Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has said that by allowing Optus to migrate its 433,000 hybrid-fibre coaxial (HFC) customers onto the National Broadband Network (NBN), NBN Co will see high revenues from wealthy customers earlier than it would have otherwise.
The ACCC's decision to authorise the AU$800 million deal between Optus and NBN Co was met with accusations from Shadow Communications Minister Malcolm Turnbull that the ACCC has given up on competition by allowing NBN Co to buy out an infrastructure competitor.
Speaking before a joint parliamentary committee on the NBN in Canberra last night, Sims explained why the ACCC believes that the deal will not be to the detriment of Australian consumers.
He firstly said that in the areas of Sydney, Melbourne and Brisbane where Optus' HFC network is rolled out, Optus is only serving 30 per cent of the market. In addition, the areas in question are relatively affluent areas where NBN Co would want to roll out the fibre network.
"It's relatively well-off neighbourhoods. Even though Optus has a third of the customers, there are still two thirds that NBN wants," he said.
Given Optus' indications that it would neither extend its HFC network nor invest in substantial upgrades to the network, Sims said that customers would ultimately end up migrating to the NBN, even if the HFC wasn't shut down, in order to get higher speeds. He said that by paying Optus AU$800 million for its customers, NBN Co is essentially bringing forward revenues that it would have received down the track anyway.
"The money that NBN was paying was basically bringing forward [was] the revenues it could get for HFC customers," he said. "They were bringing forward a revenue scheme they wouldn't otherwise get."
If the deal doesn't go ahead, Optus told the ACCC that it wouldn't seek to undercut the NBN on HFC product prices below NBN Co's uniform national wholesale price for broadband services. Nevertheless, Sims said that this is something that Optus might still do, and that NBN Co's wholesale would not match the price because it is required to provide a uniform price across Australia.
It would cost Optus more to keep customers on HFC instead the NBN, Sims said, but he added that this information has been kept confidential.
"The [costing] information we got from Optus and the NBN were confidential. A noticeable difference between the two."
Turnbull has previously suggested that his policy would see Optus keep its HFC network and open it up to wholesale. Sims rejected suggestions from coalition MPs that the ACCC should have taken into account the possibility of a change of government before approving the deal.
"The only way we could assume something else could happen would be speculating in the extreme," he said. "All we can do, like any organisation, is run with the policy of the day."
The ACCC's general manager of communications Michael Cosgrave told the hearing that the government is currently considering making the locations of NBN Co's 121 points of interconnect (POI) a secret for national security reasons.
"That was advocated to us by NBN Co on the advice, as I understand it, of the Attorney-General's Department, citing security concerns," he said.
"It's not [an issue] we have particularly strong views on either way."
He said that this is a similar policy to how the ACCC doesn't release the locations of Telstra's exchanges — although it was pointed out that many people know where the exchanges are anyway.
"They stand out pretty well," Labor MP Mike Symon replied.
The advice would appear to be in line with the department's current review of telecommunications security, which would see the government playing a greater role in advising telecommunications companies on the security of their infrastructure.