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Telstra NBN deal leaves Next G mobile up in the air

Telstra NBN deal leaves Next G mobile up in the air

Wireless broadband complementary to fixed-line NBN

The $11 billion infrastructure sharing agreement between Telstra and the NBN Co is set to expedite the deployment of fibre broadband potentially freeing up the telco to concentrate on improving its high-speed Next G wireless network for mainstream broadband access.

If the deal goes ahead, NBN Co will be granted use of Telstra’s existing “fit-for-use infrastructure” like pits and have a “right to acquire” Telstra backhaul services and space in telephone exchanges.

The proposed agreement also includes confirmation from the government that Telstra will be allowed to bid for the next-generation Long Term Evolution (LTE) wireless spectrum.

It’s where the two ends – mobile and fixed line – meet at the backhaul that is crucial to Telstra’s ability to maintain its market dominance.

With its legacy copper access network off its books and the Next G backhaul still in its clutches, Telstra can progress to a LTE mobile network that rivals the fixed-line NBN.

A Telstra spokesperson told TechWorld the company’s wireless roadmap will be based on HSPA+ technology with commercial HSPA+ dual channel devices coming to market later this year and LTE will be an “evolution” for the Next G network.

“LTE is an option to allow us to carry more capacity,” the spokesperson said, adding LTE is a “very flexible” technology.

When asked whether the Next G backhaul is aggregated with Telstra's existing fibre network, which does form part of the NBN deal, the spokesperson said: “Sorry, but because the negotiations are ongoing we are not providing any breakdowns.”

According to NBN Co, the provision of services to Telstra relates to the fixed line basic service offering, and remains subject to ACCC approval.

Competitive Carrier’s Coalition chair Matt Healy said if NBN traffic is only picked up at points where there is competitive backhaul it won’t be a concern as the deal won’t provide Telstra with an anti-competitive benefit in using the NBN.

“Where NBN Co will use Telstra backhaul it has said it won’t duplicate underutilised backhaul and it will be done in a regulated way,” he said. “We expect it to be dark fibre NBN Co will acquire so as long we get retail and wholesale separation of Telstra we will get more competitive backhaul.”

Healy said if Telstra wholesale operates independently and no longer has an incentive to favour Telstra retail it will want as many customers as it can get.

“The increasing investment in backhaul that flows from premises traffic will provide extra backhaul to mobile networks so the current regional stranglehold should be unwound,” he said. “But there is still a good deal of clarity to emerge as to how it will work.”

“In regional areas there will be new wireless infrastructure deployed, but it will be open access. Telstra, due to government funding, has become the only mobile operator in some regions and has an unfair monopoly.”

Healy said further investment in Next G could boost Telstra’s access monopoly, but generally the CCC views wireless as a complement to the fixed-line NBN, not as a competitor.

“Open access will mean extra backhaul that mobile operators can use to put in base stations,” he said. “If the backhaul component can share infrastructure from NBN Co it lowers the barrier to entry even more.”

Health said it is always a concern Telstra’s power can be used to suppress competition and the CCC doesn’t want to see that model in the post-NBN world.

“The biggest step towards that is the structural separation of networks, but Telstra must not lock away content or spectrum to prevent user choice,” he said. “There is no magic bullet, but the reform bill provides us with a framework to remove the anti-competitive aspects of the market.”

Research director and principal mobility analyst at Telsyte, Foad Fadaghi, said LTE is a pure substitution of fixed-line broadband in many ways, but whether Telstra can establish a mobile broadband monopoly will depend on many factors, including location.

“The key is the wireless market is a lot more competitive than fixed-line, but with the NBN deal Telstra is in the box seat to deliver services,” Fadaghi said. “Telstra has a natural advantage so it is important to sure up as much market share going into it.”

Fadaghi said Telstra is ahead of its competition and he doesn’t expect that to significantly change in a post-NBN world, but wireless will become an increasingly important strategy. “Telstra is closest to LTE,” he said.

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Tags CCCltebackhaulwireless broadbandnext gTelstraNBN

More about Australian Competition and Consumer CommissionCarrieretworkTelstra CorporationTelsyte

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