ACCC defends authorising Optus-NBN deal

ACCC defends authorising Optus-NBN deal

Summary: The ACCC chairman has defended the decision to allow Optus to shut down its HFC network and transfer customers onto the NBN for AU$800 million.

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TOPICS: NBN, Telcos
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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."

Secret POI?

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.

Topics: NBN, 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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9 comments
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  • !!!

    http://goo.gl/nsMhz
    scrummage99
  • More Turnbull FUD

    As per usual, Malcolm chooses to ignore certain facts. Like the fact that Optus has not extended the HFC in the last what, 15 years? And they have never upgraded it, nor do they wish to. The HFC networks are the white elephants, not the NBN.
    gr1f
    • One white elephant makes way for the new

      The private investment in both Telstra and Optus HFC networks was questionable at the time, but both were betting their investor's money. Neither network has been commercially profitable.

      Not to be outdone then comes the thought bubble of Rudd and Conroy, $50+ billion and climbing FTTH network. Acquiring competing infrastructure simply to retire to ensure a monopoly.

      The facts as we know them (published by the NBNCo):

      5029 fibre users in the first year (predicted 500,000). Average cost per user $90,000.

      Mobile users currently around $14,000 per user.

      All targets missed, budget already upped another $3 billion. 100% taxpayer guaranteed.

      Yep, another great success;-)
      Richard Flude
      • White Elephants are still far superior to Turkeys

        Maybe you wish to dispute this analysis, you will need to verify your opinion with evidence and facts however.

        http://delimiter.com.au/2012/08/14/blowouts-no-the-nbn-is-very-much-on-track/

        It is a 10 year project and the actual rollout is just commencing. The Dams, pumping stations and control systems have been built, the trunk piping largely installed, now time to start plumbing the towns and the premises.

        However you may prefer the Coalition private sector solution with AT&T as the glowing golden example. Remember the US Government is spending $1,000 for every man woman and child on top of many Billions by the States, Counties and Cities in subsidies to the Private Sector to fix the competitive Private sectors failures in providing what is now essential National infrastructure with massive economic and Security aspects.

        How is it all going?

        http://technologyspectator.com.au/why-nbn-shouldnt-follow-atts-lead

        Guess we are taking the wrong path, we should blindly follow your expert advice and the media and the Coalition, we have it all wrong, our investors are missing out on the Golden Shower for doing next to nothing
        Abel Adamski
      • Cyclops...

        I guess it's because you only have one eye that you can't see the entire picture Dick?

        Funny how all the anti-NBN FUDittes are the same, isn't it?
        RS-ef540
    • "The HFC networks are the white elephants, not the NBN."

      Indeed. Thing is just like copper these networks were never really designed for broadband in mind. They are all redundant now that fibre is being rolled out. HFC certainly wont be able to keep up, although I dont agree with this Optus-NBN deal the right thing to do to is put it out of it's misery. It's for the best.
      Hubert Cumberdale
  • What? A mere $800,000 - petty cash!

    The NBN Co spending another $800K - what's to question? For them that is loose change. Us taxpayers have got plenty and even if we do pull up a bit short we'll just borrow a bit more from the Swiss or the Chinese.

    Now, of course, Julia will insist Quigley drops everything so he can immediately start on the FtN and FtM projects (fibre to Nauru and Fibre to Manus) so that the newly installed irregular visitors (love that phrase!) can have high speed comms to their lawyers and other bleeding heart supporters as they frame their appeals to the high court.

    Oh happy day - Est quaedam flere voluptas
    Brianab
    • Facts please

      The taxpayer is not paying for it
      The lawyers, perks etc are all thanks to the ridiculous naive legislation designed and implemented by John Howard.
      All those horrendously expensive appeals that always succeed are because tey are in facilities that fall under Australian Jurisdiction, the reason why Julia as a lawyer was trying to move the holding and processing out of Australia's jurisdiction. However Tony was more interested in providing the legal gravy train.
      All the perks that Little Johnny gave them would make your hair curl.
      Like this one
      Claimed, cannot guarantee the reality, check if you wish. Buy a car with a loan (obtained with Government assistance) for maybe a Kluger
      Default 3 Payments and the government will pay the loan out, cool. Heard of a family where 3 members claim they obtained their nice new fully paid cars that way.
      Liberal voters of course, thanks Johnny
      No wonder they bust a gut to get here
      Abel Adamski
    • Blah

      Go Brian... LOL

      Answered in full.
      RS-ef540