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Vic govt puts Warrnambool exchange fire cost at AU$18m

The Telstra exchange fire in the Victoria regional town of Warrnambool cost the local economy at least AU$17.9 million, according to the Victorian government.
Written by Josh Taylor, Contributor

A fire in a Telstra exchange in the regional Victorian town of Warrnambool that cut off more than 65,000 telephone services in the local region in November 2012 has been estimated to have directly cost the area AU$17.9 million, according to the Victorian government.

The claim came in a submission (PDF) to the federal government's inquiry into the circumstances around the fire. The Victorian government said that the fire cut off not only internet and phone line access, but also ATM services, EFTPOS services, and traffic signalling. The south coast region in Victoria has 12,000 businesses with over 40,000 workers, and the government estimated that the economic cost for the region with services down for businesses for between five and 21 days was AU$408,000 per day. The total cost was put at AU$7.6 million for Warrnambool and AU$17.9 million for the entire region.

The flow-on costs were estimated to be AU$13.7 million for Warrnambool, with the loss of up to 46 jobs, and for the entire region at AU$28.3 million, with the loss of up to 89 jobs.

This is not taking into account the potential impact that the fire may have had on tourism in the area, the government noted.

Telstra did get credit for quickly deploying temporary exchanges and mobile base stations into the area, but the government said that local residents were annoyed at Telstra's response to the outage.

"While [Telstra] responded quickly to the technical aspects of the event, Telstra did not initially appreciate the broader community, social, and economic consequences of the event on the region," the government said. "An important lesson for Telstra is the role it plays in mitigating adverse effects of a disruption of this scale on the local community."

Telstra had not been clear enough about how long the outages were expected to last, the Victorian government said, meaning that residents and businesses were not able to put in temporary workarounds right away.

The Victorian government is rolling out a backhaul fibre link to Warrnambool, and has suggested that this could be connected to the National Broadband Network (NBN). It warned that increased centralisation built into the NBN, and the decommissioning of the existing copper network, would make it more vulnerable to outages. While the Victorian government noted that the NBN has greater resilience built into its design, it suggested that the federal government consider keeping Telstra's copper access network until the NBN has proven itself.

"Legacy systems should not be decommissioned until the capability of new systems and technologies, especially in an emergency management context, has been proven."

Under the AU$11 billion deal with NBN Co, Telstra will maintain the copper network for the purpose of providing phone services in areas outside the fibre footprint that are serviced by fixed wireless and satellite.

Optus in its submission noted that while its 2G network had a number of outages as a result of the fire, its 3G network stayed up and the incident highlighted the need for competition and diversity in the telecommunications market.

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