Telstra has scrapped plans to build a new $4 billion fibre optic network after negotiations with the competition watchdog over regulatory issues broke down.

Telstra said the talks with the Australian Competition and Consumer Commission (ACCC) about the so-called fibre to the node network (FTTN) had reached an impasse over costs.

“Until Telstra’s actual costs are recognised and the ACCC’s regulatory practices change, Telstra will not invest in a fibre-to-the-node broadband network,” the company said.

Telstra said it had sought an outcome that would assure shareholders the company’s massive investment would not be used to subsidise network access by its competitors.

“The negotiations have not produced this outcome,” it said.

“The major stumbling block was the ACCC’s unwillingness to recognise the actual costs that Telstra incurs in providing its services and, especially, the costs it incurs in providing services to rural, regional, and remote Australia.”

In a hastily called media teleconference, Telstra group managing director public policy and communications Phil Burgess said the failure of the talks was regrettable because most of the FTTN issues had been sorted out.

He said the talks were a “casualty” of confused and inconsistent policies governing the regulation of the Australian telecommunications sector.
Mr Burgess put the cost of the network at $4 billion.

Telstra said it would not invest in the network until the ACCC recognised the actual cost of providing its services, particularly in rural areas.

“Until Telstra’s costs are recognised and the ACCC’s regulatory practices change, Telstra will not invest in a fibre-to-the-node broadband network.”

ACCC ‘bewildered’ by decision

Australian Competition and Consumer Commission chairman Graeme Samuel said Telstra senior executive Phil Burgess had rung this morning to end discussions over the regulatory framework for the system.

Mr Samuel said as late as Sunday morning, Telstra had supplied the commission with information regarding the project.

But Mr Burgess had killed it off today.

“It’s fair to say I’m bewildered by the decision, and just a little bit disappointed,” Mr Samuel told AAP.

“I received a phone call from Phil Burgess this morning to tell me that the fibre-to-the-node discussions were dead.

“I have to say that I’m still not sure why they’ve killed the negotiations.”
Mr Samuel said negotiations with other potential suppliers of a high speed network were already under way.

He said there would be a system in place, even if it wasn’t one provided by Telstra.

“As surely as night follows day, there will be a high speed broadband network built,” he said.

“I don’t think we need to be held hostage by Telstra to achieve that.”

Source: SMH