update A group of Telstra’s rivals known as the G9 today formally lodged their draft proposal for a nationwide fibre broadband network with the competition regulator.
Telcos involved in the group include AAPT, iiNet, Internode, Macquarie Telecom, Optus, PowerTel, Primus, Soul and TransACT.
The proposal — known as a Special Access Undertaking (SAU) — forms a significant step towards getting regulatory and government approval to build the network, which would initially reach some four million households and businesses, according to a statement issued this afternoon by the group.
A spokesperson for the group declined to provide a copy of the SAU for publication.
Communications Minister Senator Helen Coonan is believed to have been discussing the G9’s plan — and also a rival proposal from Telstra — for some weeks. The Australian Labor Party has also promised AU$4.7 billion of taxpayer money towards the construction of such a network if it won the federal election scheduled for later this year.
However, the statement said the G9’s proposal did not rely on government money — instead being financed through the private sector. The G9 network would provide wholesale access to the network at “an average price” of between AU$21 and AU$24 per month.
“This proposal is in stark contrast to Telstra’s plan. Our proposal offers Australia fair and reasonable pricing and promotes competition, which will drive greater broadband choices for consumers,” Optus chief executive Paul O’Sullivan said in the statement. “Importantly, each access seeker will have the ability to differentiate their product and service offering.”
Primus chief executive Ravi Bhatia said the G9’s focus would now be on working with the federal government to “fine tune the regulatory arrangements” to support the proposal, while the ACCC considered the draft proposal and provided feedback. The regulator is also expected to eventually invite public comment on the proposal.
However, the G9 proposal still relies on using and replacing portions of Telstra’s existing copper network.
A Telstra spokesperson said the proposal was “just more paper to add to the press release mountain” the G9 had produced since they initially announced the plan last year. “Ask to see maps and engineering plans (which ideally should come before pricing, and you won’t get anything,” they added.
“On top of that the price given to the ACCC today is even more nonsensical because they haven’t factored in how much they would compensate Telstra for stealing its network, clearly they expect to be given it for free.”
What is the G9 proposal?
According to the group’s statement today, as well as its previous comments, the G9 proposal would see optical fibre cables extended out from telephone exchanges to neighbourhood cabinets, in a technique dubbed “fibre to the node”.
The rollout would invalidate substantial amounts of existing infrastructure currently owned by the G9, in addition to some portions of Telstra’s existing copper network. ADSL2+ — and maybe eventually the higher speed VDSL — technology would complete the last leg over Telstra’s copper network between the cabinets and buildings such as homes and businesses.
While the network would initially focus on capital cities, it would progressively be rolled out to densely populated regional centres such as Newcastle, Townsville and Ballarat. Areas currently not served by exchange-based broadband infrastructure (ADSL) would be a priority. Speeds of up to 24Mbps would be provided.
To own the network, the G9 would set up a new company Fibre Access Network Operating Company (FANOC). “Both access seekers and institutional investors would have an opportunity to invest in FANOC, but importantly, no single carrier will be allowed to control it,” the group said in its statement.
“As the network owner, FANOC would not provide retail telecommunications services. Its objective would be to deliver high-quality and cost-effective wholesale services to access seekers who will then compete in downstream markets.”
The group’s statement said the proposal included obligations on FANOC to ensure the timing and scheduling of its rollout took into account the interests of parties whose infrastructure would be affected.
FANOC would establish a group — dubbed SpeedReach — that would operate and manage the network.
“No individual carrier will control SpeedReach, and all access seekers will be entitled to membership of SpeedReach, including Telstra,” wrote the G9. “Speedreach will have both access seeker-appointed and independent directors and managers tasked with optomising the use of the fibre to the node network.”
The G9’s proposal would see access prices to the network set initially and then re-visited every three years, including a price cap from the second period of three years. “The price setting formula will ensure that FANOC can recover its costs (including a cost of capital) but no more than its costs,” said the G9.
The G9 are proposing a 12-year agreement with the Australian Competition and Consumer Commision, which the group said would be sufficient to provide investors with long-term certainty.
