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Telstra restarting long-stalled ADSL investment

Wait, what?

Telstra CEO Andy Penn, while promising to spend AU$250 million improving the Telstra network, has, without much fuss, re-started investment in ADSL infrastructure.

That announcement is in the context of a National Broadband Network that's supposed to make ADSL obsolete.

In this blog post, Penn says the mobile network's $50 million enhancement is proceeding, and there's another $200 million for the core network, and for “increasing current ADSL broadband capacity to meet increasing customer demand”.

The rest of Penn's announcement is that the $250 million includes the $50 million already promised by COO Kate McKenzie to set the mobile network straight; and other investments in the core network.

DSL investment, both from Telstra and its competitors, stalled in the wake of the Rudd government's NBN, and why not? – Nobody could see the point of putting money into assets that would be stranded as soon as the NBN's optical fibre arrived.

In 2011, Telstra Wholesale listed 2,783 exchanges in which ADSL (including ADSL2+) services were available. Today, there are 2,830 DSL-enabled exchanges – just 47 new exchanges in five years.

Now, however, Telstra has decided that an unknown chunk of a quarter-billion in new network investment is going to be poured into services that will presumably be stranded by the NBN's fibre-to-the-node rollout.

Competitive landscape

ADSL will never again see the rate of expansion seen in the mid-2000s, because many of the remaining exchanges serve populations too small and/or sparse to justify a DSLAM.

That suggests to The Register the focus of Telstra's new investment will be twofold: new ports in existing exchanges, and new backhaul capacity.

It's an each-way bet in a competitive landscape that's vastly different from five years ago, because of the TPG-led consolidation of the industry. TPG has a scale unmatched in 2011, and has shown itself willing to invest to capture customers.

If the NBN continues to plan, Telstra's investment in ADSL will help it hold onto customers in the transition; and if the NBN stalls, the investment will be worth making.

The investment in the core network is also a win-win for Telstra: a fibre-to-the-node NBN will need more backhaul from the exchanges; and in the meantime, it should prepare happier customers ahead of the transition. ®

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