Is wholesale-only backhaul just a pipedream?

Summary:The potential acquisition of Pipe Networks by SP Telemedia has raised the question about whether vertically integrated backhaul providers will mean higher wholesale prices for ISP customers.

The potential acquisition of Pipe Networks by SP Telemedia has raised the question about whether vertically integrated backhaul providers will mean higher wholesale prices for ISP customers.

Some, including economist Joshua Gans, believe it could be bad news. Others, like Netspace's Matthew Phillips, are also concerned but will wait and see what impact it has. Meanwhile, over the ditch, Kordia's Susie Stone says all backbone providers in New Zealand have their own retail operations. So what are we worried about?

Pipe Networks has focused on major capacity links in high traffic areas. Whether they become part of a retailer or not, the impact will not be as pronounced as it would in regional areas where little or no competition exists. Here Telstra is often the only backhaul provider, although the government has called for tenders for alternate providers. The influence of vertically integrated providers here is much more influential.

Should the NBN include many, if not all, backhaul links in its network? The involvement of the NBN in the provision of backhaul still seems a little fluid. Universal coverage of backhaul by the NBN would ensure that a guaranteed wholesale-only provider will exist on all routes to minimise the likelihood of vertically integrated providers inflating wholesale prices.

With their views on the Pipe acquisition and the extent of backhaul competition in Australia you'll hear from:

  • Matthew Phillips, Regulatory and Carrier Affairs manager for Netspace
  • Susie Stone, GM of Strategic Development at Kordia
  • Joshua Gans, economist from Melbourne Business School

Bevan Slattery from Pipe Networks declined an invitation to participate in this week's Twisted Wire.

Topics: Broadband, NBN, New Zealand, Telcos, TPG

About

Phil Dobbie has a wealth of radio and business experience. He started his career in commercial radio in the UK and, since coming to Australia in 1991, has held senior marketing and management roles with Telstra, OzEmail, the British Tourist Authority and other telecommunications, media, travel and advertising businesses.

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