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  From: Mark Newton <newton@atdot.dotat.org>
  To  : Michael Kratz <michael_kratz@hotmail.com>
  Date: Fri, 29 Jun 2001 22:42:46 +0930

Re: Telstra Broadband & Multi-Users

On Fri, Jun 29, 2001 at 09:30:29PM +0930, Michael Kratz wrote:

 > >The regions are pretty large - Metropolitan Adelaide is one, for example.
 > 
 > So in the country how big are the regions, ie. say if you wanted it in the 
 > region of whyalla, how far would that get you, would that cover the entire 
 > iron triangle....
 
From memory, there are 7 regions in SA.  That should give you some
idea.  There are 66 in Australia, anyway.

 > So what is the likelyhood in the future of other ISPs (yes.... IPA) of 
 > extending into the secondary cities. I have already heard that it is rather 
 > expensive, thats why I wanted to know how big the regions are, are there any 
 > webpages on telstras site which show the region borders?? so for example if 
 > the region covers the iron triangle it might prove profitable, 3 large 
 > cities that are bandwidth hungry all in one zone.... hmmm... somehow I don't 
 > think telstra would be that stupid though.

The problem is that if you add up the populations of those "3 large
cities," you get about 100,000 heads at most.  But ADSL looks to be
only just barely viable when you're servicing a population of 1,000,000
(i.e., metropolitan Adelaide).  And, as Simon mentioned in another response,
the only one of those cities which Telstra has said they'll service in the
medium-term future is Whyalla, which is, what, 30,000 people?

What's needed is action to force a change in Telstra wholesale policies,
because, with the exception of BigPond, every ISP who has taken a serious
look at the way the FlexStream (wholesale ADSL) product is packaged and
priced will stridently agree that the status-quo is anti-competitive.
Simon has mentioned that this is the subject of ACCC approaches in a
separate reply to your message.

For example:  Elsewhere I've described how the way you obtain access
to a DSLAM "cloud" in a region is by buying a Frame Relay or ATM tail
circuit (from Telstra - you can't use competitors' Frame or ATM circuits),
and paying a separate price for a PVC over that tail circuit between 
yourself and FlexStream.  What that gives you is a connection into 
Telstra's aggregator (the Shasta boxes in Sydney, Melbourne and Brisbane),
which takes all the ATM PVCs from all the DSLAM ports connected to
customers you're servicing and hands them back into your own infrastructure.

Duplicating the functionality of the Shasta box requires something like
a router with an ATM port on it.  They're a dime a dozen, so why can't
ISPs go to Telstra and say, "Tell you what -- I'll co-locate an ATM 
router in the third-party area of your exchange, and you can deliver
the ADSL ATM PVCs for my customers to me, instead of the Shasta in 
Melbourne.  That way, instead of needing an enormous minimum spend
per annum for access into FlexStream, I'll be able to look after my 
own connectivity to my own router, so I won't need to pay your ADSL tax.
Even better, I'll be able to perform bandwidth upgrades, thereby improving
service to my customers, without needing to pay you more money for 
ever-increasing PVCs and tail circuits for my FlexStream access!"

Is there any technical reason why we couldn't do that?  No, of course
not.  So why can't we do it?  Because it's in Telstra's interests to 
sell us a Frame or ATM tail (five-figure installation fee, four-figure
per month rental, minimum) with a PVC (another five-figures per annum for
the smallest one you're permitted to use with FlexStream), and get
another couple of hundred thousand dollars out of us in the first year of
operation.  And note that we incur those costs whether we have any customers
or not;  There are additional costs we need to cover when we actually
get people *using* it, in the form of a monthly fee per customer (which,
I've pointed out elsewhere, is within $10 - $15 of the base retail price 
anyway).

The only reason we need to spend that money is because Telstra says we have
to.  If they un-bundled the FlexStream ISP access from the FlexStream
End-User Access then Agile (and other carriers) would be able to do ADSL
much, much cheaper, in many more areas than right now.  There'd still be
a monthly fee per customer (which is to be expected, Telstra has to pay
for their DSLAMs somehow), but Agile could manage its own costs to 
get those customer links back to a useful aggregation point instead of 
being held ransom to Telstra's extortionate Frame/ATM price list. 

To give you some idea of the comparisons, the price for the first year
of access at 2 Mbits/sec via a Frame Relay PVC is within the same order
of magnitude of the amount of money which would need to be spent to lay
fibre-optic cable between the Agile Communications equipment at 31 York
Street and the third-party room of the Waymouth Street telephone exchange.
Comparing the number of 1.5 Mbit/sec ADSL customers which could be
supported over 2 Mbits/sec of Frame Relay to the number of customers
which could be supported over Gigabit Ethernet on non-Telstra fibre will
be left as an exercise for the reader.  Which one do you think is more
cost-effective?

Of course, the other side of that coin is that Agile (the carrier -- you
need to be a carrier to get into a Telstra third-party room) would then be 
able to offer wholesale ADSL to other ISPs, in competition to Telstra
FlexStream.  And other carriers would be able to do the same thing.
The whole ADSL aggregation space could fill with competing wholesale
providers, instead of the present situation we have, where Telstra gets
to be the only player in the industry who is capable of setting an ADSL
wholesale price.  The whole Broadband market would open-up, every
mom-and-pop ISP in the country would be able to offer their customers an
ADSL link, prices would drop, competitive pressures would benefit the
consumer, yada yada yada -- Which is why Telstra is so bloody-mindedly
dead-against the whole idea.  You don't need to get every customer in
the country to maintain a monopoly, you just need to make sure that
nobody else can connect customers without going through you and paying
the monopoly tax.

So if you're wondering why nobody is doing broadband in regional 
Australia, there's your answer.  The wholesale market is locked up, 
nobody will do it unless there's some meagre potential to make something
approximating a profit, and until the FlexStream wholesale situation 
is changed there really isn't much chance of that happening.

   - mark

--------------------------------------------------------------------
I tried an internal modem,                    newton@atdot.dotat.org
     but it hurt when I walked.                          Mark Newton
----- Voice: +61-4-1620-2223 ------------- Fax: +61-8-82231777 -----

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