Telstra scraps massive Australian broadband plan

Telstra scrapped plans for a US$3.06 billion high-speed broadband network after reaching an impasse with regulators over how to charge rivals for access.

Telstra has scrapped plans for a $4 billion national high-speed broadband network after reaching an impasse with regulators over how to charge rivals for access.

It ended discussions with Australian regulators over a next generation fibre-to-the-node (FTTN) wireline network slated to cover Australia's five major cities initially before being expanded nationally.

Telstra had aimed to ensure it was not subsidising network access by rivals, but discussions broke down because regulators failed to understand the actual costs involved in building the network out to rural areas of the nation, it said in a statement.

"We are not going to engage in a new investment costing $4 billion that is just going to hopefully bring more revenues in on the IP side, but hasten the depletion of revenues that would otherwise be used to fund services to the bush," head of public policy and communications at Telstra, Phil Burgess, said.

Telstra would not invest in an FTTN broadband network until its costs are recognised and regulatory practices change, the company said.

In a statement, the Australian Competition and Consumer Commission said it was perplexed by Telstra's decision to unilaterally end discussions, and that it had agreed in principal that Telstra should be entitled to recover its actual costs from the investment. The regulator also said it asked the company last week to open its FTTN plan to public scrutiny, but it did not do so.

The decision to end discussions over the next generation network came just a month after Telstra CEO, Solomon Trujillo, threatened the move. At the time, he said Telstra wanted to guarantee its 1.6 million shareholders they would earn a competitive return on their investment in the company. The decision also comes just ahead of a planned government share sale of the company.

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