Last year, Telstra proposed to build a fiber-optic network at a cost of AUD 3.1bn ($2.36bn), and had already awarded the contract to build the network to Alcatel SA. The network would have used fiber-optic cables to connect Australian telephone exchanges to 20,000 boxes on the streets of five of the largest Australian cities. This would have allowed Telstra to offer its customers a much higher-speed network compared to its copper-based one, along with high bandwidth services such as IPTV.
However, Telstra and the Australian telecoms regulator and government have locked horns since March over the issue of allowing competitors access to the new network. Telstra had been arguing that it needed the opportunity to recover the costs of building the network, and would not subsidize access for its competitors.
Telstra’s rivals and the regulator said Telstra could not expect such a protectionist move, despite repeated threats by Telstra to pull out of the network build, a move which the Australian government had previously described as blackmail.
In the end, with talks according to Telstra as stalemated, the Melbourne, Australia-based carrier has walked away from the proposal, after failing to agree with the Australian Competition and Consumer Commission over what it could charge rivals for access to the network.
The decision by Telstra to walk away from the deal, put into doubt plans by the Australian government to sell off its remaining 51.8% in the carrier, thought to be worth AUD 25bn ($19.1bn). Telstra’s ADS shares on the New York Stock Exchange fell 2.29% to $14.53 following the announcement.
