TELSTRA and the competition watchdog are locked in an intense number-heavy debate about the value of the copper network, as the government prepares to announce how many exchanges will be built into the new fibre network.
The Australian Competition and Consumer Commission must finish its review of pricing for the copper network within three weeks because new pricing for fixed-line services is due to start on January 1, 2011.
The deal between Telstra and NBN Co cannot be finalised until the ACCC’s review is completed, because it affects the value of Telstra’s network and the cost of accessing Telstra’s assets.
Another key decision is expected today: how many points of interconnect, or exchanges, will be built into the national broadband network.
Federal cabinet is understood to have discussed on Tuesday the ACCC’s advice to build about 200 points of interconnect into the network, but the Communications Minister’s office has held off announcing the decision. It is unclear why the delay is necessary.
The number of exchanges will affect the cost of connecting to the network because internet retail providers must install equipment in every exchange.
However, adopting NBN Co’s proposal of a total 14 exchanges in a handful of capital cities will render the existing and competitive inter-city fibre network unnecessary. Fibre owners have already suggested they will seek compensation if their assets are stranded. Meanwhile, the ACCC and Telstra are debating the value of Telstra’s fixed-line assets, such as conduits and piping, land, copper lines, and exchanges.
In September, the ACCC proposed a new pricing methodology that values Telstra’s copper network at $7.5 billion and other assets, such as cables, switching equipment, and international and satellite equipment, at $5 billion. This would see wholesale line rental fall from about $25 per month to $20.
Telstra disagrees and has submitted nearly 20 documents supporting an alternative valuation, including expert opinions and Treasury handbooks on how to estimate the cost of capital for state-owned enterprises.
Article via Sydney Morning Herald
