NBN cash should be for DSLAMs too: ISPs

Internode, iiNet and Adam Internet believe that if Telstra is being paid to decommission its copper network for the National Broadband Network (NBN) roll-out, other internet service providers (ISPs) should also be compensated as their own infrastructure becomes obsolete.

Telstra is currently waiting on the Australian Competition and Consumer Commission (ACCC)'s approval of its structural separation undertaking (SSU) and its shareholder vote on the $11 billion deal. If the company passes both of these checkpoints, as the NBN fibre is rolled out across Australia, Telstra will decommission its copper network and move its customers onto the NBN.

While Telstra will be compensated for customers that migrate onto the NBN, telcos that wholesale from Telstra will effectively be forced to move their own customers onto the NBN, and will receive no compensation for the copper-based technology they're using that will be rendered obsolete when the copper network is decommissioned. In a joint submission (PDF) to Telstra's structural separation undertaking on behalf of iiNet, Internode and Adam Internet, law firm Herbert Geer said that the ACCC should assess the advantage that this compensation offers the incumbent.

"Our clients believe that a fact that the ACCC should not overlook is that Telstra is being compensated by NBN Co to decommission its copper infrastructure, whereas NBN Co will not be compensating access seekers for their copper-based infrastructure (for example, DSLAMs) that the NBN will make obsolete," Herbert Geer said.

"As a matter of principle, this is obviously unfair to access seekers. The provision of this 'war chest' to an already dominant player in retail markets gives Telstra a significant competitive advantage over access seekers."

The deployment of DSLAM technology by Telstra's rivals in exchanges across the country has undoubtedly opened up Australia's ADSL2+ broadband market over the past few years. In areas where DSLAMs have not been deployed, such as in regional and rural Australia, iiNet and Internode have previously complained that Telstra has been able to sell retail broadband at prices lower than the wholesale products offered to its competitors.

Herbert Geer also addressed this point in its submission, stating that the SSU would "cement" wholesale prices in regional and rural areas at levels that would mean rival ISPs would be unable to compete with Telstra's retail prices.

"It is our clients' view that Telstra's conduct has caused, and continues to cause, serious anti-competitive effects in regional and rural markets for broadband services," Herbert Geer said.

The SSU wouldn't prevent the ISPs from seeking the ACCC to push further regulation on Telstra in the interim 10-year period as the NBN rolls out, Herbert Geer noted, but it would make it more difficult.

"Though acceptance of the SSU does not necessarily prevent other regulatory action, it would suggest that the ACCC considers the SSU would provide an acceptable level of competition in all geographic fixed-broadband markets."

In the meantime, iiNet has committed to driving down its costs in regional Australia by deploying DSLAMs in places where the company can make back its investment in less than two years. The average cost to deploy a DSLAM is approximately $100,000 for the company. It has estimated that when it has moved all of its customers onto the NBN, it will save approximately 27 per cent in costs per customer.