Telstra Velocity fibre rebuild or exit 'not practicable' before August 2021

Telstra is still no closer to an “exact date” to either upgrade or offload its residential fibre networks, but says it won’t be before the end of July 2021.

The telco has up until 1 July 2022 to either exit the residential fibre business - comprising its South Brisbane and Velocity networks - or upgrade the networks to minimum NBN specifications.

It was meant to have done so by now - several times - but repeatedly secured extensions.

The latest extension granted by the government will be its last, and is a year less than Telstra had wanted.

There are several overlapping regulations that govern the upgrade or exit ultimatum, and one of those is up for review due to an impending expiry on July 28 next year.

Telstra has asked for this particular regulation to be continued so that it aligns with the latest government extension.

But in doing so, the telco has admitted that customers in South Brisbane and its 128 Velocity-cabled housing estates won’t have NBN equivalent services - or the same choice of retail service providers - before at least mid-2021.

NBN equivalent services in this context comprise “wholesale access to a Layer 2 bitstream service with a downstream data rate that is normally 25 Mbps or higher upon request.”

“Plans to finalise the future operations of the FTTP networks are still in development, such that Telstra is unable to confirm the exact date that the Layer 2 transition will occur,” Telstra said in a submission. [pdf]

“The current [regulations] expire on 28 July 2021. However, it is not practicable for Telstra to complete any such disposal transaction, or transition its customers to a Layer 2 bitstream service, prior to the current expiry date.”

Telstra said it “has continued to explore a number of options for the operation of the FTTP networks” over the past few years.

“Telstra has dedicated resources to this project and has been in discussions with reputable third parties regarding the potential provision of services over the FTTP networks by those third parties,” it said.

“Telstra expected to be in a position to set out the timeframe for the networks being able to meet the Layer 2 service description before commencement of [this] inquiry.”

Upgrade vs rebuild

Telstra used much of its submission - albeit redacted - to argue that the upgrade path to get its residential fibre networks up to minimum NBN specifications would be a particularly costly exercise.

The networks were never intended for the “purpose of providing high speed broadband services but rather to replace or augment our PSTN [public-switched telephone] network,” it said.

“Telstra’s network and product design were targeted to PSTN emulation to mirror our existing (non-NBN; non-NGN) network capabilities rather than to provide new fully function Layer 2 bitstream services that enable a suite of IP-based NGN [next-generation network] services as per NBN and other new superfast networks.”

Telstra said a “full rebuild” would be required.

“For Telstra to be able to support an NBN-equivalent wholesale Layer 2 Ethernet product on its FTTP networks, a simple network reconfiguration is not possible,” it said.

“A complete rebuild is required.”

Telstra kept its actual cost estimates for a rebuild confidential, but said that due to the limited number of premises, it would have limited ability to recoup the investment.

Most of the cost, it said, would be in labour, IT systems, and new customer premises equipment.