One-up attempt on the National Broadband Network by Telstra

In a move by Telstra that has been seen as a clear challenge to the Federal Governments $15 billion National Broadband Network by its rivals, the telco will now be turbo-charging its capital city cable broadband network.

The 12Mbps speed of the National Broadband Network will now be competing with the 100Mbps download speeds to come from Telstra, and Melbourne will be the site for the first stage of the upgrade, which currently uses its hybrid fibre coaxial network to provide broadband to more than a million of its customers.

The upgrade, which will cost £300 million and should be finished by Christmas, will help to show that it has a serious alternative to the broadband plans of the Government and will stem the dropping revenues on its fixed lines, according to analysts.

The Government, which is planning to deploy a high-speed broadband network to 98 percent of Australia, is likely to be seriously concerned by the upgrade plans for Telstra as a minimum speed of 12Mbps is all that is being offered by the NBN.

The economic feasibility of the NBN could possibly be complicated now by this move as it raises the prospect that super-fast cable network from Telstra could lead to it cherry picking the users in the cities and the high revenues they yield.

Due to it failing to meet the requirements of the NBN tender process Telstra was dropped from the $15 billion national broadband network back in December.

Telstra’s expansion was announced just a few weeks before the winning NBN bid is to be announced by Stephen Conroy, the Communications Minister.

A spokesperson for Senator Conroy said “Broadband is important enabling infrastructure for the digital economy and the Government welcomes any investment in high-speed services. However, Telstra’s HFC network is confined to some areas of metropolitan Australia and will do nothing to improve speeds for the vast majority of Australian premises outside its HFC footprint.”

The upgrade was described as the dominant telco playing just another round of brinkmanship by Optus, who is the only competitor of Telstra’s in the stakes for broadband cable and has an almost identical network size.

Maha Krishnapillai, a spokesperson for Optus said “This is clearly a cynical ploy to introduce fear, uncertainty and doubt into the NBN process. We always knew they would do an upgrade but it has no impact on our commercial model for the NBN in any way. HFC is also an inferior network to what the NBN prescribes because it’s a shared network, which means internet speeds deteriorate as more people access the network.”