Optus-NBN tick against ACCC charter: Turnbull

Optus-NBN tick against ACCC charter: Turnbull

Summary: Shadow Communications Minister Malcolm Turnbull has slammed the competition watchdog's pending approval of the $800 million deal between Optus and NBN Co that sees the telco shut down its hybrid fibre-coaxial (HFC) network, and move customers onto the National Broadband Network (NBN).

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Shadow Communications Minister Malcolm Turnbull has slammed the competition watchdog's pending approval of the $800 million deal between Optus and NBN Co that sees the telco shut down its hybrid fibre-coaxial (HFC) network, and move customers onto the National Broadband Network (NBN).

The Australian Competition and Consumer Commission (ACCC) indicated on Monday that it will approve the deal, which would lead to 429,000 HFC broadband customers in Sydney, Melbourne and Brisbane moving onto the NBN from 2014.

To convince the ACCC to let the deal go ahead, Optus said that it has no intention of offering wholesale services over HFC, upgrading the HFC to provide speeds higher than 100 megabits per second or extending the network farther than the 1.5 million premises it covers today. It also said that the cost of operating the network would make it tougher to compete with NBN Co.

But Turnbull branded the ACCC's decision in parliament yesterday evening as being "thoroughly unconvincing and contradictory". He said that the government prevented Telstra from building a competing HFC network, and Optus could have competed against Telstra's fixed-line copper domination with the HFC network.

"But here, in the socialist paradise of Julia Gillard's Australia, the government is building a massive new fixed-line telecommunications monopoly, and, just in case there would be any competition with it, the government is paying Telstra and Optus to decommission their HFC networks, as well as paying Telstra to decommission its copper network," he said.

He pointed out that the ACCC rejected arguments that the HFC deal would improve NBN Co's rate of return, and that the roll-out of the NBN would be slowed if the deal doesn't go ahead. He said it admitted that the HFC network is able to meet entry-level consumer demands for broadband. Yet, the deal was ultimately approved.

"How on earth did the ACCC conclude that the Optus HFC deal should be approved? How could it conclude that an anti-competitive arrangement, which has, to the best of my knowledge, no counterpart anywhere else in the world, be acceptable here in Australia?"

Turnbull said that the only benefit of the deal is to Optus, in avoiding the cost of maintaining its network.

"But is this a public benefit, or is it ... simply a supposed benefit to Optus? Even if you accept the ACCC's proposition, why does it not offset that benefit to Optus against the $800 million cost incurred by the NBN and the unfortunate Australian taxpayers who are ultimately funding that and many other payments to the NBN?"

Despite Optus' own admission that it would not upgrade the HFC network, he said that it is "heroic" of the ACCC to assume that Optus will not invest in upgrades to its HFC network to offer speeds higher than the currently available 100 megabits per second.

"Given the rapid pace of disruptive technological change — given the plethora of technological changes, which were not only not predicted, but also not anticipated — why would anyone assume that this network will not be upgraded in the future? The ability to upgrade copper networks to carry high-speed broadband improves year after year, month after month, as we have seen with the various evolutions of DSL."

He questioned the value of the deal to NBN Co if Optus has no intention of upgrading its HFC network to compete with the high speeds on the NBN.

"This draft determination is so contradictory that the only conclusion you can take from it is that the ACCC believes that the management of the NBN Co are commercial morons who are recklessly paying $800 million to get something which is going to fall into their lap for nothing anyway."

He said that NBN Co management are not "morons", but are paying $800 million to eliminate a viable competitor to the NBN.

"For the ACCC, which is supposed to be flying the banner of competition and ensuring that monopolies are kept in check, to say, 'No, this deal can go ahead', is abandoning its charter. It is a draft determination that should be abandoned as well, and replaced with a ruling that would be more consistent with its distinguished track record."

On Monday, Optus said that the deal would allow the company to redirect resources from having to maintain the HFC network to retail services, but told ZDNet Australia that no job cuts were planned in the HFC area at this time.

Topics: NBN, Broadband, Government, Government AU, Telcos, Optus

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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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23 comments
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  • Guess what? I have Optus Cable (HFC) at home and since optus started rolling out their 'MeTV' this year my Optus cable has slowed to a crawl. I used to consistantly get 16 to 20mbits download speeds now its down to 4 to 8 Mbits even with the Broadband speed test sites.

