NBN's success on a knife's edge: Optus

Optus has thrown its support behind the National Broadband Network, but also warned that the telecommunications industry is on a knife edge, claiming that NBN Co is the next big monopoly and needs to be tightly scrutinised.

Speaking at CEDA's (Committee for Economic Development of Australia) CEO Vision Series in Sydney, Optus CEO Paul O'Sullivan said he was doing "something very unfashionable in Australia today" and throwing his full support behind the NBN.

"I'm going to get behind the NBN. I think it's a bloody good thing. It's going to bring about the creation of a national, high-speed broadband network and a reform of our industry."

But O'Sullivan also said the concept was close to disaster.

"The NBN is on a knife edge. It could go either way — it could be a major success, or it could be huge failure," he said.

"We are re-establishing a government-owned monopoly at a time when most of the rest of the world is taking them apart. Let's remember that the NBN might be a wholesale-only network — it may not have the incentives to discriminate against other players the way Telstra has — but it will still be a monopoly.

"It will probably be the most powerful monopolies we have ever had in Australia. It is vital that it is subject to a forensic level of scrutiny and strong regulatory oversight.

"For the NBN to work, it would be foolish to rely — to trust — on the monopoly doing the right thing."

O'Sullivan raised five key issues with NBN Co that he claimed weren't new and that he considered to be common sense.

"The mere fact that I have to propose them tells you how far back [the industry is] in the whole debate."

• O'Sullivan wanted the Australian Competition and Consumer Commission (ACCC) to ensure that the NBN's spending was monitored.

  "I'm sorry, but this is an infrastructure monopoly. Someone's got to make sure its spending is efficient because it's a monopoly and if they spend too much, you and I will end up paying for it," he said.

• His second request was a cap on the number of price changes the NBN would be allowed to make.

  "There should be no presumption on the part of NBN Co that prices can rise over time," he said.

• O'Sullivan also wanted the ACCC to be granted powers to force NBN Co to outsource activities to others if they could do it better.

  "If the NBN Co can't do something well, it should face competition for providing those services."

• He highlighted the lack of quality of service and innovation targets in current wholesale contracts, and the lack of improvement measures for NBN Co's customers.

  "The NBN Co should actually have quality of service and innovation targets. It doesn't. Incredibly, the current wholesale contracts provide no service or performance guarantees to customers."

• He called for greater transparency of the company's leadership.

  "Such a large organisation could be very attractive to vested interests, so we think it should have the same transparency and bipartisanship as the Reserve Bank," he said.

  "There should be a register of contract between the government and NBN Co to limit undue influence. The minutes of board meetings should be published and there should be public consultation before there are any major changes to NBN Co's market plan. That's not that radical," he said.