Internode to cut Tassie Telstra backhaul by 75 per cent

The agreement ends months of negotiations between the two parties and is expected to be operational "before the middle of this year".

Internode said it is purchasing capacity to transport up to 622 Mbit/s of data across the strait initially but expects to upgrade to one Gigabit capacity "within the first year".

"We're running an STM-4 [synchronous transport module] but have access ports into the network capable of running at much higher speeds so we're able to step up bandwidth as demand grows," Internode's carrier relations manager John Lindsay said.

Lindsay said Internode would retain Telstra backhaul until the Basslink service is operational and stable, after which it would cut capacity by 75 per cent and use it as a redundant path.

"Basslink is a single path and a brand new service - it's just prudent [to keep some Telstra capacity]," Lindsay told iTnews.

"Once it's stable we'll cut back the Telstra capacity to about a quarter of what it is. We don't see any purpose in rewarding a market bully."

Lindsay also revealed that Telstra had offered "considerable" wholesale price reductions to the ISP to keep them, once it became apparent that Basslink was committed to provide wholesale capacity.

"Telstra are trying very hard to retain our business," Lindsay said.

It contradicts an earlier statement by Telstra to iTnews in which the incumbent ruled out a price drop.

"As we have always said we welcome infrastructure based competition," the Telstra spokesperson said.

"Our pricing policies haven't changed".

The agreement will no doubt be a relief to Internode, which announced at the end of last year that it would "subsidise" the return of ADSL2+ services to Tasmania by running them off Telstra backhaul.

At the time, Internode said its decision to resume selling ADSL2+ services in Tasmania was "due to the expected connection of the Basslink fibre link to Victoria".

But it also said that "because Bass Strait backhaul is [currently] limited to a monopoly supplier, Telstra, it is much more expensive for Internode to transfer data between Tasmania and Victoria than it is to move data between Australia and the US".

Lindsay said the agreement would enable Internode to create a profitable ADSL2+ business in Tasmania.

"It's been very frustrating that we haven't made any money out of Tasmania for a long time," he said.

"This puts us back in a position where Tasmania can be profitable, which is nice. We're looking to sell more services into Tasmania now knowing that it's profitable."

Lindsay also said Internode is "looking again at the viability of putting more of our DSLAMs into Tasmania" but did not commit to any rollout.