Optus NBN support hinges on amendments

Optus has threatened to withdraw support for the Federal Government's National Broadband Network legislation unless further amendments over level playing field provisions are made this week, CEO Paul O'Sullivan has said.

Optus CEO Paul O'Sullivan (Credit: Josh Taylor/ZDNet Australia)

The Federal Government yesterday circulated a number of amendments to the National Broadband Network Companies Bill 2010 and the Telecommunications Legislation Amendment (NBN Measures — Access Arrangements) Bill 2010 legislation currently before the Senate. While the government has said that the amendments relating to provisions around fibre networks in competition with the NBN were made after close consultation with industry, O'Sullivan said Optus had been "thrown a curve ball".

"While on the one hand we are very concerned about these amendments because they are designed to protect NBN Co from future claims, it has acted anti-competitively. We are also willing to work to try to amend these amendments to ensure the industry can be competitive," he said at an American Chamber of Commerce lunch in Sydney today.

O'Sullivan said the telco was in "constructive dialogue" with the government about making further amendments.

"We support a level playing field and we want to see some changes to these amendments to ensure this comes about," O'Sullivan said.

"It would be our hope that in the next 24 to 48 hours we can get the necessary amendments and reassurances that will allow us to support the passage of these Bills through the Senate."

The next 24 hours will be critical for the government with the Senate today voting to extend sitting hours in order to pass the critical legislation.

In addition to concerns about the amendments, O'Sullivan said the company was worried about the handling of the structural separation of Telstra and the accompanying $11 billion deal with the government.

"Our big worry here is that the people managing the negotiation may not have the skills or experience of having to deal on access as we have in the past or that there may be too much pressure to get a deal in a timely fashion, resulting in a poor outcome on structural separation," he said. "And that's important because Telstra could leverage a competitive advantage through a poorly crafted structural separation Bill."

O'Sullivan said the deal with the government should be fully transparent and that it was vital to ensure that Telstra didn't receive knowledge from the agreement, which would give it a competitive advantage.

"We also think that there's an inherent risk in this deal because Telstra need to free up the ducts and provide access to NBN Co, it will know before anybody else which area NBN is rolling into for what will be a seven-year roll-out. That gives Telstra many months of advanced warning to go in and lock down customers, to cross-subsidise, to nuke the territory before any competitor can get in there," he said.

Highlighting Optus' own brush with Telstra in this area, where Telstra Wholesale had passed on Optus information to its retail arm, O'Sullivan said roll-out information should be kept from Telstra and that any executive found to be passing on information about where the NBN is rolling out to Telstra's marketing or sales department should face criminal charges.

"Civil sanctions are not enough because financially it can be worthwhile to breach the rules of the game in order to get marketing advantage. We'd like to see some criminal penalties for any executive who willing chooses to breach the safeguards around competition," he said.

The biggest task ahead for NBN Co, O'Sullivan said, was to ensure it would not become another Telstra.

"As tight as a leader as Mike Quigley is, and I am one of his strongest admirers, even he is going to have a massive challenge dealing with the inherent structure of both government ownership and a company that is the monopoly provider of all telecommunications services in fixed-to-the-home," he said.

"If the transition from today's environment to the NBN is not handled correctly we could see Telstra's dominance of the industry historically simply transfer to the NBN and that would not be a good outcome for the almost $30 billion of your money that will be invested."