Clear regulatory outlooks boosts Telstra

Telecom Asia, March, 2008 by Lachlan Colqhoun

The change of government in Australia has so far proved beneficial to Telstra Corp, which has used the breaking of a long-running regulatory stalemate to roll out faster broadband services and entrench is market position.

Up to 952 exchanges across regional Australia are now in the process of being converted to Telstra's ADSL2 broadband--delivering a speed of up to 20 Mbps to potentially 2.4 million Australian households.

Telstra chief Sol Trujillo was at loggerheads with the previous Howard government over the issue of regulatory protection and refused to convert the exchanges and expand ADSL2 unless the government ruled in its favor on third-party network access.

The new administration of Prime Minister Kevin Rudd, however, has given Telstra assurances that it would not regulate in favor of giving third-party rivals access to the ADSL2 exchanges--a decision likely to deliver Telstra a larger slice of Australia's home internet market.

"It is clear that the government understands the artificial impediments that have been holding back investment in broadband, and is prepared to act in consumers' best interests," said Trujillo.

Telstra controls about 48% of Australia's home broadband market, and the company's recent interim results show that broadband revenue grew 65% to A$844 million ($780 million) in the six months to the end of December.

"We expect our market share to increase to more than 50% in the near future as we continue to have a bigger footprint, better content and faster delivery," Trujillo said as he delivered a higher than expected A$1.94 billion profit.

The next issue for Telstra's broadband plans will depend on its success in tendering for the new government's plans for a fiber-to-the-node network, details of which will be announced by Canberra this month.

Telstra has proposed a A$4.5 billion FTTN network with speeds of 24 Mbps, upgradeable to 100 Mbps, deployed to four million urban homes in just over three years.

The company's fortunes, and its relationship with the government, has also improved with the rollout and success of its new 3G wireless and wireless broadband network, which contributed A$890 million in revenue in the recent profit result.

The Rudd government has announced that it will permit Telstra to turn off its regional CDMA network on March 11, with those customers moving onto 3G.