Feb 28, 2012

ACCC gives green light to Telstra separation

The Australian Competition and Consumer Commission (ACCC) has given the National Broadband Network (NBN) its tick of approval with the acceptance of Telstra’s Structural Separation Undertaking (SSU) and draft migration plan.

Australia’s number on telco submitted the SSU and draft migration plan to the ACCC in August, which commits Telstra to structurally separate by 1 July 2018. It also maps out the measures Telstra will put in place to provide transparency and equivalence in the supply of services to wholesale customers during the transition to the NBN.

ACCC chairperson, Rod Sims, said the acceptance of the SSU marked a significant milestone in the structural reform of the telecommunications sector.

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"This SSU has been the subject of extensive consultation and public discussion. The ACCC acknowledges contributions from industry, as well as the preparedness of Telstra and NBN Co to modify the undertaking in response to legitimate concerns,” he said in a statement.

The telco submitted its final SSU to the watchdog recently, to address concerns raised by the watchdog. Changes included clarification on the operation of the overarching pricing equivalence commitment, and also how wholesale customers access reference prices for regulated services. "In particular, Telstra has made substantial improvements to its interim equivalence and transparency commitments, which are intended to ensure that wholesale customers gain access to key input services on an equivalent basis to Telstra's retail business units during the transition to the National Broadband Network."

In the SSU approval document released by the ACCC, the regulator said the SSU specified a range of measures to apply to Telstra’s supply of fixed line access services to its wholesale customers.

“Of particular significance is the commitment that Telstra has given to providing equivalent outcomes for wholesale customers as are achievable by Telstra’s retail businesses.

“The inclusion of this commitment provides additional assurance that the equivalence and transparency measures will remain appropriate and effective for the duration of the migration period.

“The SSU also specifies measures that will enable the ACCC to monitor Telstra’s compliance with its various commitments.”

Telstra has also sought to renegotiate existing wholesale ADSL contracts following the watchdog’s recent interim access determination if requested by a wholesale customer. The interim wholesale price will be in place for 12 months, as a final access determination is established.

According to Sims, NBN Co and Telstra have also addressed some issues regarding commercial arrangements, with restrictions on Telstra promoting wireless services as a substitute for fibre services replaced with a requirement that it meet existing Australian consumer law requirements.

“Any subsequent amendments to the commercial arrangements that would restrict either party from competing will now be subject to ACCC oversight – this is effected by a joint undertaking that NBN Co and Telstra have given to the ACCC.”

Telstra chief executive, David Thodey, said the telco could now work with the government to finalise the processes to implement the definitive agreements.

“There are a small number of matters left to finalise with the Government, including NBN Co shareholder approval and Telstra receiving Ministerial waivers from the legislative requirement to divest our HFC network and our share in FOXTEL,” Thodey said in a statement.

“The SSU comes into force once these waivers are received,” Mr Thodey said.

Both the SSU and migration plan will become effective once the Minister has exempted Telstra from the requirement to give undertakings on its subscription television broadcasting licence and its hybrid fibre-coaxial (HFC) network.

There will be a two month period for the telco to implement interim equivalence and transparency measures before they become enforceable.Chloe Herrick (Computerworld)28 February, 2012 12:36Comments

Follow Chloe Herrick on Twitter: @chloe_CW

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Apple expected to unveil iPad 3 on March 7

Apple (NASDAQ:AAPL) issued invitations to the media for an event in San Francisco next week where it is expected to release its next version of its popular iPad tablet.

The event will take place March 7 at 1 p.m. ET at the Yerba Buena Center for the Arts Theater, where Apple has held previous product launches. The invitation only says: "We have something you really have to see. And touch." However, it has been speculated for some time that the company will introduce its latest iPad in March and that it will include an LTE modem, the first LTE product for Apple. An LTE tablet could be a presage to an LTE iPhone later this year.

AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ) will launch an LTE version of the iPad, according to a report in the Wall Street Journal from earlier this month. AT&T and Verizon have been the only two U.S. carriers so far to offer the iPad, though Sprint Nextel (NYSE:S) started selling the iPhone last fall.

Apple has historically held off on supporting new wireless network technologies until the networks provide ample coverage, and thus a positive user experience. Currently, Verizon's LTE network covers more than 200 million POPs and AT&T's LTE network covers more than 74 million POPs. Additionally, the iPad's larger battery and customers' penchant for using the iPad on Wi-Fi networks could have made the addition of LTE more palatable to Apple--critics have noted that LTE connections quickly burn through users' smartphone batteries. According to multiple reports the device will also have a 2048×1536 Retina Display and a faster processor.February 28, 2012 — 12:24pm ET | By Phil Goldstein

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Gigabit Internet for $70

SEBASTOPOL, CALIFORNIA—Two things set a one-block stretch of Florence Avenue apart from other American streets. One is the quirky metal sculptures planted in front of most homes; the other is the Internet traffic coursing through recently-strung fiber-optic cables on the block’s utility poles. They offer each house up to one gigabit per second in bandwidth, making this one of the fastest streets in America.

While some other cities can also brag about gigabit access, in this Sonoma County town it costs only $69.95 a month.

The service comes courtesy of Sonic.net, the18-year-old Internet provider based in the neighboring city of Santa Rosa. And Sonic even throws in two phone lines with unlimited long-distance calling when you sign up.

Despite living on one of the best broadband streets in the country, almost none of the few dozen residents on Florence Avenue bother with the highest-end gigabit service, though. And why should they? Sonic's everyday 100 Mbps fiber offering costs just $39.95 a month, the same price Sonic used to charge for its 20 Mbps DSL connections (It includes unlimited phone, too.)

