NINE LEADING TELECOMMUNICATIONS COMPANIES RELEASE THEIR FTTN MODEL

Today AAPT, Internode, iiNet, Macquarie Telecom, Optus, Powertel, Primus, Soul and TransACT released a detailed economic report - A Competitive Model for National Broadband Upgrade.

It offers a plan for a higher bandwidth Australia - while protecting and strengthening competition.

The report, prepared by Allen Consulting Group and dandolo partners, sets out a model for a Fibre to the Node (FTTN) network which avoids the anti-competitive problems of Telstra's FTTN model.

Michael Simmons, Chief Executive Officer of Soul, said: "Our model allows an FTTN network to proceed while protecting and increasing competition in telecommunications. We recommend a co-ordinated approach to investment to maximise the availability of high speed broadband while avoiding the inefficiency of duplication."

David Tudehope, Chief Executive of Macquarie Telecom, said: "Our model has two separate but linked elements. First, the governance arrangements we propose are a necessary condition for a fibre to the node roll out. They should apply regardless of who owns the network - Telstra or any other party.

"Second, we believe the national benefit of FTTN can be significantly enhanced if the network is not exclusively owned by Telstra, but instead owned wholly or partly by players other than Telstra, be they other telcos or financial investors."

Key to the proposal is the creation of an industry-owned, special purpose company called "SpeedReach".

The key features of the model are:

• Creation of an industry-owned, special purpose company called 'SpeedReach' to make key decisions about the network;
• A process to secure more extensive capital investment in the FTTN network - thus delivering high bandwidth broadband to millions more Australians than under Telstra's proposal;
• An access pricing model which sets fair prices for use of the network;
• An integrated process to move forward - including a managed process for transition from today's world of unbundled local loop to the future world of FTTN.

The benefits of the model are compelling, delivering:

• A blueprint for high speed, wide coverage broadband - going to more Australians than under Telstra's model;
• An FTTN network operating under effective competition - thus ensuring more innovation, lower prices, better service and greater penetration than Telstra's model;
• The regulatory certainty to let the FTTN investment go ahead.

Paul Broad, Managing Director of PowerTel, said that the release of this report was very significant because it gave certainty to the Government, ACCC and Telstra about what the major competitive telecommunications companies considered to be necessary to preserve competition while allowing FTTN to proceed.

"If the FTTN network has the governance mechanism we propose, with the special purpose company SpeedReach; if it has access prices set in accordance with the principles specified in our report; and if it has the managed process to transition from ULLS to FTTN that we specify - then we are happy to see a FTTN network proceed," Mr Broad said.

Paul O'Sullivan, Chief Executive of Optus, said that in addition to specifying the necessary conditions for FTTN to proceed, the report laid out a process by which the benefits of FTTN could be expanded - by moving from a model where the network was exclusively owned by Telstra to a model where it was owned by range of industry or financial investors.

"We believe the FTTN access network could be financed as an infrastructure asset, much like assets such as gas pipelines and motorways, which attract substantial debt and equity financing in the financial markets," Mr O'Sullivan said.

"Indeed, we think there is an investment opportunity should Telstra not proceed - so we will be inviting specialist infrastructure financiers to approach us with proposals for a FTTN network based on the traffic volumes that we can jointly deliver."

The nine companies have written today to the Government, the ACCC and to Telstra to brief them on the model.

View the report - A Competitive Model for National Broadband Upgrade

View the presentation - Building a higher bandwidth Australia while protecting and strengthening competition

Media contacts:
Melissa Favero
Optus Corporate Affairs
Tel: (02) 9342 5030