telstra plans upgrade

http://finance.news.com.au/story/0,10166,12028294-462,00.html

Telstra plans upgrade
By Michael Sainsbury
January 24, 2005


TELSTRA management will in coming months present to the board a blueprint for a $1.5 billion upgrade of the company's core residential voice and data network.

The project - known as Broadband Multi-Services - will be Telstra's biggest residential upgrade for a decade and enable a suite of new high-speed consumer services.
It will include a network platform to serve technologies such as wireless broadband, faster ADSL (broadband over copper wires), cable, internet-based voice services and video offerings.

The project will represent the most significant overhaul of Telstra's residential network since it replaced its analog exchanges with digital equipment in the early 1990s.


Telstra Technology managing director Andrew Johnson said high-speed data and internet connections were "going to be ubiquitous - this is going to be the main way we relate to our customers".

The BMS project consists of three parts: A core internet protocol network that would see all residential services - the so-called triple play of voice, video and high-speed internet - offered on one platform for the first time; applications, such as video and voice over IP; and operations and maintenance. The cost could be as much as $1.5 billion.

"If you look at the scale of our operation, there are 7.5 million houses, there are 10 to 11 million fixed lines. Certainly, when you start talking those numbers, you can get up to $1.5 billion. I wouldn't say that's unrealistic," Mr Johnson said.

But it was unclear whether the project would squeeze into Telstra's annual domestic capital expenditure budget of about $3.2 billion. "We are working that through but I would like to see it be able to live within our existing capital envelope," he said.

"The movement from narrowband (traditional voice and dial-up internet) to broadband is part of natural evolution in our business. But the caveat that I would put is take-up.

"The first year in broadband - about five years ago - we sold 80,000 services. In November, I sold 80,000 services in one month. If we get dramatically fast market take-up, we may invest money faster than we expected to.

"BMS is an integral part of providing a better high capability broadband services. The high-speed highway is only part of it. BMS is all the control systems that allow this to operate and then the applications platforms. We are putting in the infrastructure capability that allows new services to follow."

Telstra has asked its equipment suppliers to make their submissions for the project by Friday after issuing a "request for information" last month.

"Our aim would be to get the business case signed off by the end of this financial year. Assuming we go ahead - and I believe we will - we are envisaging a five-year delivery program for the majority of the changes," Mr Johnson said.

Companies which have been working on the RFI include Telstra's broadband suppliers Alcatel and NEC, as well as Cisco Systems, Ericsson, Juniper, Lucent Technologies, Marconi, Nortel Networks and Siemens.

Telstra's project mirrors a number of similar network upgrades which have been given the green light by large offshore telecommunications companies over the past 12-18 months. The most advanced of these are the former incumbent British Telecom and Verizon and SBC in the US.