Look beyond Telstra to avoid broadband price-hike

A report yesterday claimed that the cost of implementing a national broadband network could lead to an increase of 50 percent or more on home phone and Internet bills, but one analyst believes the only way to keep prices down is to leave Telstra out.

According to a Sydney Morning Herald report yesterday, home phone and broadband costs may rise by an average of 50 percent under plans for a national broadband network.

"If open wholesale access to the network is provided and sold off it is true that prices will rise," said Richard Chirgwin, research manager at telecommunications analysts Market Clarity.

"Fifty percent is a realistic estimate of the retail impact but it's difficult to predict exactly what will happen," he said.

However, Robin Simpson, research director for mobile and wireless at analyst firm Gartner believes the Herald's claims are speculative and rely too much on the presumption that Telstra will be involved as a major player in the construction of the network.

"To say that prices are going to rise by this much or that much is nothing but conjecture at the moment, we don't even know to what extent Telstra are going to be involved."

"At this point we have no details of the technology, the timetable or the business model," he said.

Phil Burgess, Telstra's head of public policy told the SMH that Telstra planned to become a "premium provider charging premium prices".

Market Clarity's Chirgwin said: "Everyone would like to be able to focus on premium services and premium customers, whether it is possible to do that successfully and without losing too much volume business is another question".

"Telcos are a volume business, small operators can afford to focus on a small amount of premium clients, but large carriers cannot afford to lose large chunks of customers," he added.

Gartner's Simpson insisted that it is an open contest for the network and the government's major partner may not necessarily be a local carrier.

"The game is wide open now and this might present an opportunity for overseas telcos such as BT or AT&T, both are active in the Australian market and would clearly be interested in being involved."

Simpson went on to say that one of the major issues that will come about is the battle between shareholder interest and public equity in the network, and that legislative action may be required by the new government if Telstra isn't willing to come to the negotiating table as a candidate to build the network itself or provide access to existing infrastructure for an alternative company.

"They're no longer guardians of the national interest -- Telstra answers primarily to its shareholders now ... Kevin Rudd is a man on a mission; I think it's quite possible that he will find a regulatory way around things if Telstra don't want to comply," added Simpson.