Telstra's 100Mbps: The great PSTN robbery

Telstra's 100Mbps: The great PSTN robbery

Summary: Many Australians are drooling at the prospect of 100Mbps broadband, but Trujillo seems to have a bigger endgame in mind. As Telstra poaches customers from the PSTN and NBN, he'll leave more poison pills than we've seen since Phar Lap.


If necessity is the mother of invention, Telstra is quickly closing in on "octomom" Nadya Suleman in the maternity stakes.

Since it was unceremoniously ejected from the NBN tender process, Telstra has fought a plummeting share price; the departure of its COO and pending departure of its CEO; ongoing union problems; and a myriad of other issues.

The company has countered these issues with a flurry of announcements trumpeting its innovation: in the past month alone, we've had announcements about Telstra's contactless mobile technology, the seemingly useful Voice2Text service that converts voicemails to text messages; a major roll-out of big-bucks telepresence gear, the boost of Next G to 21Mbps, and an escape from the IT services business with its sale of Kaz.

Yes, Telstra is firing on all cylinders — and no more so than with its intention to boost its hybrid fibre-coax (HFC) network to 100Mbps (for up to 1 million Melbourne residents, to start with) by Christmas.

Telstra won't be claiming a world first, as it did with the Next-G upgrade; 100Mbps services were already widely available when I lived in Singapore back in 2006, for example, and they're now on offer in several countries. However, nobody outside Telstra's marketing department cares about world firsts anyway: people want services that are reliable, strong-performing, cost-effective, and most of all available.

This latest announcement is a poison pill that will have Telstra rolling in dough while the government and NBN winner fund an FttN roll-out through Australia's least-populated (and least profitable) geographical areas.

Knee-jerk reaction to Telstra's announcement has been that its cable network leaves the NBN in the dust. Yet comparisons between the two networks are poorly informed for two reasons: (1) 12Mbps is not the speed of the NBN, but a minimum specification that Senator Conroy has long indicated bidders are free to exceed; and (2) Telstra's HFC network only reaches capital cities, and is therefore utterly irrelevant to the rest of the country. The NBN's purpose is to set a new common denominator for internet access nationwide, not to be the be-all and end-all that renders better services irrelevant.

That said, Telstra's cable will have an impact on the market. That's because the schism between government and Telstra is widening as Telstra focuses on differentiating parts of its infrastructure that aren't subject to competitive concerns and legal wrangling. This latest announcement is a poison pill that will have Telstra rolling in dough while the government and NBN winner fund an FttN roll-out through Australia's least-populated (and least profitable) geographical areas.

While the NBN worries about reach, Telstra will focus its efforts on making money — and on sabotaging the NBN's value proposition wherever possible. Or something like that, judging by Trujillo's comments during a conference call with analysts and journalists on Tuesday. Telstra's strategy, Trujillo conceded, includes the steady abandonment of the local loop, control over which it has spent years defending.

"We can essentially replicate the [landline] services and features that we have today, but we're going to take them to another level where we think we can go on this platform," Trujillo said, referring to the PSTN-on-cable offering as "PSTN-plus". "There are customers on ADSL2+ in this footprint, and customers on PSTN in this footprint," he explained. "Our strategy will be aimed at moving people across to these better, new services to give them far more value for money."

If I may translate loosely, PSTN in Trujillo's new parlance seems to be short for "Permanently Stuck with Telstra Now". Cable is, after all, inherently a stranding technique: it delivers TV, broadband and landline-equivalent services over a single wire and obviates the need for an actual landline service. Customers may have copper running into their house, but if customers are taking services via cable Telstra has little interest in keeping that copper serviceable.

If I may translate loosely, PSTN in Trujillo's new parlance seems to be short for Permanently Stuck with Telstra Now.

The spectre of PSTN-plus represents a major problem for competitors. After all, if customers can get all the communications services you need from one provider — including the PSTN connection and standard phone service owned by Telstra for decades — why bother even considering other providers?

