Telstra is almost certainly working on a "secret" fibre to the home (FttH) network, regardless of whether it wins the government NBN project, telecommunications analyst Paul Budde claims.

The network will allow high speed content including movie and music content from BigPond and Foxtel to be delivered into the home. It will also allow users to access IPTV services in a move that wil hurt free to air TV stations.

Budde who is not a fan of Telstra says that when Telstra boss Sol Trujillo outlined a need for massive growth in telecoms capacity to underpin the digital economy, he gave a clear hint at an FttH future.

"It is important to bear this in mind when analysing the antics that are taking place around the National Broadband Network," Budde's report says.

"With that vision established, the company is putting an infrastructure strategy in place that has FttH as an end goal, but is totally independent of any National Broadband Network."

Budde says very significant fibre investments are already being made under the Telstra's normal maintenance program. "In the three years since the discussion began regarding an NBN, the amount of fibre in Telstra's network will have very significantly increased and it would not be too difficult for
the company to fairly quickly switch on a 'half-way house', known as FttN."

BuddeComm estimates that by 2009 Telstra will be able to deliver broadband ¬at least for metropolitan Australia ¬ at speeds significantly higher than the 12Mbps prescribed by Broadband Minister Stephen Conroy in his NBN plans  without any subsidies.

"Within the current regulatory framework there is nothing to stop Telstra from continuing its market dominance in moving forward with fibre networks," he says. "However the regulatory status is not under the control of Telstra and can be changed quickly if the Government chooses to do so."

Budde says the digital economy is too important to the nation for it to be based solely on the delivery of the highest possible investment returns to Telstra.

"In order to use the infrastructure for e-health, tele-education, smart grids and other nation-building activities, it must be based on returns in line with other utility services, such as electricity, gas and water.

"An NBN that most people cannot afford to use, or that is not economically viable for the delivery of government services, would be contrary to the national interest."

"While Telstra has an absolute right to fight for its cause, telcos in other countries have accepted that there is also a national interest case, and that in one way or another some sort of compromise needs to be made so as to address both the national interest and the profitability of the telco.

"To overcome this dilemma the incumbents need to be able to go to their shareholders and explain their reasons for being prepared to forgo profits in order to serve the national interest."

If that doesn't quite sound the Sol Trujillo/Phil Burgess style to you, Budde is quick to add; "But it is unrealistic to expect any commercial organisation to voluntarily forgo profits in this way ¬ it is up to the Government to set the rules."