NBN Co warned to stay out of competitive backhaul market

NBN Co warned to stay out of competitive backhaul market

Summary: An alliance of Australian telecommunications carriers has issued a warning to NBN Co to stay out of the competitive backhaul market, after the company said it would consider the idea in a bid for new sources of revenue.

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The Competitive Carriers’ Coalition (CCC), an alliance of Australian telecommunications carriers, has warned NBN Co to stay out of the competitive backhaul market, after the company tabled the idea as a potential revenue generator in its review this week.

The CCC made its warning this week in response to NBN Co's review of its AU$3.5 billion Fixed Wireless and Satellite Review (PDF), which suggested the company could competitively sell its point of interconnect (POI) backhaul — the infrastructure enabling the mid to long-distance transport of data from a series of disparate locations back to a centralised hub.

"The policy point of building the NBN to create a structurally separate market is and always has been to clearly separate the access network — which has monopoly characteristics — from the parts of the network where competition is viable, such as higher-volume transmission or backhaul routes," the CCC said in a statement.

The CCC said that in its review, NBN Co suggested it might want to compete in those markets to gain new sources of revenue.

"Allowing NBN Co to compete in those markets would be the first step in recreating all the competition problems caused by Telstra's integration that the NBN was intended to forever end," the CCC said.

In its review, which was published earlier this week, NBN Co said that the potential strategies explored to deliver "incremental revenue opportunities" included selling B2B products on its satellite service — where there is excess capacity — and providing backhaul from a number of regional and outer-metropolitan POIs to the capital cities.

"The most likely purchasers of such a product would be smaller RSPs [retail service providers]," said the review.

"There are (by design) at least two fibre transmission providers to each POI and the ACCC already regulates backhaul on routes not subject to effective competition and has been active in settling the regulated price of backhaul with reference to benchmarks from competitive routes," the review said.

A CCC spokesperson said that NBN Co had "no place" in the competitive backhaul markets.

"The ACCC made the determination about where the boundaries of NBN should be drawn when it agreed the number and location of points of interconnection between NBN Co and other carriers," said the spokesperson.

"Now NBN Co wants to shift these boundaries so it can enter the POI backhaul market, which it acknowledges is already competitive.

"Allowing NBN Co into this market can only create the risk of monopoly power being leveraged to undermine competition and destroy the value of private investment. In the long run, consumers will lose," the spokesperson said.

Earlier this week, NBN Co announced that it would commit an additional AU$1.7 billion to extend its fixed-wireless and fibre-to-the-node broadband services after the review commended an additional 1300 wireless towers be built.

Topics: NBN, Government AU, Telcos, Australia

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Leon covers enterprise technology and start-ups from ZDNet's Sydney newsroom.

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4 comments
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  • The question is...

    ...why would a Liberal government (and it's abundantly clear that NBN's board and management take their orders from the federal Communications Ministry) allow a publicly owned company subsidized by taxpayers to compete with private enterprise? It makes sense to have it provide the infrastructure, but if private enterprise can profitably serve the end users, then why not let them without any direct government involvement?

    Isn't that the way capitalism is supposed to work?
    John L. Ries
  • Cherry picking

    Agreed. I would really have preferred the full FttP NBN I was promised under Labor, and still think it is the most robust option and best investment Australia can make in regards to communications, but failing that, and being stuck with a Liberal communications minister that either has no idea OR serves the purposes of Telstra, Foxtel and other media giants perfectly (hhmmm), I believe NBNCo still has obligations to at least target getting access to people that actually need faster (any?) communications and build from there. Not just cherry-pick the high revenue earning areas. That is what got us in to this mess as we are today in the first place.
    Ramrunner-5dd3e
    • Merely Serving their Sponsors

      This present Lie-beral Party has absolutely no interest in serving the public interest so what else could we expect?
      grump-a1eeb
  • No surprise..

    The NBN's boss & TB's lackey would have already discussed it with his boss & received tacit agreement from him to make the announcement. Any port in a storm, no matter the cost or outcome. Another Telecom debacle in the making.
    Huntsman.ks