    So, NO, the Optus HFC is no match for the NBN in case Malcolm Turnbull seems to think so. Its so bad now that I am considering switching to Telstra Cable. HFC is no match for NBN's FttH as in Cable you share the speed with all the other users in your street. So even if you have 100Mbit cable and if there are 20 active users in your node (street0 thats an average of 5Mbits that you get.
    rajivdx
    • rajivdx, even with NBN GPON technology, you will be sharing bandwidth (and data) with your (possibly 64) neighbours
      anonymous
      • Read the NBN documents again, its 32 houses per cabinet. The total available bandwidth available per cabinet I think its about 2.5gbit~. If everyone was connected at 100mbit and downloading at ideal maximum speed, the minimum speeds you would see is about 78mbit. Also depends on where you're downloading from etc. But the bandwidth available is more than enough. when 1gbit speed plans come along, all they have to change is the hardware at either end of the cable and the bandwidth from the cabinet and exchange increases.
        Tiberio-d2a73
        • Actually, as far as the gigabit speeds, the only hardware that needs changing is at the Tasmanian first release sites (and that upgrade will be underway shortly). Because of when they were installed in the very first trial rollout stage, gigabit-capable units were not available within the required specs at that time.

          The NTUs used in every install since then are fully capable of gigabit speeds without hardware modification. Some firmware updates may be needed, but I imagine these would be delivered over the network remotely.
          Gwyntaglaw
    • Thank you that explains why my optus cable broadband speed has dropped to
      Knowledge Expert
    • The issue is not whether Optus HFC is a match for the NBN. The issue is whether the NBNCo should be allowed to pay Optus $800m to scrap their HFC network. The ACCC and the competition legislation is there to prevent this sort of deal.

      My HFC service is not as bad as yours. However, the closest equivalent Optus NBN service to mine is $14pm cheaper. If the service is as poor as yours for many customers and it's so much cheaper for Optus to use the NBN then surely Optus would close down the HFC network without being paid $800m.
      brynmeek@...
      • The reason why all these messy looking deals are necessary - and they do look pretty messy, both this and the Telstra deal - are to remedy the persistent effects of the 1990s HFC rollout debacle.

        Not to do so would be to let the dead hand of past errors distort future sensible planning. And the problem is that to let Telstra benefit from a similar deal with its HFC while denying it to Optus would, amongst other things, give an unfair advantage to Telstra - as if it needed any more.

        One other factor is at play here: in all the commentary, most notably from Malcolm Turnbull and Peter Martin (http://www.smh.com.au/business/nbn-paying-optus-to-destroy-infrastructure-20120529-1zhbr.html), the Optus HFC is treated as though it is common property, open to all. Commentators love to talk about using it as though they already owned it (the FTTN debate founders on this fallacy as well - talk of using the copper "because it's there" ignores the fact that Telstra actually OWNS it). The reality is that Optus has no intention of expanding its use, does not wish to invest further, and treats it as practically a dead loss. On its own, there is no incentive for Optus to keep using it.

        Any serious competition policy based on the idea that the Optus HFC will remain in viable use ignores this reality - Optus would run it down, not open it up to new customers, and it would become a millstone around the company's neck (while Telstra looks on and laughs). It is compensation for THAT scenario that is behind the NBN Co payments, as much as a business deal (to smooth migration and secure its customer base).

        The only alternative is that a future government would bribe Optus to keep it open and operating. Which is just another way of paying Optus to deal with the persistent problem dating back 15 years... and far less efficient in the end than the NBN Co course.

        So, there really isn't a viable alternative to the NBN proposal. Turnbull has no interest in following his argument to its conclusion, of course. He's just scoring cheap shots, cloaked in the clever-sounding, smooth rhetoric that he does so well. Sadly, it's just all shoddy goods.
        Gwyntaglaw
        • Yep. But if Optus HFC network is as bad as that surely Optus would close it of their own accord once the NBN becomes available. Why pay them $800m?
          brynmeek@...
          • No, they would ring every last cent for as long as they can, until it literally fell apart, not close it.

