Experts say Optus high-speed cable upgrade could be strategic move to defend against Coalition threat to scrap NBN

An IT expert believes Optus’ decision to upgrade its cable network on the east coast to offer 75 Mbps could be seen as a move to defend itself given the Coalition is threatening to scrap the National Broadband Network if it comes to power.

The move comes as Telecom New Zealand is preparing to structurally separate its network and retail businesses following the sale of AAPT, in order to participate in its own Government’s ultra-fast broadband plan.

Ovum research director David Kennedy says Optus is attempting to build up demand for high-speed broadband at the same time Tony Abbot is threatening to abolish the NBN if he comes to power. If that comes to pass, Kennedy says Optus won’t be left high and dry.

“I’m interpreting this move as a transitional strategy, and I think what Optus will be trying to do over time is just create more and more demand for high-speed broadband. And if the NBN doesn’t go ahead, then they have something to work with.”

The rollout comes as the NBN has been put front-and-centre in the Federal election campaign. Late last week communications minister Stephen Conroy launched blueprint maps of where the network will be rolled out, and services are continuing to be connected in Tasmania.

But overall, Kennedy doesn’t believe the network is meant to be seen as a competitive threat.

“I would be extremely surprised if they are trying to undermine the network. They have been big supporters of the NBN, and the McKinsey report found the Government isn’t looking to purchase cable assets. This is more of a stop-gap.”

“The NBN is going to take eight years to get rolling. Telstra already have high-speed cable in Melbourne, and possibly elsewhere, and this is Optus realising they need to have their own offer in the interim before the network can be fully operational.”

Optus announced yesterday its customers in Brisbane, Melbourne and Sydney will be able to access plans on its Hybrid Fibre Coaxial cable network, with speeds of up to 75 Mbps. Over 1.4 million households will have access to the network, and can upgrade with their existing plans.

“The upgrade of our HFC network… demonstrates another significant investment from Optus. Australians are hungry for high speed broadband, so we’ve upgraded our cable network to provide the broadband speeds of tomorrow, today,” Michael Smith, Optus consumer managing director, said in a statement.

The upgrade comes as Telecom New Zealand prepares to separate is retail and wholesale networks in order to contribute to the New Zealand Government’s high-speed broadband plan, although it previously considered building a rival network.

The decision comes after Telecom New Zealand sold off AAPT to iiNet last week for $60 million, in a move speculated upon for months following a rumoured bid from TPG founder David Teoh. The move will see Chorus, currently Telecom New Zealand’s network business, move into a separate entity.

“I think what Telecom New Zealand is moving towards is making Chorus an entity on its own. It will be fairly well placed to manage the upgrade of that copper network to a fibre one,” Kennedy says.

The decision comes as reports suggest Telecom NZ is holding on to AAPT’s fibre network in Australia for a possible sell to the National Broadband Network.