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Jan 12, 2009

Telstra holds back broadband speeds. Again.

Confused by Telstra’s rejected low-cal bid for the National Broadband Network? Stilgherrian looks at Telstra's latest moves.


Confused by Telstra’s rejected low-cal bid for the National Broadband Network? Let’s stir some new jargon into the stew: “DOCSIS 3” and “dark fibre”. Suddenly Telstra’s strategy makes sense — for Telstra — but it delays the rollout of high-speed broadband even further. Again.

DOCSIS 3 is a new system for cable internet which increases speeds from the current 17Mbit per second of BigPond Cable (30Mbit in Sydney and Melbourne) to 100Mbit or more. Last week Telstra CEO Sol Trujillo revealed that the technology is being deployed, but implied that it won’t be offered until they’re forced to by a competitor’s actions.

“We have [DOCSIS 3] as an option if somebody chooses to compete and to compete with us,” he told a conference in Phoenix.

“The only difference is we’ll be there a lot quicker a lot faster a lot bigger, a lot more integrated and with more capabilities than anybody else.”

How does Telstra do it quicker? By quietly stashing away its secret weapons, ready to be unleashed when a competitor tried to deploy their own big guns. Remember how Telstra didn’t sell ADSL2+ broadband, even from exchanges where equipment was already installed, until ISPs like iiNet started selling their own ADSL2+?

This time Telstra will do it quicker by using dark fibre — optical fibre cable that’s already in the ground but not yet “lit up” by the data-carrying laser beams.

Any telco with half a brain has dark fibre. If you’re digging expensive trenches, it doesn’t cost much to drop in a few extra cables while you’re at it. In the late 1990s, before the Dot-Com Bubble burst, demand was predicted to continue soaring. Telstra laid in plenty of spare capacity.

“There’s nothing imaginary about the many hundreds of kilometres of dark fibre out there,” writes former Telstra Wholesale employee “TerraMatt”.

“Telstra’s NDC division was so busy installing that new-fangled ‘fibre’ thing that companies like John Holland and (was it?) VisionStream were contracted to keep up.” And then there were start-ups like COMindico, many of whom went broke or. COMindico’s assets were bought up by SP Telemedia (now Soul Australia). What happened to the other networks?

According to TerraMatt, there’s dark fibre from the Pilbara to Perth and Kalgoorlie, Warrnambool to Geelong and Melbourne. Even Mt Gambier has fibre optic cable sitting there.

“It’s kind of like rats,” he says.

“There’s bound to be some fibre optic cable within about six feet of you…”

The rejection of their NBN bid is a great outcome for Telstra. They can pretend to fight the decision in the courts, delaying the release of that $4.7 billion of taxpayers’ largesse to their competitors. Meanwhile, Telstra gains a few more months to polish their 100Mbit DOCSIS 3 cable for capital cities and their to-be-announced-any-time-now 21Mbit Next G wireless broadband upgrade everywhere else — all joined together by Sol doing a quick “Fiat Lux!” on the dark fibre.

[Disclosure: Stilgherrian receives free Next G access from Telstra Country Wide as part of a technology seeding program.]


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23 thoughts on “Telstra holds back broadband speeds. Again.

  1. Richard McGuire

    Please spare us your indignation. Telstra is doing what any other listed private company would, that is put the interests of their shareholders first. Spare a thought for all the mum and dad shareholders out there. The current government inherited this dog’s breakfast from the previous one. The great Telstra privatisation experiment is a work in progress. Watch this space.

  2. Richard McGuire

    That was no excuse Stillhere, that’s just the way things are…… There is nothing unusual about Field Marshall Trujillo when compared with other CEO’s of large companies…… Sometime down the track the debate may turn to the merits or otherwise of the previous governments sale of Telstra.

  3. Peter

    I can confirm in my part of country Victoria – between Wangaratta and Beechworth (and beyond) there is at least one either unused or under utilised optic fibre cable in place.

    When I asked if I could be connected to it, I was told there are no optic fibre cables in the area – .even though a few months earlier I assisted Telstra staff as they had to repair my water pipe repair when it was cut while the optic fibre cable was laid in front of our property

  4. David Husband

    This is really no great surprise. A few years ago I asked (optimistically) forTelstra to connect the fibre optic which runs outside my property to my house. Or via the local exchange 300 metres away. I was prepared to pay all costs involved. They declined. The Minister said it is a commercial decision. I say it is corporate bloody-mindedness, when they have the monopoly in my rural area. I hurl my metaphorical shoes at Telstra, and may they rot in corporate hell.

  5. Stilgherrian

    I’m not sure that debating the merits or otherwise of the previous government’s sale of Telstra are particularly useful, except for historians and players of what-if games. The real interest is in understanding where we are NOW and pondering the possibilities for the future.

  6. Bohemian

    See what happens when corporations have monopoly control! They act like totalitarian regimes which is how they are run i.e. top down. The people are left powerless to respond with one exception and that is we can stop buying or using their products immediately. Money is what drives them and lack of it is the only thing that brings them to heel. Good old market forces.

    Now in the case of state control over resources, it simply mandates that you use its services and that is probably worse; although until such time as it wrests power forcefully from the people, we can still vote them the rascals out. But I am not sure how long we have left.

    Telstra is an example of what a monopolistic corporation can do..imagine what would happen if we had monopolies in health care and education whereby government had ceded control of parts of those systems to some “lucky” corporate tenderer! Scared yet?

  7. Stilgherrian

    “Stilwhat”? Um, Stilgherrian IS my real name. Legal, like on my passport, Medicare card and all those nasty letters from my bank manager. Has been since 1981. Why the arrangement of alphabetic characters disturbs you?

