Consideration of the Telstra (Dilution of Public Ownership) Bill 1996



The following information has been provided to define and illustrate the current and future modes of operation of Australia's telecommunications networks. Data has been drawn from a cross-section of submissions, evidence and other technical material provided to the Committee. [1]

Section 1


Analogue systems transmit continuous signal which vary in amplitude (e.g. AM radio) or frequency (e.g. FM).

Table 1:Analogue Systems

  Bandwidth* Comments
Voice 4 kHz Single telephone channel
Music 10 kHz AM Radio
Music 200 kHz FM Radio
TV 6 MHZ TV Broadcasting Station
*Hz = 1 Hertz = 1 cycle per second
Khz = kiloHertz = 1,000 Hertz
MHZ = megahertz = 1,000,000 Hertz


A digital signal is a means of transmitting information in bits, and is obtained by sampling the amplitude of an AM analogue signal, and coding the signal into bits (binary digits - 0 and 1). Digital signals are used in all interexchange networks based on a pulse of light representing a bit.

Table 2: Digital Systems

  Bandwidth* Comments
Voice 64kbps corresponds to 4 kHz analogue
Data 10 Mbps Ethernet for computer networks
Video - TV 96 Mbps corresponds to 6 MHZ analogue
TV approx 6 Mbps compression factor = 96/6 = 16
*bps = bit per second
kbps = kilobit per second = 1,024 bits per second
Mbps = Megabit per second = 1,048,576 bits per second
Gbps = Gigabit per second = 1,024 Megabits per second

** compression factor involves a trade-off with sensitivity to noise.


In a digital network, services can be aggregated together. Thus the interexchange network operating at 2.4 Gbps can carry about 20,000 simultaneous telephone calls per fibre.

A Full Services Network is a (digital) network which can deliver voice, data and video services. ISDN (Integrated Services Digital Network) is the extension of the digital interexchange network to the customer access network (CAN) using 64 kpbs channels on twisted copper pairs. Some services such as videoconferencing can be supplied by aggregating channels (e.g. 3 ISDN lines gives 182 kbps which can provide poor quality video).


The capacity of a communications link is determined by the total available bandwidth.


An optical fibre can be used to send signals in both directions.

A coaxial cable is subject to electromagnetic interference, and signals travelling in opposite directions must be in different `channels' to remove this by filtering.

In practice, optical fibre can provide high bandwidth capacity in both directions, whereas coaxial cable can only provide high bandwidth in one direction.

Cost of Broadband Infrastructure

The Communications Futures Project of the Bureau of Transport and Communications Economics (BTCE), 1994, considered the relative costings of different infrastructures and the broadband services they could each support.

The most extensive study was that for hybrid fibre coaxial (HFC) networks, which indicated that the cost of coaxial TV plus telephony would be $1,600 per home in urban areas. Many broadband services could be delivered on the HFC network, but not two-way communicative broadband services.

The BTCE, on the basis of an estimate of $10,000 per home for a Fibre-to-the-Home (FTTH also known as FTTD Fibre-to-the-Door) from Japan, did not consider such a network as being feasible.

1n 1995, AT&T announced that the cost of FTTC networks would be comparable to HFC. The BTCE did not study the Fibre-to-the-Curb (FTTC) network.

A Note on Future Rural Services

The cost of providing fibre to rural communities is often stated as a hindrance to provision of broadband services to these communities. The BTCE report considers these costs using a demographic model.

However, it is noted that optical fibre cable is becoming more reliable than copper cable, and is likely to need less maintenance. Optical fibre units serving 32 customers are presently used by Telstra for providing telephony to rural and remote communities in areas prone to electrical storms. The low attenuation of fibre is a technical advantage for fibre connections in rural and remote areas. Since the cost of installing fibre or copper is similar, it can be anticipated that optical fibre will begin to be deployed in rural areas where the lower power consumption of such optical units is an additional advantage.

The demand for such systems from rural customers may increase as they link their computer technology to the network because of the potential for destruction arising from electromagnetic pick-up on copper networks. Once optical fibre is installed, the upgrade from telephony to broadband could be small.

Thus the BTCE analysis which stated that the cost of providing broadband services to rural and remote areas of $24 billion for (HFC) could be significantly overestimated. The principle reason for a delay for rural communities in receiving broadband services in the high cost of replacing the existing copper rural telephony network. Such a replacement may occur as a result of other technology drivers not related to provision of broadband services.


Section 2

Bandwidth, network types and service

The existing telecommunications network is predominantly a copper network, and is able to deliver all currently available technologies to some of the people some of the time. This is accomplished via a combination of existing cable upgrades to Hybrid Fibre Cable (HFC) in some areas, and enhancement technologies such as Integrated Services Digital Network (ISDN) and Asymmetric Digital Subscriber Line (ADSL).

