Australia's going all-in with its government-run fiber network. The government has now convinced the country's dominant telco, Telstra, to sign on with the scheme, get rid of its copper and cable lines, and transition its subscribers to the open-access national fiber program. When the project is complete, Australia will have taken an almost unprecedented step for a country of its size: legacy telecommunications infrastructure will be almost gone.
Although Australia had planned to move forward with its AUS$43 billion fiber network with or without Telstra, Telstra's decision to join the party is a significant one—the company could have held out and fought to keep its customers from defecting to fiber, setting the stage for a long platform war. In the end, though, there just weren't many benefits to doing this; a recent report from McKinsey and KPMG reemphasized the fact that the new fiber buildout would "accelerate the evolution of the industry," and it would be hard to compete with open-access fiber-to-the-home on speed.
Telstra could hardly afford not to become part of Australia's future, which is why it penned the deal with the government after a year of negotiations. For AU$9 billion, Telstra agreed to transfer all of its customers away from copper and cable and onto the new fiber network; it also opened all of its ducts and existing fiber backhaul to the government for its use.
In the end, Australia will have an open-access fiber network that reaches most homes in the country, with the rest served most by high-speed wireless (12Mbps minimum) and a few isolated places with new higher-speed satellites. The fiber network will be run as a pure infrastructure company that leases out access to any ISP who wants it at nondiscriminatory rates, paving the way for major competition in the ISP space.
Australia's Minister for Communications, Stephen Conroy, praised the deal by saying that Telstra's participation will mean the government can reduce the overall cost of building out the network. "This is an important step in the delivery of the single largest nation building infrastructure project in Australian history, which will increase national productivity and help build a stronger economy," Conroy's office said in a statement.
The deal is not quite done yet, as the government must first sort out binding agreements with Telstra that must then be approved by shareholders. Once it is approved—and there's not much reason not to be—the government will take over Telstra's phone services, payphones, and emergency call services until the new system is in place.
From other parts of the world, regulators often watch the US telecommunications market in amazement, shocked that ISPs and phone companies so aggressively challenge every FCC decision and Congressional bill they don't like. Even asking Comcast to stop blocking P2P traffic was met with a lawsuit.
Indeed, it's almost impossible to imagine something like this happening in America, with the government going to AT&T, announcing that it's building a massive fiber network that will make the copper telephone lines obsolete, and that AT&T can join it or die a slow death in the marketplace. (See the recent National Broadband Plan for evidence of the FCC's almost total lack of interest in trying to spur ISPs to do big things.)
There are some good reasons for these differences, and the US market isn't like Australia's; fiber is more widely deployed here by companies like Verizon (to the home) and AT&T (to the node), while widespread DOCSIS 3.0 cable systems increasingly offer 50 and 100Mbps speeds.
But it's still not hard to watch what Australia has decided to do with something like awe; in essence, it is making Google's dream of high-speed, widespread, open-access fiber a reality, and it's willing to browbeat even the largest telco in the country into compliance with the plan.
I thought this was an interesting development, so I figured I'd share.