Telstra’s extensive wireless broadband price cuts may have an unintended consequence—they will render the Next G offering on a par with the Department of Broadband, Communications and the Digital Economy’s definition of what constitutes “metro-comparable broadband” and virtually eliminate national eligibility of ISPs to collect Australian Broadband Guarantee subsidies.

The DBCDE considers “metro-comparable” broadband to be a service costing less than $A2,500 over three years, with a 3GB monthly data allowance and a minimum speed of 512Kbps—ABG subsidies are available only in areas where this is not provided by the market.

Until this week, only Optus’ 3G wireless service was considered metro-comparable but the latest Telstra price cuts have brought its Next G offering well within the definition.

The difference: while Optus’ single band 3G service only covers 80% or so of the population and dual band 96%, Telstra’s Next G covers a much greater geography at 98-99% of the population. If DBCDE is to observe its own guidelines, it would be compelled to dramatically cut eligibility for ABG funds to a fraction of the current pool.

A number of CommsDay readers have contacted us in the past 48 hours to alert us to the apparent unintended consequence of the Telstra price cut.

One, Paul Heymans who operates Westnet and Next G reseller Paul’s Computers in the Somerset region of south east Queensland, said the new Telstra plans “could give ABG funded satellite ISPs a bit of a headache.”

“I believe the service has to be approved as metro equivalent by DBCDE, but since Optus 3G has been approved, it’s hard to see how DBCDE could avoid giving approval to Bigpond Next G. Defining Next G as a Metro comparable service could save heaps of tax payer dollars in the form of ABG subsidies.”

Heymans added “Since Next G coverage is greater than other 3G services, this could open up a whole new broadband dimension for many regional customers.”

DBCDE ENGAGING TELSTRA: The DBCDE confirmed to CommsDay last night that the new Telstra plans might well impact ABG eligibility. “The Department is engaging with Telstra to confirm whether the performance of any of Telstra's NextG services meets the current Australian Broadband Guarantee definition of metro-comparability, in particular in relation to data speeds,” it said in a written statement. “The Department is also confirming coverage of NextG services so that the Department’s Broadband Service Locator can be adjusted if necessary to reflect current availability of commercial metro-comparable services.”

However, a re-rating of what constitutes eligibility for ABG funds could undermine a number of projects that were originally billed with government fanfare and financial support, including Adam Internet’s WiMAX rollout in Adelaide DSL blackspots and Internode’s Yorke Peninsula WiMAX network.

Recent major recipients of ABG funds include Skymesh, Australian Private Networks, Aussie Broadband, Harbour IT, Westnet, Orion Satellite, Optus and Ocean Broadband. The ABG program provides for per user subsidies of up to $A2,750 for broadband connections in areas where a commercial metro-comparable broadband service is unavailable.

Asked to comment on the potential impact on Internode yesterday, MD Simon Hackett called for a re-definition of metro-comparable broadband so that existing high-speed regional deployments were not disadvantaged by the presence of Next G.

“I have argued for years to what is now DBCDE, that they should raise the ABG funding performance bar to 12 megabits per second minimum speed, to match the NBN specifications for regional,” Hackett said.

“ABG funding should still be provided, but only to providers that can meet that 12 megabit baseline. Or to put it another way, that they should not extinguish ABG support until the customer has a metro equivalent service available offering a demonstrated 12 Megabit per second peak data rate, rather than staying with a last century speed target of only 512k - that’s not broadband! DBDCE have made it clear that 'broadband' is 12 Mb/s in regional and 100M in metro.”

If DCBDE didn’t change the definitions, ABG eligibility would dry up and only be retained in the small 1-2% of the population that can’t get Next G, Hackett warned.

For its part, the Department seems committed to enforcing its existing rules. “The policy intention of the Australian Broadband Guarantee has always been to support access to metro-comparable broadband services only where such services are not available commercially. As commercial coverage changes, the pool of eligible premises is adjusted accordingly.”

Asked to comment, a Telstra spokesman was unaware of the impact that its Next G price changes might have on ABG arrangements.

Grahame Lynch