Australia's largest teleco has scrapped plans for an A$4 billion
(C$3.4) national high-speed broadband network after reaching an
impasse with regulators over how to charge rivals for access.
Telstra Corp. Ltd. decided Monday to end
discussions with Australian regulators over a next generation
fiber-to-the-node (FTTN) wireline network slated to cover
Australia's five major cities initially, then expand to the rest of
the nation.
The company had aimed to ensure it was not subsidizing 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, Telstra said in a
statement.
"We are not going to engage in a new investment costing A$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," said Phil Burgess,
head of public policy and communications at Telstra, according to a
transcript of an analyst meeting held after the decision.
Telstra won't invest in an FTTN broadband network until its
costs are recognized 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 Chief Executive Officer 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. Telstra used to be Australia's national
carrier, but has been undergoing a drawn out privatization process.
It is supposed to sell more than 6 billion shares to investors
later this year in a public offering valued at around A$24
billion.
Australia's FTTN, which is a kind of high-speed, fiber-optic
network that goes to the neighborhood but not directly to the home,
is expensive because of the vast distances between cities in the
nation and its relatively small population. The initial plan to set
up the system in the five biggest cities would ensure the network
covers around half of Australia's population.
icon.
