Netspace and iiNet have put Apple Isle expansion plans on hold until Telstra either comes to the negotiating table and lowers pricing, or the Tasmanian Government opens up its optic fiber network to cultivate competition, spokespersons from both companies said.
Despite completion of the Basslink HDVC fiber connection in July 2005, the Tasmanian Government is yet to open up traffic between the two islands. As the situation stands, Telstra is the only operator of commercially available data cables connecting Tasmania to the Australian mainland.
"It's ironic that the tyranny of distance is working in reverse in Tasmania," Netspace spokesperson, Ben Dunscombe, said. "It's more than twice as expensive to get bandwidth in and out of Tasmania as it is to get bandwidth to the US."
He said that backhaul pricing in and out of Tasmania was nearly five times more expensive than it was from Melbourne to Canberra.
iiNet's regulatory affairs general manager Stephen Dalby said it was much worse than that for his ISP, but believed Telstra would deliver acceptable offers once competition in Tasmania opened up.
"If the Basslink were to come on as an alternative, it would remove a serious hurdle for our expansion into the area," he said.
Although Dunscombe conceded that the expense was part and parcel of doing business in Tasmania, he feared the high costs would have a detrimental effect on the future development of next-generation broadband technologies.
"Telstra have a complete monopoly on bandwidth in and out of Tasmania and it's threatening to strangle the prospect of ADSL2 and other technologies in the future," he said.
Both ISPs are counting on the opening of the Basslink to alleviate Telstra's costs.
"We would love for Telstra to come to the table and discuss, but we're not at all hopeful of it," Dunscombe said. "We think the real solution will come through the opening of Basslink."
A Telstra spokesperson said the company could not discuss customer contracts.