Optus-NBN tick-off is 'a dark day' for ACCC: Turnbull

Optus-NBN tick-off is 'a dark day' for ACCC: Turnbull

Summary: Shadow Communications Minister Malcolm Turnbull brands the ACCC's decision to allow the Optus-NBN deal to shut down Optus' HFC network as a black day for the competition regulator.

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It was a "dark day" for the Australian Competition and Consumer Commission (ACCC) when it decided to let Optus and NBN Co proceed with their AU$800 million deal to shut down Optus' hybrid-fibre coaxial (HFC) network, according to Shadow Communications Minister Malcolm Turnbull.

The ACCC announced yesterday that it had decided not to oppose the deal that will see Optus shut down its HFC networks in Sydney, Melbourne and Brisbane, and transfer its 400,000 customers onto the National Broadband Network (NBN) starting in 2014.

The regulator came to the view that Optus would not upgrade the HFC network, and that, over time, customers demanding higher speed services would have naturally migrated to the NBN anyway. It argued that the HFC network wouldn't have had much impact on NBN competition, because of the regulatory environment set up around the NBN.

This morning, in a blog post on his website, Turnbull admonished the ACCC for this decision.

"A black day indeed for the ACCC and competition in Australia," he said.

Turnbull compared the deal to the AU$11 billion Telstra agreement, which he said the government had largely forced through via legislative changes. The ACCC had said that other legislative changes prohibiting carriers from expanding their networks in profitable areas would prevent the expansion of Optus' HFC networks, but Turnbull argued that the ACCC should still have blocked the Optus deal.

"The Telstra part of this shabby arrangement was legislated so the ACCC really had no say in it, but they could have and should have blocked the Optus deal."

Turnbull said that the HFC network could compete with the NBN, as already happens in the United States, Korea and Singapore, and the ACCC was underestimating the potential for future technological upgrades for HFC.

He asked why, if Optus was set on shutting down the network eventually, should the taxpayer pay AU$800 million for the company to do so earlier?

"It is Optus that has hit the jackpot. AU$800 million in cash."

In a recent submission to the ACCC, prior to the regulator's final decision, Optus responded to criticism over the value of the deal. Optus estimated that, in shifting HFC customers over to the NBN earlier, and therefore picking up revenue from Optus NBN customers, NBN Co stands to earn back the money it is paying to acquire the customers.

"It is reasonable to assume that the transaction will result in a positive impact to NBN Co's business plan, since the revenue from accessing the Optus HFC customers will exceed the migration payments NBN Co will make to Optus to acquire those customers," Optus said.

Optus estimated that the net benefit to NBN Co (that is wholesale payments to NBN Co, minus the AU$800 million payment to Optus) is AU$317 million.

Topics: NBN, Government, Government AU

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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13 comments
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  • Whew!

    I'm a longtime ZDNet reader but I have no idea what Optus-NBN is, what a 'tick-off' is, what ACCC stands for or who this stranger Turnbull is. I certainly don't know why I should care.

    But I have heard the phrase, "a dark day," and my opinion is it's a dark day for ZDNet after the decision to make the publication an amalgam of styles and languages. Yuck!
    none none
    • Join the world

      Even a moments use of Bing or even Google would tell you that NBN is the Australian National Broadband Network, Optus is a Singapore Government owned telco that provides telephone and broadband in Australia.

      The Australian Competition and Consumer Commission promotes competition and fair trade in the market place to benefit consumers, businesses and the community. It also regulates national infrastructure services. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws.

      A "tick off" is to give permission.

      Turnbull is an Australian politician, currently in the opposition party and a spokesperson on broadband. An intelligent person, his current stance on the NBN is just stupid and refers more to the current opposition's rejection of anything the govermnet brings up rather than his brain.

      Funny how I manage to navigate the parochial US based ZDNet without a problem. I would suggest you stick to reading only USA flagged articles - even the Canadian ones may be confusing.
      Tony_McS
      • re: Join the world

        I don't know what a Bing is, either, but I'm certain I'm no worse off for it. BTW this post was the top article in the US edition.
        none none
        • Whinging ...

          So go bitch and moan at ZDnet for having it come up on the US site then rather than moaning here.

          If you knew what it did after some simple research, the USA would want one too.
          Master_T[RG]
          • Pick up your dummy and go home.

            Pick up your dummy and go home.
            Van Der
          • re: Whinging ...

            I am on the US site, fool. What are you doing here?
            none none
      • Misleading Tony

        You were correct till third paragraph.,

        But you were stupid to abuse Turnbull. He is right. Turnbull was right. We have a rogue regulator which is stymying competition. A government monopoly is shutting down an existing competitor by paying several hundred millions of taxpayer dollars.

        You will know how Australians love a freebie and many are lining up for this so called panacea for all the ills in Australian society.
        Van Der
        • You probably shouldn't speak until you know what you're talking about.

          This is infrastructure investment, and what you're proposing is the same as each water company laying a separate water pipe to your kitchen sink.

          Course, that would be stupid (very much like your comment), so I suggest that perhaps you should restrict your comments to the a murdoch website where logic and thinking is discouraged- you might get a better reception there.

          The $800 million dollars is an unfortunate but necessary step that needs to be taken following the last 15 years of the 'free market' dictating who gets ADSL and who is stuck on dial up or wireless.
          RealismBias
        • Rogue regulator

          Sims is a rogue regulator just like Samuel was a rogue regulator, according to NWAT disciples.

          Will they ever wake up?
          RS-ef540
        • Claytons Competition

          Van Der
          Optus HFC was designed and implemented as multicast Cable TV with Telephony capability, not for B/Band. Shared spectrum + dedicated TV spectrum with large no of customers per Node and High Contention Rates along with rubbish upload. The infrastructure was never upgraded unlike in the US. To upgrade would require at least 3x nodes, which means at least 3x feeder fibres and at least 5x (the other 2 for upload) the backhaul and associated infrastructure. The HFC would need to be replaced. Looking at over $1Bill , neither Optus or Telstra are interested so simple Malcolm would have the taxpayer pay for it, for what a cul de sac technology and taxpayer subsidised and provided competition. for what? Foxtel and Skychannels benefit
          Dumbest thing I have ever heard of
          Abel Adamski
  • Be it as it may

    Turnbull is right in practice but wrong in reality. The current ACCC supremo inherited the half baked NBN in mid stream, thus in a force majeure dilemma.
    Vasso Massonic
    • Rogue Regulator

      Obviously the new ACCC supremo is another rogue regulator and wayward sheriff, because he disagrees with you VasMas...

      Gee here's a thought... since there's been more than one ACCC boss, maybe that THEY aren't the ones who have NFI?

      The NBN may be a lot of things, but half baked isn't one of them. Which is why you rad cons see it as such a threat.
      RS-ef540
  • Prophesy fulfilled

    @ VasMas @ xyz10_z

    From the rolls eyes files (3 days ago)...

    http://www.zdnet.com/accc-approves-optus-hfc-deal-7000001190/

    Thank you for playing your uncontrollable part in my exact word for word prophesy.
    RS-ef540