ADSL2+ at last — but at what cost?

Much has been made of Telstra's decision to finally stop holding Australia to ransom, and to actually turn on the ADSL2+ equipment it has installed in what is apparently over 900 of its exchanges around the country.

Much has been made of Telstra's decision to finally stop holding Australia to ransom, and to actually turn on the ADSL2+ equipment it has installed in what is apparently over 900 of its exchanges around the country.

I don't think anyone will argue that this is anything but a positive move, at least as far as improving the availability of decent-speed broadband.

Telstra claims the new government has given it the regulatory certainty it was requesting from previous comms Minister Helen Coonan. The letter (click here for PDF) that current Senator Stephen Conroy wrote to Telstra head Mr Sol (as per a curious notation at the top of the letter), however, tells a different story: the senator has made no new commitments to Telstra — in writing, at least — apart from pointing out the things that ACCC head Graeme Samuel has been saying for more than a year.

So, if nothing has changed, why has Telstra picked now to deliver ADSL2+ to large swathes of Australia's suburbs?

Many have suggested the telecoms giant is trying to curry favour with the government, helping convey the impression that Labor has helped improve Australian broadband in exchange for kind treatment in the tender that Conroy expects to offer sometime around June.

Funnily enough, many of Telstra's exchanges will become ADSL2+ enabled just around that time — certainly longer than the 48-hour turnaround Phil Burgess has been promising in his speeches. Apparently things move rather slowly in Telstra's world, especially if "things" coincide with the issuing of major contracts.

Can this timing be accidental?

I noted with interest that Telstra's ADSL2+ announcement was attended by no less than Stephen Conroy and Kevin Rudd, who are falling over themselves to show Labor as fulfilling its broadband-related election promises. Could this launch be the clearest sign yet that Telstra is the heir apparent for the FttN contract?

Enabling Telstra's broadband ambitions also serves Labor well because it deemphasises the population's perceived need for the wireless local loop, which is to be provided by OPEL through its planned WiMAX network. That will strengthen the government's case to slash AU$958 million in OPEL funding — something IDC Australia telecoms guru David Cannon this week predicted will happen sooner rather than later, as Rudd's razor gang looks for ways to slash AU$10 billion of public expenditure.

"The activation of the ADSL2+ exchanges gives regional and rural communities metro-like broadband services and will counterbalance any negative public sentiment should the OPEL funding be withdrawn," said Cannon.

But does it? ADSL2+ doesn't work in isolation: even more so than with ADSL, the newer technology is largely at the whim of Telstra's own copper network, which by all accounts is struggling to connect even dial-up callers in many rural areas. Even city residents are struggling, with Telstra retrenchments causing staff shortages so severe that many ailing lines are being fixed with plastic bags.

In-home wiring can throw another spanner in the works. Throw ADSL2+ over those kinds of lines, and all you're going to get is thousands of cranky customers complaining they're not getting anywhere near the speed they were promised. Perhaps Telstra should consider giving its new ADSL2+ customers their own home waterproofing kits? Or will plastic bags from Coles suffice?

Ironically, wholesale service failures would suit Telstra's ambitions: of course ADSL2+ alone isn't enough, we'll be told; to fully realise the promise of broadband, Australia either needs a completely different solution — a la WiMAX — or a fibre-to-the-node network to reduce the last-mile lengths, just as Telstra has been saying for years. The money is ready and waiting; all the carrier needs, we are told, is regulatory certainty that its FttN will remain just that: its FttN.

These kinds of actions are the technological and economic tools of the effective monopolist. Consider it the telecoms analogue of Gillette's oft-cited razors and blades model: razors are no good without blades, so you can build a dominant market by selling razors cheaply and blades at a high price. And, by using proprietary connectors between the two and changing designs every few years, Gillette ensures Schick and other competitors can't break into its market.

For now, let's hope Senator Conroy is going to stick to his guns and work to keep Telstra on the straight and narrow, as he has intimated in the past. He may have been shaking hands with Sol Trujillo last week, but at least he's still apparently proceeding with the introduction of the Trade Practices Amendment (Access Declarations) Bill.

This bill will lend regulatory weight to the decisions of the ACCC, something for which Conroy should be commended — if only because it will restrict Telstra's capacity for stonewalling and spurious litigation.

This episode isn't over yet, however: competitors wasted no time preparing their own legal challenges to Telstra's argument that it can't be forced to wholesale its ADSL2+, which has not yet been declared by the ACCC. That claim would on the surface seem to be logically, if not legally, sound — but we'll let the lawyers determine that.

And will the ADSL2+ also be sound? Well, the customers will determine that.


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