Telstra to build NBN with FTTN & VDSL2

Broadband Internet speeds of 25-50 megabits per second (Mbps) to 65-75% of households, and 12-20Mbps to the remaining 25-35% that cover 80-90 percent of the population. These are figures that can be achieved by Telstra for a national broadband network VDSL2 Fibre to the Curb ‘upgrade’ (FTTC, also known as Fibre to the Node). After following the progression of the NBN saga closely, it’s an extremely possible scenario that could be well on the money and have a very fast turn-around time to boot. 

VDSL2 research and testing has not only commenced, but has been well underway for quite sometime now by Australia’s largest telecommunications provider ‘Telstra’. The incumbent has been playing their cards very close to their chest and has been unwilling to reveal it’s blueprint for Australia’s new $4.7 billion dollar (or should I say $10 billion?) high speed broadband network. If they were to win, the odds are very short that their preferred choice of broadband delivery method would in fact be VDSL2. This type of telecommunication technology could easily support simultaneous triple play services such as high speed broadband, voip/telephony & digital TV (or IPTV) products at the minimum government required broadband speed of 12Mbps.

Although Telstra submitted a ‘non compliant’ NBN proposal, this is not to say that the telco cannot stitch up a ‘backdoor’ deal with the government that will take advantage of VDSL2 technology for a proposed NBN. You see, it’s no secret that Telstra has been considering VDSL2 as it’s primary architecture for a NBN. There are plenty of facts’, quotes, and articles floating around the Internet to suggest that Telstra are in the box seat when it comes to A – Being the most logical and experienced bidder to take on and build a broadband network of this magnitude; and B – Use VDSL2 technology (Very high speed Digital Subscriber Line) which provides faster speeds over similar distances using copper lines than that of ADSL2+. VDSL2 is essentially an upgrade that will supersede ADSL2+ DSLAMs in telephone exchanges across Australia. Whether DSLAMs will remain for other ISPs to use (if this were to be the case) is another story.

For example, an article appearing on New Zealand based Stuff.co.nz just recently, and of course Telstra’s non compliant 12 page NBN proposal, is reporting that a Telstra constructed national broadband network would use VDSL2 technology and be built by 4000 workers using Alcatel- Lucent materials and equipment. It makes perfect sense that the facilitation in regards to accessing and upgrading exchanges with the required new equipment to be governed by Telstra, after all who else knows an Australian exchange better than Telstra themselves? With this in mind, along with the threat of countless court room litigation cases if Telstra were not to win the NBN, a VDSL2 roll out would be performed much much more faster by Telstra than any other party.

Kevin Rudd, Stephen Conroy, their NBN panel and the Australian Government have an enormous and convoluted task with the whole NBN dilemma as it now stands. Not only do the need to ‘tick off’ pre-election promises, however they also need to consider the possible backlash from Telstra shareholders if Telstra were to lose out on the NBN; endless courtroom litigation waged against the government by Telstra (again, if it were to lose); regulatory guidelines such as operational or structural separation placed upon Telstra (if it were to win) and the consequences of such if adequate competition guidelines aren’t included; implications from the likes of Optus, Terria and other constituents (if they were to lose), but most importantly and above all other implications – whats best for the Australian people and Australia’s future!

One thing is certain though, no matter which way the decision goes…. it’s time for Kev and Steve to stand up and get their hands dirty. Telstra for the win in my opinion.

The network would use VDSL2 technology to provide download speeds of 25-50 megabits per second (Mbps) to 65-75 percent of households it reached and speeds of 12-20Mbps to the remainder. Telstra could start building the network next year, but gave no completion date.

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** Updated ** Telstra ‘Booted’ from NBN Process - Tuesday 16th December 2008

As at 15th December 2008, Telstra has been officially ‘rejected’ from the $4.7 billion NBN process by the Australian Federal Government. Sighting a technicality in Telstra’s Broadband Network proposal, Communication’s Minister ‘Senator Conroy’, in a recommendation passed on by the expert panel, stated that Telstra had been rejected on the grounds that it failed to submit a mandatory element of the proposal surrounding a small to medium business plan. 

Sol Trujillo and Telstra appeared to be walking a tight rope right from the NBN inset by submitting a non-compliant bid which entailed a 12 page document only, whilst competing entities were believed to have submitted comprehensive proposals that incorprated 1,000+ detailed pages.

Calling Telstra’s Bluff, the Australian Government has now sent out a loud and clear message by dumping Telstra. This action has essentially displayed a show of strength which indicates the NBN process will not be compromised by parties seeking to hold the Government at ransom.

Telstra’s motives may have been driven by the shareholders best interests, or so they keep saying, however on the flip side it could also be clearly interpreted as an arrogant and somewhat ignorant mistake that has grossly underestimated the Government’s integrity and could cost them dearly. Of course the Telco has their shareholders to consider, but breaking the rules is breaking the rules and above all and foremost, the Government has the entire population of Australia to consider, and has acted accordingly.

As an initial result, Telstra now sees it shares plummeting to their lowest point since entering the ASX in 1997. They also have to explain their actions to their shareholders which has already seen billions of dollars wiped from share pricing. The Government meanwhile, without Telstra on board, have a NBN selection process that will now be perceived as a ‘fair’ and ‘equal’ platform that will offer an ‘open access’ environment which will encourage competition; provide innovation and growth potential through regulatory guidelines; and a future broadband network that should benefit both consumer and business alike.

So what now for Telstra?

The wounded incumbent will now have to consider contingencies as a result of being ‘dumped’. Some say they will try and re-enter the NBN process and negotiate with the Government. The problem here is that it could be too late, and that other bidders will see this approach as a ‘breach’ of guidelines and ‘unfair’.  Either way, litigation could be imminent in a race with such a high purse.

To even contemplate Telstra laying down without a fight is absurd. If they decide not to pursue legal proceedings, they may in fact build their own network as an alternative, or should I say ‘upgrade’ their existing network. Telstra have got the finance, firepower and experience to scale up their network so that it’s faster and made available way way before any future new national broadband network is built. One mustn’t forget all their ongoing technology research and testing that they continuously conduct. Using Wireless technology and as close as early next year, Telstra can roll out robust high speed broadband that can reach 21Mbps for rural areas, and between 50-100Mbps with VDSL2 and Hybrid Fibre Cable technology in maor metropolitan regions. Funnily enough, the latter of these broadband speeds will easily surpass the 12Mbps minimum requirement set by the Government on the NBN process too.

Don’t worry about Telstra folks, they are far from out of the race, regardless of what you, me or anyone else thinks.