Compare Sonic’s 100 Mbps price to the two better-known area options for broadband—Comcast's Xfinity Extreme 105 Mbps service runs $199.95 a month, while AT&T's U-Verse tops out at 24 Mbps for $49.95.


It's actually much faster than this
Rob Pegoraro
Gigabit access is fast—fast enough at one Sebastopol subscriber's house to perplex Ookla's Speedtest.net. The service incorrectly reported the person’s connection at a mere 134 Mbps. Downloading the current release of Ubuntu Linux didn't help, either; on two different tries, the server simply couldn’t provide the 695-megabyte file as quickly as the connection allowed.

But there was no mistaking the speed of Sonic’s system when I pulled up a YouTube clip and saw the entire video buffer instantly, even on a “mere” 100 Mbps connection.

Even better, Sonic does not place any data caps on its service.

As ISPs often note, people keep using more data; what they usually neglect to mention is that the costs of providing it have dropped dramatically. "It's reasonable to say that consumer bandwidth consumption went up,” Sonic chief executive and co-founder Dane Jasper said when I stopped in for a visit at his Santa Rosa office late last year. “But at the same time, the cost of clearing those bits keeps going down."

Wondering "why can't somebody else do this?" You're asking the right question. But you may not like the answer.

The twilight of DSL

Privately-held Sonic is an unlikely survivor. As a small digital-subscriber-line (DSL) service, one might have expected it to go extinct like most of its brethren after the Federal Communications Commission largely deregulated the DSL business.

The FCC's 2005 decision to reclassify DSL as an "information service" (PDF) came after several bruising years for upstart ISPs that saw overleveraged firms like NorthPoint Communications and Rhythms NetConnections implode, abruptly disconnecting subscribers as they tumbled into bankruptcy. When the FCC ended incumbent carriers’ obligations to sell last-mile access to competing ISPs at regulated rates, things got even worse for independent DSL providers.


One of the Patrick Amiot sculptures on Florence Avenue in Sebastopol
Chris Willis
Those that survived were stuck with a growing competition problem: they couldn't provide DSL at speeds faster than the incumbents, and they were now more expensive, too.

"We were on this dead-end street… all essentially selling the same thing," said Jasper.

One way Sonic could stand out, however, was through customer service. Its consistently high reviews on DSLReports.com speak to its success there. But with cable services getting faster, Sonic had to get more out of DSL technology if it wanted to compete. In 2008, Sonic began rolling out the faster ADSL2+, finally offering speeds competitive with cable to customers who were close enough to a phone company’s central office (prices ranged from 6 Mbps for $45 to 18 Mbps for $80).

The company increased speeds while cutting costs, taking advantage of cheaper upstream connectivity. A year later, the cost of 18 Mbps service fell to $55. Sonic, having obtained a phone service license from the California Public Utilities Commission (PUC) in 2006, added voice calling as an option. It then made voice a standard feature in 2010, with unlimited nationwide calling in a $50, 20 Mbps bundle. (That plan is now down to $39.95.)

The tradeoff for relying on ADSL2+ is limited coverage. The service's reach is fairly extensive in San Francisco but, in towns like Sebastopol and Santa Rosa, it doesn't get far outside the downtown.

Customers beyond that perimeter (about half of Sonic's less-than-50,000 subscribers, Jasper included) can only access the older, slower form of DSL that cable providers like to mock in their ads: 3-6 Mbps for $39.95 (although that's cut to $19.95 for the first year.)

If Sonic were to not just survive but succeed, it needed a plan for the future that wouldn't be tied up in somebody else's copper telephone wire. It settled on fiber.

The jump to fiber

Deploying fiber-to-the-home service is a big step. Sonic kicked off this buildout on favorable ground: a reasonably dense neighborhood in Sebastopol, a compact town of 7,397 that may be best-known as the home of tech-book publisher O'Reilly and Associates. Sonic began contacting DSL subscribers there last year with an absurd-to-resist offer: five times their current speed for the same price.

But why did Sonic also offer gigabit access at only twice the price of its 100 Mbps service? Said Jasper: Why not? "The cost differential between a customer who's connected at all and one who's connected at one gigabit [per second] is nominal." Calling the $69.95 service "a headline product," he noted one key reason for Sonic to offer it: because others can't.

The math behind Sonic's marketing is not so absurd. Once the company moves a DSL customer to fiber, it can stop renting the copper loop from the local phone company office to their home, which costs about $12 a month. From there, the company begins the countdown to recover the "sub-$500" cost to deploy fiber to that home.

"On paper, the model is viable," wrote Diffraction Analysis CEO and co-founder BenoĆ®t Felten. He noted Sonic's advantages of being able to start in customer-rich neighborhoods served by cheap overhead lines instead of more expensive to deploy underground conduit. He also emphasized the importance of getting enough customers to upgrade. "If you get in the 40 percent plus [range] it starts to look golden, and if you're in the 60 percent range,” he said, “you've built a cash printing machine."

But expanding on a much larger scale might create financing issues. "On the scale that Sonic.net is currently considering, they can self-finance,” he added, “but if it works and they want to go beyond that, they will need a lot of capital that, as far as I'm aware, they don't currently have."

Jasper confirmed the suspicion; Sonic will have to take on debt if it continues to expand—as it hopes to do so. In a few more months, he said, it will start to advertise the service; by the end of this year, Sonic aims to pass about 2,500 homes in Sebastopol with fiber, plus some 20,000 more in San Francisco's Sunset District.

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