John Linton
Amidst all the huffing and puffing of 'NBN Mk2' (which I confidently predict will never be built, but that will wait for another day) we are slowly finalising our "return to Tasmania". Now, we don't have a lot of customers in Tasmania and because we have had to suspend providing new services in Tasmania for almost a year now we have got very little 'presence' there and have, of course, lost some of our customers over time as they have moved residences and we haven't been able to provide them with ADSL in their new locations.
So, prima face, there is not a good business case for us to spend the money equipping a new PoP and paying the premium pricing required to connect the Tasmanian PoP to Exetel's main land network. In fact there is no business case at all based on the immediate future income/expenditure considerations. However that isn't why Exetel is in business and the future could look very different.
We have only ever offered ADSL1 in Tasmania as neither Optus nor Powertel/AAPT offered ADSL2 (again for the same Telstra back haul cost reason). We will need to provide ADSL2 if we are to have any chance of making a break even on residential services. We have looked at doing this in a number of ways and have pretty much concluded that only doing it ourselves would make any sense but we will determine whether or not the imminent change of management within Telstra makes re-selling Telstra ADSL2 remotely feasible (I would guess not but it is something that needs to be determined). Even if Telstra became commercially realistic about wholesale ADSL2 costs to small wholesale customers the cost to Exetel is almost certainly going to be more than double what we could do it for ourselves and we would need to be able to offer the same ADSL2 pricing in Tasmania as we do anywhere else. Reducing our exchange to PoP cost to less than we currently pay Optus or Powertel for 'main land' ADSL2 services would allow us to absorb the much higher costs of terminating the customers data on Exetel's main land network and therefore we could achieve the same or better pricing.
"Politically" speaking (in Tasmania) it may well be a significant 'plus" to be able to offer ADSL2 services in Tasmania at prices that are LOWER than are offered in other States - albeit only to people in the larger Tasmanian population areas. I think it would certainly get us some 'free press' to kick start our return to providing services in Tasmania!
The latest gigantic lie by Krudd does affect this decision (not because it affects my view that NBN Mk2" will never be built) but because he has really painted himself in to a corner in trying to tie up the five Tasmanian federal electorates with more pig ever fitted in to a bigger wooden container than at any time in Australia's political history. By promising to bank roll a FTTH service to Tasmania's 400,000 or so citizens "to be started by mid-2009" he has created a problem for Telstra and everyone else who has currently put ADSL2 infra-structure into Tasmania (and there is not much of it).
An electricity company such as Aurora does have the relatively easy means of quickly connecting all of Tasmania's residences and businesses to FTTH and federal money makes the cost problems that have prohibited this in the past simply "go away". Even the cost to the end user problem is going to be at least partially solved by Krudd needing to demonstrate that a FTTH service will be "affordable" though that, as they say, "is going to be the real trick". His creative accounting minions will be able to manipulate the numbers and that will certainly provide short term benefits to Tasmanian end users before the Auditor General gets around to looking at what he did.
So, assuming that Krudd is forced to actually make good on his promise to fund the Tasmanian State government's Aurora roll out and that some end users begin to get switched on in the not too distant future there would appear to be an opportunity to become an Aurora/Tassie Govt/Krudd/Whoever wholesale buyer of services competing on a "level playing field" (and if you believe that you will believe anything). What should be true (oh dear - am I always going to be this naive?) is that a small company like Exetel would be able to use its better than anyone else's low cost operation to compete with Telstra et alia better than we have been able to do anywhere else in Australia by offering the lowest cost data services to Tasmanian residential and small business users.
However that's all in a pretty unclear and totally undetermined future so back to reality.
One reason for proceeding with our own ADSL2 services in Tasmania (should we end up deciding to do that) is based on the acknowledgment that re-selling Telstra's ADSL1 services is not exactly either financially viable or even appropriate to Tasmanian end users in mid 2009 and reselling the super high priced Telstra ADSL2 is not something that we have become cynical enough to do (unless the "new Telstra" suddenly prices its services correctly).So we have to find other services to provide to make the investment even marginally sensible - ADSL1 alone is simply not going to be sufficient.
The other reason is that we would base a future Tasmanian business plan on business and government services for which we need our own DSLAMs in at least Hobart and Launceston (which currently are possible) and possibly Devonport and Burnie (which may not be possible). We would deploy standard ADSL2 ports in those locations for residential users but more importantly would deploy 10 - 40 mbps/40 mbps ports for business and government users.
Well, that's the theory and it is a long way down the path to becoming 'reality' - the only issue now is taking a guess at if/when an FTTH in at least parts of Tasmania becomes a reality and what the likely wholesale cost to a small company like Exetel will be. Krudd's demonstrated record of telling the big lie and then moving on makes that more difficult than it should be but in this instance he has very little option but to be seen to deliver now he has been so publicly humiliated. If he doesn't deliver, then those massively pig containered 5 electorates may well 'swing the other way'.
PS: I'm indebted to P J O'Rourke for so perfectly summing up Krudd's words and actions over the past 18 months:
"Giving money and power to government is like giving whiskey and car keys to teenage boys."