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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.