The current copper network does not supply either a standard or a high grade of non-voice services to a significant portion of the community. This is particularly true in rural Australia. An estimated 800 000 [2] access links do not have the capacity for standard fax or data transmission facilities (including the Internet) to the home.

Telstra began upgrading the existing Copper network to a Hybrid Fibre/Coaxial (HFC) network in 1992 and if this program continues, the next Australian telecommunications network will be an HFC network. Full fibre optic links are currently, with a few exceptions, used solely for major inter capital and submarine links. There are no current plans for the installation of a Fibre-to-the-Curb (FTTC) or full Fibre-To-The-Door (FTTD) network.

Bandwidth may be achieved in a variety of ways (refer Table 3). These methods differ greatly in cost, in long term effectiveness, and in quality of service provision. Essentially, while it is true to say that it is possible for the majority of Australians to access the Internet from home, the current network often provides a slow and erratic service [3] unless the user has ISDN access. This is prohibitively expensive for the average household [4]. Yet the same network is able to provide good quality facsimile service which operates at a substantially higher effective bandwidth. These problems would be eliminated if the same service were provided via either an HFC or FTTD network.

Copper and HFC cable are of approximately equivalent material cost and equivalent installation cost. Upgrading of the current Australian telecommunications network to HFC has been estimated at a cost of between $24 billion and $30 billion [5].This estimate represents total capital investment in cable, buildings, switching upgrades and all other associated costs.


Table 3: Service quality and speed available through network types

Network Type Quality/Speed of Common Telecommunications Services
Services ==> POTS Fax Data/Internet Pay TV NVOD
Copper high medium low NA NA
HFC high high high medium medium





very high


very high


very high


very high

Glossary: POTS - Plain Old Telephone Service; ISDN - Integrated Services Digital Network; ADSL - Asymmetric Digital Subscriber Line; HFC - Hybrid Fibre/Coaxial; FTTC - Fibre To The Curb; FTTD - Fibre To The Door.


Upgrading to HFC commenced in 1992 and, if it continues, could be completed by the year 2004. This represents an approximate annual capital investment of $2.5 billion. Telstra's capital investment for the 1994-95 financial year was $3.2 billion. [6]

Current charging zones are predicated on a copper based network requiring repeaters every 30km. An HFC network requires such repeaters only every 100km. A FTTC network requires further technology from curb to door. An FTTD network requires few, if any, repeaters. Thus, upgrading should reduce the overall number of exchanges and associated expenses.

Table 4: Network descriptions and approximate costs

Network Medium Available Enhancements Bandwidth Provided (kbps)* Service Cost (Capital)
Copper   2.4** Capital: Exchange Line - $750 Exchange Portion - $300
  ISDN 128 As above***
  ADSL 64+ Capital: As above
Hybrid Fibre/Coax (HFC)   64+ Capital: $3000 - $4000
Fibre Optic


  **** None available

Glossary: ISDN - Integrated Services Digital Network; ADSL - Asymmetric Digital Subscriber Line; HFC - Hybrid Fibre/Coaxial; FTTC - Fibre-To-The-Curb; FTTD - Fibre To The Door.

* Bandwidth is estimated for data transfer. Other uses/technologies yield differing bandwidths.

** This service varies in its bandwidth. Telstra `guarantees' 2.4 kbps to residential clients. Actual bandwidth is commonly much lower (<1 kbps) for home use but, in some major cities, may be as high as 9.6 kbps.

*** ISDN relies on the current Telstra Network (predominantly Copper) plus additional CAN installed at the clients expense.

**** potential exceeds demands of all current services by high orders of magnitude

Table 4 sets out the base qualities of the current carrier technology within Australia's telecommunications networks. Copper, in several forms, is the most common cable type currently in operation. Hybrid Fibre/Coaxial (HFC) cabling represents only a small fraction of the Network. Fibre Optic cabling represents a negligible percentage of the network. This percentage is utilised in key load bearing capacities (e.g. the main Sydney-Melbourne cable links).



[1] The Committee gratefully acknowledges the assistance of Australian Photonics Cooperative Research Centre whose information is contained in Section 1 of this Appendix.

[2] Dr Roger G. Buckridge, Submission No. 141 Vol.5, p.860.

[3] 2.4kbps data transfer represents the AUSTEL standard for data transfer. The average home modem operates at 28.8kbps, with significantly older models operating at 14.4 or 9.6kbps.

[4] $400 connection fee, $960 annual rental charge, $0.20 flagfall for local data calls ($0.14 for voice) plus a timed local-call incremental charge. (Actual provision of ISDN service involves little expense to Telstra.)

[5] Television New Zealand executive Gerry Moriarty to the Senate Select Committee on Subscription Television Broadcasting Services (1992), and Australian Telecommunications Users Group Limited (ATUG).

[6] Telstra 1994-95 Annual Report 1995, p. 19.