Backhaul tender cautiously welcomed

Internet service providers (ISP), mobile telcos, and bidders for the $250 million regional backhaul build have welcomed the launch of the initiative, but questions remain over whether the plan will deliver competition.

iiNet, Vodafone, Optus, NextGen and Internode have welcomed the government's plan to build backhaul transmission links to the six regional locations announced yesterday. All agreed the build should improve competition to areas that are either under-serviced or monopolised by Telstra.

The two companies known to be lodging bids, Leighton's fibre subsidiary NextGen and Optus are keen to accommodate the government's plans, according to its spokespeople. Chief of fibre company NextGen Phil Sykes told ZDNet.com.au its parent Leighton's core business gave it a natural advantage and said the proposed September start was "very do-able".

Optus' director of Government and Corporate Affairs, Maha Krishnapillai, said it was already rolling out fibre in some areas and had the workforce for a quick deployment.

Internode chieftain Simon Hackett told ZDNet.com.au that the ISP and its carrier company, Agile, was considering responding to the tender too. "Anything that serves to create competitive alternatives to unviable monopoly backhaul pricing from Telstra is a good thing for the country — anywhere and everywhere that this occurs," he said.

Telstra has not responded to ZDNet.com.au's request for comment.

Key criteria the government wants to find out, according to the tender documents, is how soon construction can start, a completion date, and when services will be available. While both NextGen and Optus plan to bid for the entire project, Optus' Krishnapillai conceded the government's desire to have the project completed quickly could mean multiple companies will be allocated work.

But Ovum telecommunications analyst David Kennedy has questioned the government's plan to roll the network into the NBN Company. The tender documents reveal the government is planning for the backhaul builder to manage, maintain and provide third-party access to the network for the first five years after its completion. After this, either the NBNCo would take over ownership or the builder could be retained as a contracted service provider.

"If the government wants to put backhaul infrastructure into the NBN that raises the prospect of the newly funded fibre and Telstra's fibre being rolled into the same company in the future," Kennedy told ZDNet.com.au. "If that happens then the whole drive of this — to promote competition — will be null and void."

"There needs to be care taken that we are not funding competitive infrastructure that will be rolled into a monopoly in the future," he said.

The government, however, has insisted that, given the company would be a legislated, wholesale-only monopoly, it would, unlike Telstra, lack the incentive to give itself a good deal on access prices.

Still, whether competition is delivered depends less on the regulatory regime, but the economics of the new links, according to Internode chief Hackett.

"Competition isn't dependent on the fibre, it's dependent on the fibre access cost being low enough to make service delivery viable. It's not sufficient if the access cost is a little bit lower than Telstra backhaul prices; the data links have to be made available at metro level wholesale dark fibre pricing," said Hackett.