Microsoft has confirmed that it is currently "in discussions" with a local broadband provider but said it didn't want to create any expectations in the market other than to assure gamers that the service is on its way. Still, Microsoft won't provide a timeframe for the release of the service.
"We do know that broadband is the only technology that will successfully deliver the online gaming experience that we want to deliver, but we have to work out what the best solution possible is in each territory and we're still working that out in Australia," Microsoft Xbox spokesperson, Simon Baulderstone, told ZDNet Australia.
Telecommunications analyst Paul Budde believes that Microsoft is negotiating with Telstra. Budde expects that Optus will pull out of the Australian broadband market altogether, leaving Telstra as the only service provider in Australia capable of carrying the online gaming system.
Budde also believes that the two companies will have to negotiate though a mix of serious technical hurdles and commercial conflicts.
According to Budde, Telstra will want to re-brand the Xbox Live gaming platform and structure the deal so that it can take a share of revenue from the service.
"That's the sort of stranglehold that Telstra has on the broadband market and it is not only a thorn in the side of Microsoft but anyone else who wants access to the broadband network," he said
Microsoft maintains that Australian broadband technology is ready for its online gaming service, but that assertion has been challenged by Budde.
"Games are notoriously hungry, so you cannot just do all the XBox games that you will have on your DVD-based system because there simply isn't enough capacity on the network," he said.
Even if the systems are ready for the gaming network, Budde said that under Telstra's current broadband pricing policy it will be too expensive for the children's market that it will be targeted at. Budde believes that using the service will increase the average user's broadband bill dramatically
"With those sort of games you very quickly run out of capacity and therefore if you're not careful you could run up bills of hundreds of dollars per month," he said.
In the United States Microsoft charges US$49.95 per year to subscribe to the service. Microsoft Australia said that the 10,000 gamers currently testing the service in the States have reacted positively, but it concedes that the local broadband market is very different
The software giant still won't give indications whether the Australian version of XBox Live will be bundled with a broadband product or released as a network neutral subscription service.
According to Budde, like other content providers who would like to provide high bandwidth services, Microsoft will be facing a difficult decision: downgrade the quality of its gaming platform or hold off until broadband service levels improve.
Current estimates place the number of residential broadband users in Australia at somewhere between 210,000 and 240,000.
Microsoft said it has sold 65,000 XBox game consoles in Australia.
The telstra monopoly strikes again... Looks like we australians are doomed to live in a technological backwater because of the ineptitide of our current government in making sensible decisions regarding the future of our country. All they can do effectively is distract the common folk by shouting "Terrorist!" or "Asylum Seeker!".