Open wholesale access key to FttN success

Wholesale works, but incumbents hate it

Australia's national fibre backbone will need open wholesale access and government funding, and must be built on neutral technology, according to telecommunications leaders.

Communications Minister Stephen Conroy has proposed a $4.8 billion Fibre-to-the-Node (FttN) network which would be funded with an additional $4 billion from the private sector. The network would be open-access and offer wholesale-priced access to competitors.

This proposal has received heavy criticism from telecommunications providers, notably Telstra, because they believe wholesale access and regulation will destroy shareholder value.

Australian Telecommunications User Group (ATUG) CEO Rosemary Sinclair said Australia's national fibre network will fail if it is not funded at least in part by the government.

Open access is critical but it is only effective if it means true equivalence

Rosemary Sinclair - ATUG CEO

"Part of a national broadband network will need to be funded by government [because] competitive markets for communications services in Australia will not develop without government funding beyond major metro areas," Sinclair said.

"Open access is critical but it is only effective if it means true equivalence. As the argument between Telstra and the 10 ISPs indicates, a considerable number of companies using the current access provisions do not believe they are really getting equivalent access.

"Experience around the world now is indicating open access works. Incumbent operators don't like it but 'born wholesale' models are working well."

The industry unanimously agrees the network must be open-access, according to Communications Alliance CEO Anne Hurley, because it promotes competition, generates revenue for the infrastructure incumbent and maximizes the value of the network.

She said the Communications Alliance has been involved in several "high-level" discussions about the fundamentals of next-generation telecommunications, including the FttN network, the Universal Service Obligation (USO), and digital broadcasting.

"We have submitted many papers to the government and the ACCC (Australian Competition and Consumer Commission) about what fundamentals should form the next generation of telecommunications," Hurley said.

"[The network] will need to be open-access and technology neutral which is something that the Alliance has come to after a lot of consultations with industry and government."

Hurley refused to discuss whether the network should be fully government owned, partially funded, or left to the private enterprise, nor could she say whether regulating wholesale access would deter private investment or how the unconditioned local loop (ULL) would be affected in an FttN network.

Under the $3.6 billion Optus-led G9 consortium FttN proposal, dubbed the Special Access Undertaking (SAC), capital cities will be the first to receive fibre with speeds up to 24Mbps. Priority will be given to regional areas which do not currently receive ADSL.

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