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Rebel Alliance won't destroy the Telstra Death Star

A battle of galactic proportions is looming in Australia's nascent broadband market.
Written by Renai LeMay, Contributor
commentary A battle of galactic proportions is looming in Australia's nascent broadband market.
Renai LeMay, ZDNet Australia
On one side sits the nation's former monopoly telco Telstra, brandishing a plan to fund and build an AU$3 billion fibre network that will bring 12Mbps broadband to around four million addresses.

Last week, however, a rebel alliance arose to challenge the heavyweight many see as the Australian telecommunications industry's equivalent of Star Wars' evil empire.

Telcos Optus, Macquarie Telecom, PowerTel, Primus, Internode, Soul and TransACT want in on Telstra's fibre plans.

The seven have floated their own proposal which would see a similar fibre network built. Under this alternative plan, however, the rebels hope to ensure Telstra can't use its control of infrastructure to behave in a way that is detrimental to their businesses.

In the process, they promised during a Friday press conference, more Australians will receive high-speed broadband more quickly than Telstra alone could deliver.

This sounds like the sort of utopian ideal commonly spouted by revolutionaries trying to overthrow a troublesome regime.

However such dreams are unlikely to come to fruition.

The problem is the rebel alliance is banking on the government and the Australian Competition and Consumer Commission (ACCC) to force Telstra to participate in its plan.

"It would be our hope that the ACCC would intervene to encourage Telstra to consider a cooperative approach to rolling out a fibre to the node network," Soul chief executive Michael Simmons said during Friday's proceedings.

This is the equivalent of Han Solo banking on the Force to save him as the Millennium Falcon hurtles towards an asteroid.

Telstra predictably reacted badly to the plan, claiming it was a scam.

"This is a pick-pocket plan to rip-off Telstra shareholders and taxpayers," a Telstra spokesperson wrote in an e-mail to your writer.

"Together these companies are bigger than Telstra, yet they want to risk our shareholders' savings, not their own capital, to build their own fibre network," she added.

Of course, these statements have some basis in truth. The rebel alliance doesn't want to foot the entire bill for a new fibre network, despite being willing to chip in some billions of dollars.

This is why they are claiming the moral high ground and trying to force Telstra into a joint investment.

Unfortunately for consumers (that's you, gentle readers), Telstra isn't likely to come to the party.

Since Telstra's new management took over mid-last year, the company has consistently indicated it is unwilling to help competitors expand their customer base.

For example, Optus is currently suing Telstra for what the Singtel subsidiary sees as an unfair December price rise on a Telstra wholesale line rental product.

In another case, in January Telstra terminated an agreement with some Internet service providers over joint participation in the government's Broadband Connect subsidised rural broadband scheme.

Telecommunications analyst Paul Budde agrees with your writer's opinion on the approach taken by the rebel alliance.

"Without first going through the process of structural separation, an approach like this will be hard to implement, especially as Telstra is not interested in participating in such an initiative," he wrote in a widely distributed e-mail on Monday.

What this all adds up to is a re-run of The Empire Strikes Back.

In the next year you can expect to see Telstra and the rebels firing shots at each other until the ACCC and the government come back from their retreat on Dagobah and decide what the future of Australian broadband is going to look like.

What do you think about the rebel proposal? Will it gain mindshare with the ACCC or be shot down before it gets off the ground? Send your thoughts to renai.lemay@zdnet.com.au.

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