In taking this approach, Telstra is set to repeat the major battles between cable and telephony operators in the US, where cable operators began providing local voice services and stonewalled when competitors lobbied for access to cable networks to target customers with competitive offerings.

By taking up to 2.5 million of Australia's most profitable households off the PSTN, Telstra's reborn HFC interest will remove those customers from the PSTN debate entirely. After all, Telstra can do whatever it wants with its HFC network: Optus has its own, as Trujillo pointed out, so concerns about monopolistic control no longer apply. Telstra thus has strong ground from which to argue against efforts to gain access to its customers — who will, in theory, be so rapt with their ultra-fast broadband that they won't care about the NBN anyways.

And what of the 7 million or so households that aren't on Telstra's network? Tough luck, it would seem, for now, and business as usual.

Roll-outs of both Telstra's network and Optus' (which also passes several million homes, many of them also served by Telstra) ground to a halt years ago and neither company has promoted their cable services heavily, given the focus on ADSL and ADSL2+ for most of this decade. But with Telstra breathing new life into its HFC network, Optus will face pressure to respond in kind (although its initial reaction was negative) — and customers may well begin lobbying Telstra (and recalcitrant local councils) to extend the network.

None of this kills the case for the NBN, as some observers have speculated, but it does complicate things by potentially taking many NBN customers off the market. Telstra's competitors will no doubt undercut it on price as they have always done, but with the potential for intelligent service bundling and an enforceable infrastructure monopoly it's clear that Telstra is far from out of the game when it comes to next-generation infrastructure.

What do you think? Will 100Mbps be enough to switch you to Telstra? Will new HFC investment leave the PSTN to atrophy?

Topics: NBN, Broadband, Telcos, Telstra


Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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  • Go away Sol

    No way, if it takes this much pressure from Gov't and community to get Telstra into doing what it's now doing in Melbourne - too little way too late.. so help us all, our economy and our future

    Telstra are yesterday's news, Sol - go away
  • Not a chance

    I don't care if Telstra offer me a 10Gb/s fat pipe with unlimited bandwidth at $5.00 a month - there's no way I'd use them for any communications service after what I've been through at their hands... bunch of bloody crooks!
  • It's in the details.

    itemised local calls on the monthly bill, where's telstra on that one? stuck in the 1940s.
  • Telstra is useless

    I am stuck on RIM-CMUX infrastructure and Telstra Wholesale has shaped my ADSL1 connection to 5KB/sec every single night due to backhaul congestion. How is Telstra's HFC network going to help me? Are they now going to lay cable in my street?
  • I pine for Virgin Cable like I had in London...

    Having paid only £19.90 per month for a Virgin cable service that bundled TV, landline and all you eat Internet, there is no doubt that no matter the technology Down Under, we are being ripped off.

    And based on Telstra's pricing history, the cable might be 100 Mbps, but you'll only be able to use it for twenty nanoseconds a month before you've blown your - OH SO EXPENSIVE - usage plan and they start to syphon your retirement fund directly from your bank account.

    So, yea for us plebs, stuck in a 1990s Internet timewarp while Sol gets to revise that Nero fellow, fiddle and all.
  • Not a chance

    Steve just because the scenario you suggest will never happen does not been you can lay down a heap of BS about not accepting it. Give me a $5 10Gig open pipe any day and I'll accept it. Even if I have to shake Sols gland
  • HAH!

    100/2Mbit with uploads counted and 12GB of data.. sounds almost as delicious as a tiramisu made from the brow sweat of chinese labourers..
    I think I'll stay with my TPG 8/1Mbit ADSL2+ and continue uploading 200GB+/month thanks.

    No PSTN comments?..This is the main reason Telstra are excluded from the NBN. Their anti-competitive behaviour makes it quite clear they'd turn any national network into another monopoly. By undermining competitors with their own greed they're in fact digging themselves a deeper hole than they're already in. It's a good 7ft now.. can't even see Sol's head anymore, just a flurry of dirt and the odd sighting of a shovel.

