Broadband funding stirs hot debate at ATUG

While Telstra says the government's broadband blueprint will stifle innovation and competition, Austar believes the opposite.

Representatives from each company spoke at the Australian Telecommunications Users Group (ATUG) 2006 regional conference in Canberra this week about the ICT Minister Helen Coonan's proposal to spend $1.1 billion on funding a broadband rollout through Connect Australia.

The telecommunications funding package, Coonan said, would ensure a national framework for the rollout of next-generation infrastructure for Australia both by governments and by the private sector.

"It will take a technologically-neutral approach - promoting a range of next-generation networks utilizing fibre, copper, wireless and satellite infrastructure," she said.

"The blueprint will ensure that the rollout of next-generation broadband is coordinated across jurisdictions with clearly delineated roles for state, territory and local governments that meet the needs of end users."

Coonan is calling for expressions of interest from private companies and consortiums seeking Connect Australia funding to assist their broadband rollouts.

"I will be seeking state and territory agreement to the blueprint at the next meeting of the Online and Communications Council in September," she said.

Telstra product development group managing director, Holly Kramer, said there was an inherent contradiction in advocating competition and then telling competitors to come together and work in a consortium.

"Consortiums are made up of self-interest groups and subsequent conflict ... What is gained from such a plan will be a lowest common denominator solution that stifles innovation and competition," she said.

"While I understand the government's desire to have a national solution, there are major risks in a government deciding which technology is the best to deliver that solution."

Kramer told ATUG delegates that the focus of Connect Australia should be on providing sustainable, next-generation broadband in areas where there is otherwise no economic incentive to do so.

"Connect Australia should not be used to undermine competitors' efforts to build infrastructure. If it is used to manufacture competition, then we feel it is likely to provide little benefit for Australians in rural and regional areas," she said.

So far as infrastructure rollout goes, Kramer said Telstra's "3GSM" rollout schedule was well on track to cover 98 percent of the population by 2008.

She said trials have been successfully conducted in Sydney and regional Victoria with commercially produced handsets and cards within an 80km range.

"We will be progressively expanding the footprint of this network as the technology allows, so while we can now only test at 80km range, later in the year we will be able to test at 150km range, and by 2007, we will be able to achieve the 200km range which will effectively match the current CDMA output," she said.

Austar group director Deanne Weir had a different perspective on the Connect Australia funding.

Austar, Soul and Unwired announced last week the formation of AUSalliance which is seeking funding under the Connect Australia program. The alliance will develop a coordinated business plan as part of its bid for funding while each company continues to build, own and operate its own network and business separately.

Weir said if the alliance was successful in gaining funding, it would offer an economically viable way of getting broadband rolled out to wider Australia via a combination of wireless, DSL2+ and fibre-based solutions.

Weir believes the government's funding proposal will have a positive impact on the telecommunications market.

"If the government funds us or another alternative network provider, they will actually get double the bang for their buck, because wherever we go Telstra will follow, and Telstra will innovate because it has a much broader requirement to protect its revenues. So everyone will be better off," she said.

"In particular, wholesale is not a dirty word; from our point of view wholesale is a great word, because we're building the networks and we want to fill them up. We don't have a monopoly that we want to protect. We're all new businesses," she said.

"As long as we are getting the return on investment on the network then we don't see it as an issue whether we are selling the services ourselves or somebody else is selling them."

Even within the alliance the companies will be at times wholesaling services to each other and at other times, where there is coverage overlap, they will be in direct competition.

"In some instances you may see Austar and Soul competing with each other in some markets. Soul is our backhaul provider, but we will be offering them our wireless services at a wholesale level. They will also be offering us their DSL service, but our wireless service will be competing with their DSL service in some areas where there is coverage overlap," Weir said.

"None of us see an issue with that. That is where the opportunity lies, because retail competition is going to be what drives innovation. And we also know that any market we go into Telstra will turn up in, either five minutes before or five minutes later, which will further drive innovation."