Telstra (ASX: TLS) and French Telecommunications equipment maker Alcatel-Lucent have achieved speeds up to 100 megabits per second over existing copper networks, which the Coalition wants to use as part of its NBN strategy.
Under the Coalition's plan, fibre optic cable will connect to 'nodes', which then connect to existing households via copper cabling already in place. This 'fibre-to-the-node', or FTTN, network will achieve a minimum speed of 25Mbps and differs significantly from Labor's strategy which would run fibre optic cabling to households and achieve speeds up to 1000Mbps.
Starting last month, Telstra and Alcatel-Lucent began testing the cable, which used vectoring technology to enable speeds up to 100Mbps, according to The Australian. The tests were "aimed to showcase Telstra's credentials as a potential NBN construction partner."
The length of copper cable, as well as thickness, contribute to the level of "noise" produced in a network. The longer a length of cable, the worse the quality, but over 400m to 500m Telstra and Alcatel-lucent achieved speeds of between 80Mbps and 100Mbps.
The former government's NBN strategy was forecasted to cost $37.3 billion and be completed in 2021 but the Coalition's NBN strategy is aimed at reducing the time taken to construct the network (by around two years) and would cost approximately $20.4 billion. However, maximum connection speeds will be much slower.
Communications Minister Malcolm Turnbull previously said his government will honour existing NBN contracts, which includes an $11 billion deal with Telstra. However we won't know the true effect of the change in government until a 60-day review of the NBN Co is completed in December. Although senior management at NBN contractors remain anxious, Alcatel-Lucent Australia president Sean O'Halloran said, "the scrutiny is good" and "the result of this will be a more robust approach to the National Broadband Network."
Telstra's direct competitors, including Optus (owned by Singapore Telecommunications(ASX: SGT)), Dodo and Primus (owned by M2 Telecommunications (ASX: MTU)), iiNET(ASX: IIN) and TPG Telecom (ASX: TPM) will also be concerned over the direction of the Coalition's NBN strategy and have previously voiced concerns over Telstra's position in the networks rollout.
Foolish takeaway
Telstra shareholders are hoping the Coalition will honour its deal to leave them no worse off under the new rollout, but only time will tell. The risk to Telstra is that it may be required to do more for less, but shareholders should rest easy knowing that management, headed by David Thodey, will do everything they can to preserve their investment.
