Telstra flicks the switch to fast broadband

More consumers and business owners in outer suburban and regional areas will have access to high-speed ADSL2 broadband after Telstra announced it would switch on the service in 900 exchanges across the country yesterday.

The first tranche of 370 exchanges will be switched on within seven days, making access to internet speeds of between eight and 20 megabits per second possible for almost 1.8 million premises in suburbs such as Melbourne’s Deer Park and regional centres like Kalgoorlie in Western Australia.

The remaining 500 or more exchanges, mostly in smaller regional centres, will be switched on over the rest of this year.

Telstra has had the capacity to activate ADSL2 broadband in many of the areas for some time but has refused to switch on the services because it feared the Australian Competition and Consumer Commission would force it to give competitors access to the infrastructure.

Telstra says that a letter of comfort from Communications Minister Stephen Conroy, reiterating previous ACCC comments that it would not seek to regulate the service, has given it the confidence to proceed with the service.

The significance of the letter lies more in tying the new Labor Government politically to the broadband roll-out than any legal effect, according to David Kennedy, a broadband industry analyst with telecommunications research house Ovum.

“I think the fear was that the ACCC would go back on their position and try to intervene,” Kennedy says. “But this letter, and the fact that the Minister and Prime Minister made a statement, means they invested political capital in the outcome and that provided the reassurance they were looking for.”

The preparedness by the Labor Government to align itself with Telstra reflects a real change of approach to the previous government.

“The previous government was happy to let the ACCC do its job and resisted attempts to go over its head, but this Government seems to be much more activist and has clear targets they want to achieve in terms of access. They are more focused on outcomes than processes,” Kennedy says.

While the switch has meant an end to the war of words between former minister Helen Coonan and Telstra, Labor’s changed tone will raise some concerns about its commitment to building a more competitive market, a huge issue as it rolls out its national fibre-to-the-node broadband program.

David Forman, the chief executive of the Competitive Carriers Coalition, says Telstra’s move is primarily about positioning itself in the battle to secure protection for its market position.

“The real story is not that Telstra has persuaded the Government that they’re right; they’ve turned it on because they’ve realised it can’t be used as a bargaining chip,” Forman says.