    Do you have a comment or question about the content of the article? 🙂

  8. Graeme

    Doesn’t this raise issues with Telstra not providing information to non-exec shareholders necessary to enable them to make informed decisions on holding or selling shares? Where and when does ASIC come in?

  9. Colin Campbell

    If ever there was a case of renationalising of a national resource and then splitting it up so we can have some real competition in this country, then it is this kind of crap. What arrogance. Where are the ACCC in this kind of anti competitive environment?

  10. Richard McGuire

    You may not be sure Stilgherrian but I’d wager it will become a debating point sooner rather than later.

  11. Richard McGuire

    ”the government buy back shares in Telstra ?” Well they are forking out 4.7 billion dollars for high speed broadband. This money may not be going to Telstra, but it certainly means the government is back in the game.

  12. Stilgherrian

    @Stillhere: No problem, many people assume my name is a handle/alias/whatever, but it’s all too real. Many call me “Stil” for sort, too. Feel free.

    @Richard McGuire: Even though I think a debate about privatisation is pointless, it will almost certainly kick off. There’s too many ways for politicians to attempt some point-scoring. But what, realistically, could be done now? The government buy back the shares? Using what for money?

  13. Stilgherrian

    @Alex: Interestingly enough, this afternoon on Twitter I floated the idea that this article could actually help Telstra’s share price. Instead of characterising the rejection of their NBN bid as stupid, it frames it as a clever move and part of a coherent overall strategy to beat their competition. TLS shares should therefore go up, and Uncle Sol owes me a big wet kiss. Two, if I’m lucky.

  14. Stillhere

    Just another classic example of unbridled capitalism at work. I love the lame excuse of Richard McGuire’s that it is all in the interests of “Mum and Dad” shareholders….PLEASE! This is all about a privileged few getting their rocks off through power, and all the rewards that are reaped from being in that position. Field Marshall Trujillo might as well be deploying missiles at the enemy when they get to close. How despairing it all is.

  15. Lois Frederick

    i’m a small investor in Telstra and the shareprice could go to zero as far as i’m concerned. i’d love to see the govt. break Telstra into small pieces and enforce a level playing ground. Sol should follow his loudmouthed fat little friend home asap.

  16. Matt Povey

    Couldn’t agree more – there are reasons that the phrase ‘natural monopoly’ came about. Since I first heard about the NBN I have wondered exactly what the point of it is. It doesn’t appear to introduce meaningful competition and nor does it seem to really provide Australia with any great technological advantage over other countries.

    The essential problem it seems is that noone can decide whether they want a strong ‘national champion’ in the form of Telstra, able to support ‘strategic infrastructure’ and sure to apply ‘national interest’ principles to investment or a competitive telecoms environment which drive costs down and introduces innovative services. The second option probably requires Telstra to be broken up and likely as not for foreign companies to be allowed to take parts of it over.

    The other point to make here relates to the way that Telstra allocates resources. Currently, they do it to maximise profit and ensure their continued market dominance in the future. I somehow doubt that it would be preferable for government to make those decisions instead. I don’t know what things were like here but the nationalised BT was not a great organisation to deal with.

  17. Cathy

    We’re into a debate about coloured cables and optical fibres when this ridiculous company cant connect with its customers. Telstra may well be in the communications business but there’s not a shred of evidence its into information exchange. Talking, hearing, understanding, speaking, offering service, benefits and facilitating use of its product is well beyond this communications giant totally hamstrung on its mission. Its call centres are staffed either by those with scant language skills who refer you to teams and teams of …credit, service, help, accounts, technical …teams none of whom are capable of making a decision without referring you to a team leader! The communications ombudsman is similarly stuffed on how to bring this company to the negotiation table on basic customer rights. Forget coloured cables, fibres and secret weapons. All Telstra needs is dismantling and someone to flick Sol Trujillo and his daydream. He’s landed with public infrastructure – an essential service whether he likes it or not.

  18. Richard McGuire

    Lets put markets and competition aside for one moment………….. Telstra like many government utilities became a natural monopoly……………….. You can either push for these utililities to be run as efficientlty and be as accountable as possible…………….. Or attempt to superimpose the principles of the open market on them……………. In which case, you will find the private sector has neither the will or capacity to duplicate their infrastructure………Governments can always privatise them…….. In which case more often than not your’e left with a privately owned monopoply.

  19. Richard McGuire

    Dark coloured fibre – light coloured fibre – A privatised Telstra owns that cable – it remains to be seen if it also controls that cable. Past experience has shown – re pay tv – when you try to duplicate a network – you end up with multiple communications cables hanging off power poles.

  20. Stilhere

    Profuse apologies; I had, without any research, been assuming it was a handle.

  21. Alex

    It would seem that Telstra is trying to prove to the government that it doesn’t need to deal with them. They’ll simply crush competitors by utilising it’s almost monopoly on infrastructure. However, Sol’s empire games may be unnecessarily impacting the share price. By missing out on landmark market matters like government tenders, it sends the wrong kind of signals to the market.

  22. Stilwhat

    Can you please get someone with a real name to write the technology articles?

  23. Jan Laws

    As a product of the seventies I well remember the nation enjoyed infrastructure, goods and services that were there and worked with choices when they didnt. Right now Australia looks like one huge graveyard of dysfunctional telecommunications, banking, transport, health, child and aged products with its populace wandering (EMO Nelson here) the streets in third world-manufactured rags. When Beiijing was pilloried for its net censorship and documentaries depicted life for the oppressed masses it looked to me like a window on Australia’s future. The no choice, strung up monopolised nation with a massive wealth divide. Telstra is a symptom.


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