Economy

Backlash against Telstra over broadband rollout

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Small telecommunications companies are baffled as to why Telstra needed a letter from Communications Minister Stephen Conroy to switch on fast broadband services in regional areas.

On Wednesday Telstra announced it would begin the process of switching on very fast ADSL2+ broadband services in 900 exchanges across the country after it received a letter from Conroy repeating past assurances by the competition watchdog ACCC that it would not be forced to give competitors access to the infrastructure.

Stephen Dalby, general manager of regulatory affairs with internet service provider iiNet, says the whole exercise has been more about politics than providing better services.

“I don’t understand why the Government wrote the letter. I don’t think it was necessary because Telstra knows responsibility for competition issues resides with the Australian Competition and Consumer Commission and it just repeated assurances they have given in the past. But Telstra just wanted that name on the letter,” Dalby says.

Telecommunications company Primus has reportedly called on the ACCC to regulate the ADSL2+ service, a move supported by other small telcos including iinet and Internode. 

But Dalby says the margins on providing that service to consumers would be tight and he would rather see lower charges from Telstra for access to the backhaul internet infrastructure that connects major cities and the regions.

He claims current prices make it uneconomic for his company to build its own broadband infrastructure in regional towns and cities.

“There is monopoly control of backhaul infrastructure in the regions,” Dalby says. “In Albany, a country town on WA’s south coast, if iiNet wants to buy backhaul from Telstra it would cost about $300 per customer per month – so obviously not too many operators are looking to provide services there,” he says.

Independent telecommunications analyst Paul Budde says that while real concerns remain about the state of Australia’s internet market, at least the Conroy letter to Telstra has put the bickering between Telstra and the previous government to rest.

Budde believes that by clearing the air, Labor will be in a better position to improve the current regulatory framework as part of its $4.7 billion national fibre-to-the-node broadband roll out package. So consumers may be the winners.

“What the Minister has done is to try and get Telstra moving now, so that when the bigger picture national broadband program comes up the regulatory issues can be addressed; and I think that’s a good thing,” Budde says.

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