It also announced a review of telecommunications regulation. The review canvasses both short-term changes to promote the current ULL-based competition and long-term changes that might be required for a next-generation network. A government response is due at the end of 2009.
The submissions to the government's regulatory review were released last Friday. They show little common ground between Telstra and the rest of the industry. The regulator is firmly in the camp of Telstra's competitors.
Telstra has proposed adjustments to the current competition regime that leave the broad pattern of regulation unchanged:
“Telstra delenda est”
Common ground is still possible
But nor can the government ignore Telstra's capacity to damage the NBNCo's business case. If the NBNCo must build its network and fight Telstra to peel away customers (separation takes away Telstra's copper, not its customers), then the government's subsidy costs will be vastly inflated.
The model that is now being widely discussed in the industry is for Telstra's copper access network to be rolled into the NBNCo. This would achieve structural separation in the short term, while creating a sustainable access operator with an established revenue stream. In order for this to be attractive to Telstra, it would need to get a lot of equity and some kind of guarantee on the financial return on that equity.
This model reduces the FTTH upgrade from a commercial challenge to an engineering one to be managed by the NBNCo. Customers will be cut over to the new network automatically rather than having to be captured. This will allow the NBNCo to focus on growing new revenues as FTTH is rolled out.
If acceptable parameters for such a deal can be found, the government will have pulled off a remarkable coup. If not then a lose/lose scenario seems inevitable.
Source: ovum.com
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