Optus-NBN tick against ACCC charter: Turnbull

Summary:Shadow Communications Minister Malcolm Turnbull has slammed the competition watchdog's pending approval of the $800 million deal between Optus and NBN Co that sees the telco shut down its hybrid fibre-coaxial (HFC) network, and move customers onto the National Broadband Network (NBN).

Shadow Communications Minister Malcolm Turnbull has slammed the competition watchdog's pending approval of the $800 million deal between Optus and NBN Co that sees the telco shut down its hybrid fibre-coaxial (HFC) network, and move customers onto the National Broadband Network (NBN).

The Australian Competition and Consumer Commission (ACCC) indicated on Monday that it will approve the deal, which would lead to 429,000 HFC broadband customers in Sydney, Melbourne and Brisbane moving onto the NBN from 2014.

To convince the ACCC to let the deal go ahead, Optus said that it has no intention of offering wholesale services over HFC, upgrading the HFC to provide speeds higher than 100 megabits per second or extending the network farther than the 1.5 million premises it covers today. It also said that the cost of operating the network would make it tougher to compete with NBN Co.

But Turnbull branded the ACCC's decision in parliament yesterday evening as being "thoroughly unconvincing and contradictory". He said that the government prevented Telstra from building a competing HFC network, and Optus could have competed against Telstra's fixed-line copper domination with the HFC network.

"But here, in the socialist paradise of Julia Gillard's Australia, the government is building a massive new fixed-line telecommunications monopoly, and, just in case there would be any competition with it, the government is paying Telstra and Optus to decommission their HFC networks, as well as paying Telstra to decommission its copper network," he said.

He pointed out that the ACCC rejected arguments that the HFC deal would improve NBN Co's rate of return, and that the roll-out of the NBN would be slowed if the deal doesn't go ahead. He said it admitted that the HFC network is able to meet entry-level consumer demands for broadband. Yet, the deal was ultimately approved.

"How on earth did the ACCC conclude that the Optus HFC deal should be approved? How could it conclude that an anti-competitive arrangement, which has, to the best of my knowledge, no counterpart anywhere else in the world, be acceptable here in Australia?"

Turnbull said that the only benefit of the deal is to Optus, in avoiding the cost of maintaining its network.

"But is this a public benefit, or is it ... simply a supposed benefit to Optus? Even if you accept the ACCC's proposition, why does it not offset that benefit to Optus against the $800 million cost incurred by the NBN and the unfortunate Australian taxpayers who are ultimately funding that and many other payments to the NBN?"

Despite Optus' own admission that it would not upgrade the HFC network, he said that it is "heroic" of the ACCC to assume that Optus will not invest in upgrades to its HFC network to offer speeds higher than the currently available 100 megabits per second.

"Given the rapid pace of disruptive technological change — given the plethora of technological changes, which were not only not predicted, but also not anticipated — why would anyone assume that this network will not be upgraded in the future? The ability to upgrade copper networks to carry high-speed broadband improves year after year, month after month, as we have seen with the various evolutions of DSL."

He questioned the value of the deal to NBN Co if Optus has no intention of upgrading its HFC network to compete with the high speeds on the NBN.

"This draft determination is so contradictory that the only conclusion you can take from it is that the ACCC believes that the management of the NBN Co are commercial morons who are recklessly paying $800 million to get something which is going to fall into their lap for nothing anyway."

He said that NBN Co management are not "morons", but are paying $800 million to eliminate a viable competitor to the NBN.

"For the ACCC, which is supposed to be flying the banner of competition and ensuring that monopolies are kept in check, to say, 'No, this deal can go ahead', is abandoning its charter. It is a draft determination that should be abandoned as well, and replaced with a ruling that would be more consistent with its distinguished track record."

On Monday, Optus said that the deal would allow the company to redirect resources from having to maintain the HFC network to retail services, but told ZDNet Australia that no job cuts were planned in the HFC area at this time.

Topics: NBN, Broadband, Government, Government : AU, Optus, Telcos

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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