Blocked from the national broadband network tender, Telstra has unveiled its plan B: providing Aussie homes with 100Mbit/s cable connections. But the grass is not as greener over the ditch as it seems, NBR enquires discover.

The good news is that Telstra is going to spend upwards of $A300 million to upgrade is residential fibre optic network in Melbourne by the end of the year, with upgrades in other cities beginning in 2010.

Download speeds of 70Mbit/s to 100Mbit/s are promised - that’s dizzying by any standard, and certainly more than enough for the Foxtel high definition TV and - possibly - IP telephony services that will come bundled with the cable.

A further upgrade to 200Mbit/s is promised at an unspecified date.

However, upload speeds will be restricted to 2Mbit/s. Telstra chief executive Sol Trujillo, who recently fell on his sword following the NBN debacle, tells Aussie media that’s all the upload bandwidth anybody needs - marginal thinking in an age of video sharing.

In the US, Japan, Korea and other countries where cable is more popular than DSL, 100Mbit/s in both directions is the norm.

More, Telstra spokesman Andrew Butcher confirms for NBR that, so far, the telco is only committed to upgrading the cable “passing” one million Melbourne homes. “Passing” is industry jargon for fibre-to-the-curb. Only around half the homes have fibre-to-the-door.

That’s no small detail.

Cable, conventionally, means cable right into the home. With copper covering the final few metres, and possibly more than one household sharing each cable loop, it’s no wonder upload speed will be limited to 2Mbit/s.

Mr Butcher says Telstra has yet to decide on a pricing model for owners of homes who want to get cable not just to the curb, but to the door.

Again, this is no small detail. It can cost around $1600 to extend cable from curb to home, which can lead to a big connection fee, or fat monthly fees on a multi-year contract as a provider looks for long term pay-off.

Meanwhile, investors weren’t thrilled by news of the upgrade, with Telstra shares (ASX: TLS) taking yet another battering on the ASX to finish down around 4.3%.

Many had hoped Mr Trujillo’s resignation would provide an opening for Telstra to re-engage with the government over the public-private national broadband network, which centres around fibre-to-the-node..

But by allocating so much capital to its “plan B”, Telstra clear seems committed, for now, to following its own path.