TransACT secures Canberra upgrade path

iiNet subsidiary TransACT has agreed to complete the long-running upgrade of its fibre-to-the-node network in Canberra thanks to an exemption to NBN cherry-picking legislation granted by the Federal Government.

The service provider, bought last year by iiNet for $60 million, had begun an upgrade of the 12-year-old network in Canberra in March 2009 to VDSL2, with promises of speed boosts to 60 Mbps on the downlink.

The Federal Government's anti cherry-picking legislation, passed last year, prevented areas without the network upgrade from receiving the speed boosts due to potential competition with the National Broadband Network.

The legislation required networks built or significantly upgraded after January 2011 and providing speeds of at least 25 Mbps to be operated on a wholesale-only basis.

Under an exemption to the legislation, TransACT would be able to continue upgrading the network to VDSL2 while remaining vertically integrated, provided it notify customers and government bodies of significant changes to the network.

"We're extremely positive about it," TransACT chief executive Ivan Slavich told iTnews.

"We've obviously spent a fair bit of time working to achieve that outcome and I think it's a testament to the fact that we have previously invested in those networks and have been effectively delivering the kinds of services the Government has been wanting to deliver via the NBN to customers for some time."

Though TransACT has been negotiating with the Federal Government over exemptions for the past seven months, it appears an application relating to the VDSL network only came in February this year.

New estate fibre

TransACT was simultaneously granted a similar exemption to construct fibre-to-the-home networks in a new housing estate in the city's south, where it is expects to pass 16,000 homes with the technology.

Slavich told iTnews the company had already passed 7000 premises and connected 3000 with active services since construction began last year in stage one of the estate.

Unlike its other existing networks, the FTTH network had not gained a statutory exemption as it was not built before January 1 2011, when the legislation came into effect.

However, because TransACT had signed contracts with the estate developer before the legislation passed through Parliament, and the "advanced nature" of construction, meant the exemption was allowed.

Under the agreement, TransACT will be required to provide an open access Layer 3 wholesale service to third party service providers, a product it already offers on the VDSL network.

The exemptions do not apply to TransACT's cable network in regional Victoria, which had been upgraded to DOCSIS 3.0 technology but fell outside of company plans for significant infrastructure upgrades.

Restricting expansion

Slavich said the company had continued to win business within the one-kilometre radius of its existing network, as allowed under the legislation, but acknowledged the cherry-picking rules restricted its ability to significantly expand the networks.

"If we wanted to go to another [estate] in Geelong and build FTTP, I think it would be unlikely for us to get an exemption via a ministerial instrument," he said.

"The fundamental reason why is we'd have to separate our retail and wholesale... the only way we'd do that is if we'd sold the network business. Anything's possible in that space but it's not on the market."

TransACT's concessions are the second set of exemptions provided by communications minister Stephen Conroy to the anti cherry-picking legislation.

A similar deal with Telstra saw the incumbent open 118 housing estates under its Velocity program for wholesale access to third party providers for the first time in exchange for the ability to expand infrastructure in those areas beyond the one-kilometres radius limit set out in the legislation.

The deal is expected to coerce wholesale price changes from Telstra in those estates for the first time, under the exemption to take effect this month.

It is believed Telstra and TransACT were the only companies to apply for an exemption.

Though backdated to the beginning of last year, the legislative provisions and accompanying declarations from the competition watchdog came into effect this week.