Split Telstra for a viable broadband network, says rival Optus

06 June 2009

The Australian government's ambitious national broadband network (NBN) will become viable only if  Telstra Corp separates its wholesale and retail businesses, says its rival Optus.

Speaking at the Trans Tasman Business Circle in Sydney on Friday, Optus chief executive Paul O'Sullivan said a monthly wholesale access price of $50 could be expected if NBN penetration levels hit 60 per cent.

"We think this is a realistic price level - and will allow for retail prices which are not out of line with those paid today," O'Sullivan said.

''The capital cost of this new network is enormous – somewhere in the range of $30 to 40 billion. But the total fixed annual revenues from consumer and business telecommunications and broadband are also very large – around $17 billion a year at present. If the majority of Australia's high speed broadband traffic to homes and business is carried over the new network, we believe it will be viable – and in turn will be able to set broadband pricing which is affordable to most Australians,'' O'Sullivan  pointed out.

An NBN penetration level of 60 per cent would be sufficient to ensure a viable commercial return, but O'Sullivan said this could only be achieved if Telstra was structurally separated and its access network used as the building blocks for the government's fibre-to-the-premises broadband project.

"To achieve this outcome, the NBN must be the only network delivering high-speed broadband services to Australians,'' he said.