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Telstra Scraps Australia Network Plan
By Nina Sovich and Lyndal McFarland
The Wall Street Journal
Tuesday, August 8, 2006

Australian telecommunications company Telstra Corp. said it won't go ahead with plans to build a high-speed broadband network in Australia because negotiations with regulators over whether it would be required to share the network with competitors failed.

The spat is the latest example of how big telecom companies across the globe are battling regulators over new technologies.  Governments want to spur competition for high-speed Internet, television and phone calls to benefit consumers, but they face resistance from telecom giants that say they won't invest in costly new networks if they have to allow competitors to piggyback on them.

Regulators in Germany and France are still debating whether to make Deutsche Telekom AG and France Télécom SA offer their competitors access to any new networks they might build.  In the U.S., the Federal Communications Commission ruled in 2004 that telephone companies wouldn't be forced to lease their new fiber networks to their competitors.

Telstra's decision deals a blow to French telecom-equipment maker Alcatel SA, which had signed a memorandum of understanding with Telstra to build the network.

The agreement included numerous technologies and systems.

"Telstra sought an outcome that would assure Telstra shareholders that their investment in the network would not be used to subsidize network access by Telstra's competitors," Telstra said.

Alcatel's shares traded down 3.2% at €8.49 ($10.93) yesterday in Paris.

Alcatel has struggled to convince the market that its merger with Lucent Technologies Inc. of the U.S., slated for late 2006, will right the enterprise.  A spokesman for Alcatel said the company would continue to do business with Telstra and had made suitable preparations for regulatory problems.

Write to Nina Sovich at nina.sovich@dowjones.com and Lyndal McFarland at lyndal.mcfarland@dowjones.com

http://online.wsj.com/article/SB115499251274029236.html?mod=hps_us_my_companies