    Now.. the way I see it there are two options which should have been considered a long LONG time ago.
    1. The government forcibly buys back the entire copper network as part of the NBN deal.
    2. We roll out FTTH instead of FTTN.
    Either way, Telstra lose their line rental and any dependence on them at all. Ofcourse, both of these options are expensive, so if they become necessary.. Telstra should be banned from renting/using the NBN for our inconvenience. =)
  • Plans will need to change

    Unless the plans change I don't really see who will benefit from the extra speed. Anyone who wants to use it at it's full potential will run out of usage on Telstra's current plans rapidly and your average "mum and dad" user may just see their pages and emails come down quicker, but in the scheme of things whether they wait 1 second or 2 seconds to see a page would mean little to most of them.

    Ultimately if Telstra don't change their plan sets and add a lot of extra usage then this upgrade won't affect the NBN at all.

    That is unless they are planning on doing video rentals/video on demand directly to Telstra customers via the cable network with uncounted data. That may make an impact, but in today's economic climate you won't find too many people jumping ISPs to sit under a contract plan period with limited data/excess usage fees for other uses.
  • I pine for Virgin Cable like I had in London...

    You could go back to London, I guess ?
  • Why all this noise

    I find it entertaining to peruse all the tripe that is written about Telstra on the various ZDNet Blogs and articles.

    It seems to me that most of the knockers have gone to another supplier (where they can) - I applaud this move - its called market forces in a free market economy - and it proves that competition does exist in the market place.

    So why is Telstra still in business if they provide services that are over priced, bad service to their customers and no services in some areas????

    Where are they getting their revenue if so many people are not using their services??

    If you read the postings in a different light - you could say that all the knockers actually want to use Telstra - and they really want to help Telstra get better by providing feedback on their products and services in the hope that one day - Telstra will change enough - so that will feel comfortable being a customer.

    Or you could make the observation that people are jealous of the services that Telstra provides - as a commercial organisation - for profit and benefit of their shareholders - which the other suppliers have to provide at a smaller margin to keep in the game.

    Anyway - I thank you one and all for the joy and wonder you give me in your postings.
  • Tall poppy syndrome

    Mott, they will complain about Telstra, their poor customer service, high prices, long times in queues, low share price, high share price, too fast, too slow, not enough coverage, too much coverage, what they did to my great grandfather 40 years ago, not replacing my mobile that I dropped in concrete for free, Indian call centers, anti-unionism and much much much more until they are no longer the largest carrier, which may never happen, then it will be an attack on the other company using the same lines and wishing they were able to get the same service as they did with Telstra.

    David is without a doubt one of the most openly bias professionals out there, he hides behind this "blog" because his rantings would be dismissed and he would be out of work if he tried to pass them off as real news stories.

    And your closing comment is spot on; reading this cr@p is a great source of humor and provides evidence that the old saying "you learn something new every day" doesn't apply to everyone.
  • @Why all this noise

    Very interesting view M0TT.
  • A bit of perspective please

    Telstra owns the infrastructure. Its single-minded focus on delivering profit (which it laughably calls shareholder value, though just look at its share price) by abusing this ownership raises costs across the board to taxpayers and customers of all ISPs.

    Telstra leaves no stone unturned to delay and inconvenience the government and the industry in pursuit of profit. This is perfectly reasonable and predictable behaviour when you have a monopoly over something which everyone needs access to.

    Now THAT is the reason for all the noise, MOTT.

