends $40 per month with 25% profit and they lose 25% of their clients due to this action that makes $270,000 per annum in lost profits. Not that significant to such a major player in this market is it?

    If you stop focusing on headline comments and analyse the cold hard facts you will see that the simple truth is that this is a game of profits and politics, nothing more, nothing less.

    It would be good to see what Mr Hackett has to say about this, possibly even publish his own numbers but I know this will never happen as it would reveal the facts hidden within all of the misinformation.
    anonymous