Optus talks down HFC to save NBN deal

Summary:Optus has talked down its hybrid-fibre coaxial (HFC) network in a bid to ensure the competition watchdog doesn't nix its $800 million deal with the National Broadband Network Company (NBN Co).

Optus has talked down its hybrid-fibre coaxial (HFC) network in a bid to ensure the competition watchdog doesn't nix its $800 million deal with the National Broadband Network Company (NBN Co).

The Australian Competition and Consumer Commission (ACCC) will need to give final approval of the deal between Optus and NBN Co before the company can begin migrating customers onto the NBN.

In a supplementary submission to the ACCC published last month, Optus has stated that should its deal not go ahead, and the HFC network would remain up and running, it is unlikely that this network would be an "effective competitive constraint" to the NBN.

"Optus does not currently have the technical ability to supply wholesale access services over its HFC network and has no plans (or incentive) to upgrade the HFC network to do so in the future," Optus said in the submission.

The telco also said that its network is not an effective competitive constraint to Telstra's existing copper network.

"Currently, only 4.8 per cent of fixed-line broadband services in operation in Australia are supplied over the Optus HFC network. The HFC network has a limited geographic footprint and in over 15 years, Optus has only been able to achieve a penetration rate of approximately 36 per cent of serviceable premises in the areas it serves in competition with Telstra's HFC and copper networks."

Optus blamed the lack of wholesale access and the limited roll-out of the HFC network as the reason why it had not been a competitive constraint against the copper network and said the HFC network has "inherent limitations", which would mean it would be less able to compete against the NBN.

Legislation surrounding the roll-out of the NBN would also prevent Optus from expanding its HFC network beyond its locations in Sydney, Brisbane and Melbourne, according to the telco.

Worse still, Optus argued that if the deal doesn't go ahead, it will be lumped with additional costs to continue providing services to the HFC customers.

"The requirements for Optus to maintain two networks ... will reduce its flexibility to match competitor offers."

Although Optus claims to not have the technical capability to open up its HFC network for wholesale access, Shadow Communications Minister Malcolm Turnbull has planned to seek to use the HFC networks of Optus and Telstra as part of his NBN alternative policy.

In NBN Co's supplementary submission, first reported by The Australian, NBN Co said that if the deal wasn't to go ahead, the company would declare Sydney, Melbourne and Brisbane as "cherry-picked" and therefore NBN Co "is likely to defer roll-out in those areas and so the benefits of the NBN for RSPs [retail service providers] and consumers in those areas will be delayed".

It may also lead to higher prices across the country, NBN Co said.

"NBN Co's profitability and viability would be likely affected and NBN Co may need to raise its uniform national wholesale prices. This would mean consumers and RSPs may have to pay higher prices nationally."

The higher prices would come about because the deal is designed to increase the speed of take up for NBN services and improve NBN Co's revenue plan, NBN Co said.

Topics: NBN, Broadband, 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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