    And it is the reason why no real change will occur until the exchanges and the trenches to every home are back in public hands.
  • PSTN-plus or PSTN-less

    I was interested to read in ZD-Net that Telstra is contemplating “taking up to 2.5 million of Australia's most profitable households off the PSTN” and offering PSTN-on-cable, termed PSTN-plus. Trujillo is quoted as saying, "Our strategy will be aimed at moving people across to these better, new services to give them far more value for money."
    All very nice and will offer great new ways to communicate, and probably spark a myriad of new applications and services many of which haven’t even been thought of, but how closely will the new simulated PSTN mirror the functionality of the old fashioned bullet proof PSTN?
    What about all the services and the millions of existing pieces of equipment that rely on sending and receiving old fashioned slow speed modem data or DTMF tones. We’re not talking multimedia, entertainment, or 100Mb downloads here, we’re talking about point-of-sale terminals, security alarms, medical alarms, remote control applications, even phone banking and bill payment services, all sending minute amounts of slow speed data over the existing PSTN, sometimes from the remotest of locations.
    Nowadays the carriers call them “legacy technologies” which is a nice way of saying they probably won’t be supported in the future, but there are millions of them.
    Take medical alarms for instance, where granny wears a pendant to call for help. They have been around since about 1980 and there are at least several hundred thousand in use by our aged Australians right now. Like security alarms, they communicate using (typically) 80ms long DTMF tones or slow speed FSK, but will they work in the future? (BT’s CN21 network trials in Cardiff Wales put lots of them off-air and they’re still trying to work around the problems). Will our new networks allow for the accurate transmission of this type of data? What exactly, other than simple voice, are we going to be able to feed down a simulated PSTN connection on somebody’s access box, which according to Sol most homes may eventually have? Has ACMA got anything to say about this?
    Ah I hear you say, go IP, or go wireless. But this is granny we’re talking about here and she already pays about $1 per day for the medical alarm service and won’t pay any more for network access. She may have broadband, but her router and modem won’t be battery backed-up, certainly not to match the typically 40-70 hours of a medical alarm. “Think of the things we could automatically monitor, like her environment and her state of health”, I hear you say, but again who will pay for all this monitoring equipment and data analysis. Our health system is already broke.
    The PSTN is 99.99% reliable and has provided a communications medium for a huge variety of critical low speed low data rate applications, generally termed “machine to machine.” Are our future networks going to continue to support these types of devices, or is Sol’s PSTN-plus destined to be PSTN-less?
  • MOTT

    I'm likely one of those knockers you mention, who would use Telstra gladly if they changed their game. I still remember the pride I had in Telecom all those years ago when TRL led the world and NDC could build anything.
    However, I'm getting to the point where I no longer care. Australia is so far behind our trading competitors its unlikely we will ever catch up. My view is that the govt caused this but Telstra threw ethics out the window to take advantage of stupid politicians and ignorant Australians. Rather than step up at a time of national vulnerability, Telstra decided to shaft everyone.
  • PSTN

    I thought PSTN was 99.999% uptime? Second rate services like tcp/IP are 99.99%. Also, what about the lifeline services that saved many lives a few weeks back in Vic bushfires - operating hours after the power went down??
  • PSTN

    If you can get 99.99% you're doing well...must be Telstra!

    I thought the cellphone towers and the exchanges burnt down in the bushfire areas. For one guy I know his only contact with the outside world was via his ham radio.
  • no technology is perfect

    i'd rather have an emergency pendant hooked up to a 3g network receiving priority airwaves lol. stuff having a faulty line and waiting for it to be fixed
  • What about FAX?

    Doesn't FAX use fairly low speed FSK. What about the FAX machines?
  • @Why all this noise

    "So why is Telstra still in business if they provide services that are over priced, bad service to their customers and no services in some areas???? "

    They own the last mile infrastructure, ie. the copper. The cost to replace this is prohibitive, and that's why companies are turning to other delivery methods like wireless.

    "Where are they getting their revenue if so many people are not using their services?? "

    As above, they own the infrastructure, so all those DSL customers of other companies are indirectly paying Telstra to use the copper, and adding all of those customers together makes a huge number.

    I'm currently no Telstra fan but I have used their cable service in the past and had no issues with it. My problem is they are way too overpriced and aggressive in the current marketplace and concentrate more on their shareholders than the customer.