RealTime IT News

Telstra to Spend $1 Billion on IP Network

In the face of an unprecedented demand for Internet-based services, Telstra will commit an estimated $A1 billion to upgrade its telecommunications network to become completely digital by 2004.

The company, a partly-privatised Australian government communications carrier, will next year start converting all of its voice circuits to run over the Internet Protocol (IP) on a broadband network codenamed the digital mode of operation (DMO).

The overall swing away from voice circuits to data services at a rate of 10 per cent per month had been eroding Telstra's revenue base, as the company freely admitted.

"Over the next five years Telstra will retain a strong telephony focus, but calls of the future will be made over data networks rather than a traditional telephone network," said Gerry Moriarty, Telstra's group managing director for network technology and multimedia.

What began as a blip on the radar screen a few years ago has emerged as the new network for information, entertainment and voice services. In 1994 Internet traffic was only 1 per cent of the size of voice traffic on international links. By 1998 it had grown by about 10 per cent per month or 100 times in four years, to equal or exceed voice traffic on these links.

The DMO project will involve one major supplier, to be chosen from a list of eight that were issued requests for proposal last week. Contenders are thought to include Cisco Systems, Nortel, Alcatel, Ericsson and the only local supplier, Jtec.

The new network will supplant Telstra's existing analogue copper-based Public Switched Telephone Network (PSTN), which the company had been trying to improve for data services by digitising its telephone exchanges.

The announcement comes directly after a series of disagreements with Internet service providers (ISPs) that had been using parts of the PSTN to run HDSL connections, which Telstra tried to prevent by saying it could not guarantee end-to-end analogue connections for those ISPs.

The Australian Communications Authority has also recently been "declaring" many of Telstra's existing networks, like its OnRamp ISDN network and the PSTN, meaning that other telecommunications providers and ISPs have a much stronger bargaining position in negotiating process for reselling services across those networks.