NBN Co warned to stay out of competitive backhaul market

Summary:An alliance of Australian telecommunications carriers has issued a warning to NBN Co to stay out of the competitive backhaul market, after the company said it would consider the idea in a bid for new sources of revenue.

The Competitive Carriers’ Coalition (CCC), an alliance of Australian telecommunications carriers, has warned NBN Co to stay out of the competitive backhaul market, after the company tabled the idea as a potential revenue generator in its review this week.

The CCC made its warning this week in response to NBN Co's review of its AU$3.5 billion Fixed Wireless and Satellite Review (PDF), which suggested the company could competitively sell its point of interconnect (POI) backhaul — the infrastructure enabling the mid to long-distance transport of data from a series of disparate locations back to a centralised hub.

"The policy point of building the NBN to create a structurally separate market is and always has been to clearly separate the access network — which has monopoly characteristics — from the parts of the network where competition is viable, such as higher-volume transmission or backhaul routes," the CCC said in a statement.

The CCC said that in its review, NBN Co suggested it might want to compete in those markets to gain new sources of revenue.

"Allowing NBN Co to compete in those markets would be the first step in recreating all the competition problems caused by Telstra's integration that the NBN was intended to forever end," the CCC said.

In its review, which was published earlier this week, NBN Co said that the potential strategies explored to deliver "incremental revenue opportunities" included selling B2B products on its satellite service — where there is excess capacity — and providing backhaul from a number of regional and outer-metropolitan POIs to the capital cities.

"The most likely purchasers of such a product would be smaller RSPs [retail service providers]," said the review.

"There are (by design) at least two fibre transmission providers to each POI and the ACCC already regulates backhaul on routes not subject to effective competition and has been active in settling the regulated price of backhaul with reference to benchmarks from competitive routes," the review said.

A CCC spokesperson said that NBN Co had "no place" in the competitive backhaul markets.

"The ACCC made the determination about where the boundaries of NBN should be drawn when it agreed the number and location of points of interconnection between NBN Co and other carriers," said the spokesperson.

"Now NBN Co wants to shift these boundaries so it can enter the POI backhaul market, which it acknowledges is already competitive.

"Allowing NBN Co into this market can only create the risk of monopoly power being leveraged to undermine competition and destroy the value of private investment. In the long run, consumers will lose," the spokesperson said.

Earlier this week, NBN Co announced that it would commit an additional AU$1.7 billion to extend its fixed-wireless and fibre-to-the-node broadband services after the review commended an additional 1300 wireless towers be built.

Topics: NBN, Australia, Government : AU, Telcos

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Leon covers enterprise technology and start-ups from ZDNet's Sydney newsroom.

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