|
OPTUS will attack the booming $1 billion-plus residential broadband market after awarding Chinese equipment vendor Huawei Technologies a $100 million contract to begin development of its own network. Sources close to the deal said the contract, which is expected to be announced as early as today, will make Optus the largest builder of an alternative broadband network using Telstra's copper wires and ADSL technology. Optus is finalising regulatory hurdles before the deployment can commence, insiders said. Optus now has the opportunity to jump ahead of Telstra using the latest version of the increasingly popular technology, largely used for high-speed connections to the internet, known as ADSL 2+. The new technology offers connection speeds fast enough to give users video on demand services over copper connections which were, just three years go, only able to provide normal telephone services. Since then, Telstra has spent more than $1 billion installing ADSL in its telephone exchanges. Broadband is now one of Telstra's fastest-growing businesses but the former monopoly is still stuck with an early version of the technology which offers limited data speeds. Telstra's network uses an inferior, earlier version of ADSL. Sources close to the deal said that Huawei, which also recently won a broadband contract with Optus's parent SingTel, beat British rival Marconi to the contract by offering discounts of up to 25 per cent. The move marks Optus's first major shift into consumer residential infrastructure since the number two telco spent more than $3 billion on a residential fibre-optic network which accounts for more than half of the company's broadband customers. Until now, Optus on-sold Telstra's wholesale residential network using the former incumbent's existing wholesale offerings. But deploying its own network has the potential to increase Optus's margins and cut Telstra's wholesale broadband revenues. Optus is almost totally reliant on its slowing mobiles network for earnings growth. Optus's initial deployment is understood to cover as many as 300 of Telstra's most popular exchanges. Other telcos such as iiNet, Primus and Amcom are already rolling out their own ADSL networks. The contract marks Huawei's first major win in the Australasian market. |