            Thing is, those who criticise the NBN always scream private enterprise would this and private enterprise would that. Well in private enterprise, businesses don't wait for an opportunity, they acquire (BUY) assets and do with them as they wish, just as NBNCO did.

            Let's not forget the deal includes customer migration too, not just the HFC part!
            Beta-9f71a
          • Think of it like a businessman checking in to a swanky New York hotel. You have vital business meetings, upon which your whole job depends. When you arrive at the hotel, you could just check in and hope for the best that everything falls together. Or you could spread the love, and generously tip the doorman, the concierge, the bellhop, the waiters and the housekeeping staff. That way you make sure that your bags are delivered snappily exactly where they need to be, your suits are always pressed, your shoes are shined to a mirror, and everything is exactly how you need it to be, to enable you to do your difficult and high stakes business deals. No margin for error.

            NBN Co is securing the cooperation of Optus and Telstra. They can make it slow, or they can make it snappy. They can drag their heels transferring customers, or they can work hand-in-hand to deliver those customers happily and in good order.

            And the net outcome is that everything works. If they don't deliver, they don't get paid. So they deliver. And the business case for the NBN is protected. There are so many moving parts in the business plan, that NBN Co can ill afford slack behaviour on the part of its partners.
            Gwyntaglaw
          • +1
            Beta-9f71a
  • Mr Turnbull is clearly under the Dunning-Kruger effect, i.e. he is so dumb he doesn't even know he is dumb!

    Someone that was the chairman of an ISP should really know better.
    Jingles-8366c
  • "Given the rapid pace of disruptive technological change — given the plethora of technological changes, which were not only not predicted, but also not anticipated — why would anyone assume that this network will not be upgraded in the future? The ability to upgrade copper networks to carry high-speed broadband improves year after year, month after month, as we have seen with the various evolutions of DSL."

    It appears the Coalitions new broadband policy is to stand idly by until 'disruptive, unanticipated' technological change delivers us a magical invention that allows data to be moved over copper faster than the speed of light.

    Once the Coalition have overcome the inconvenience of the laws of physics, I have no doubt that the incumbent telecos will be falling over themselves to build a network that eclipses the current NBN in ambition and scope, while allowing open access for true competition.
    RealismBias
  • I grew up in China, Chinese people learned in a very hard way that forcing people to do something is not going to work, it will kill competition and innovation.

    I have enough reason to believe many comments here which are supporting this NBN waste are from persons who received payment from either NBN Co or ALP.
    mikelee@...
    • I'm currently forced to use copper for my internet connection. Yet I'm not here trying to compare Communist China to Australia.

      Please, this must be a troll.
      Paranoid-beb39
      • He even lied when he wasn't talking about the NBN. I.e his first three words ;-)
        Beta-9f71a
    • Appears we are at an impasse as I could believe your comment and those supporting the coalition patchwork plan waste are receiving payments from either Rupert Murdoch or the Liberal party... big difference though is that I'm more likely to be right… you won't be here next week, I will. Thanks for stopping by.
      Hubert Cumberdale
    • Who is being forced to do something here? Not Optus, not NBN Co. They came to an agreement through business negotiation. Not at gun point, either literal or figurative.

      No one will be forced to buy a service over the NBN. If you want to go wireless only, you will be able to.

      I think it's pretty important to get those facts straight if we're going to have a serious debate here.
      Gwyntaglaw
    • What is more likely, is that our mate "nbnsucks", has never even been to China, let alone been born there and is simply parroting LNP memes from Alan Jones.
      Phil M-5e721
  • What's Malcolm on about? Lets examine the facts for once.
    a) Optus were never going to expand the reach of their network. They haven't done so in 10 years. As they found out before, when Telstra chased them down the same streets, it's simply too expensive deploying HFC networks in Australia for minimal return
    b) This deal means that Optus get to basically write off a 10 year old, aging network, and write off that book loss once and for all
    c) NBN get instant scale in user numbers, so suddenly they have accelerated the onbaording of 500,000 subs - which means faster revenue return, more scale etc that improves their business case
    d) There's nothing anti-competitive about it, as it actualy will BROADEN the ability of Optus to provide services to the other 19million people they couldn't provide it to
    gr1f