Steps to stop an NBN monopoly: Optus

Steps to stop an NBN monopoly: Optus

Summary: Optus CEO Paul O'Sullivan today called for extra measures to make sure that the National Broadband Network doesn't become a monopoly that restricts competition instead of fostering it.

TOPICS: NBN, Broadband, Telcos, Optus

Optus CEO Paul O'Sullivan today called for extra measures to make sure that the National Broadband Network doesn't become a monopoly that restricts competition instead of fostering it.

Firstly he repeated calls for more transparency around the deal between Telstra and the NBN Co, asking that the details of the deal be disclosed to all Australians.

O'Sullivan was concerned that such a deal had the chance to distort the fledgling NBN Co market from its early stages.

There would be a land grab for customers, he explained, because the NBN services were set to be much stickier than previous services, not only providing broadband, but also television and even cloud services. "It will be a very difficult service to churn," he said.

If the $11 billion deal Telstra was negotiating with NBN Co and the Federal Government was used to provide Telstra with the funds to throw money at customers to lock them in, the competitive field could be uneven from the start, according to O'Sullivan.

"Our major concern is that the economics of acquisition will be greatly distorted by the deal between Telstra and the NBN Co," he said.

"All I'm asking is that the industry gets a level playing field as NBN Co is launched."

A new monopoly

O'Sullivan also talked on how Australia could make sure that NBN Co didn't become the next monopoly itself.

He said that the National Broadband Network Companies legislation yet to be passed in parliament was one step to stopping the formation of a new monopoly, but he also believed that additional steps needed to be taken.

He raised two concrete proposals:

  • that the operation of the NBN itself be put out to competitive tender
  • that the government should create an independent oversight board for the NBN Co

The first he thought would enable NBN Co to be subject to the same market forces that the commercial sector faces every day. The idea was that while NBN Co would own the ducts, the fibre and probably the IT systems for the network. Meanwhile, management services such as rolling out trucks to connect people and repair services would be outsourced, with tenders held national, on a state or local level every three, five or seven years. Then people could compare how different operators performed, encouraging efficiency.

His second suggestion, the oversight body, would not have to be a parliamentary body, he said, but rather "a body that would sit independently of government".

"It would be tasked with ensuring that the NBN is run to a well defined set of criteria."

A similar body, he said, was the Reserve Bank, which had a clear charter and the independence to make decisions free of political interference.

"Whatever the model," he said, "it's really important that we don't make the mistakes of the last fifteen years," he said, adding that it couldn't become the next British Rail or Telstra.

Lastly, the Optus chief called for greater clarity around the regulation of the next generation of applications content which will be delivered over the fibre network. He claimed that companies like Google and eBay had achieved a "winner take all" dominance over the internet.

"There is a huge cliff edge for any second entrant which wants to be a challenger in those application areas," he said, highlighting the problems being suffered by Telstra advertising and search division Sensis, which has recently revealed that it is suffering sharply as a result of the decline in interest in print advertising.

O'Sullivan suggested that "hyperlinks" could be placed on the websites of companies like Google and eBay, linking to competitors or even that the traffic for such sites could be auctioned to provide access for "others who might bid to hold that auction, or for providing that search at a better price".

Topics: NBN, Broadband, Telcos, Optus

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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  • Optus needs to be split up, and stop blocking competitors the only monopoly is left is optus
    sydney l
  • How...Sydney L...(is that you lala)? That's complete BS!

    Optus have no monopoly, they are nothing really? But they are naturally, scared of the Telstra/NBN deal, so whats the problem your TLS shares will be ok!
  • oh look Optus has decided to say something about the NBN and what is it? Something totally redundant and that doesn't really concern them. So Telstra gets an 11 billion dollar pie and they are feeling left out boo hoo. You know what I cant stand Telstra but Optus has been mighty irritating lately "bubububu monopoly etc" Shut up Optus.
    Hubert Cumberdale
    • At last..........................a reasonable comment, from an anti-Telstra poster.
  • For years we have seen the call by Telstra opponents for a "fair go".

    Well folks Telstra has been split, the separation is complete and the playing field has been leveled but still you whinge. Now you call for restriction on how Telstra can spend its money to provide competition. You are sick puppies and hopefully the ACCC and Senator Conroy will see through your tricky and devious plan. My tip to Telstra opponents is to invest (spend money) offer Australians a decent network and honestly compete.
  • will they ever stop whinging? they have never come up with something innovative and they always sook. Maybe if they put in some effort into something new other than misleading marketing campaigns, they maybe successful.
  • With all due respect, I believe that you really don't understand how it works Sydneyla?

    So sans my typical witty gibes...LOL, I will endeavour to explain, IMO, why the NBN is great for the nation and a boon for your Telstra investment, in the long run...

    "Spend money offer Australians a decent network", you say to Telstra's competitors?

    What do you think the monopoly NBN you have been deriding for months is? Why do you think the government has agreed to pay Telstra $b's? And why do you think the government are also negotiating with Optus"?

    Because, the NBN is being built and the old networks decommissioned, to help create this level playing field.

    Syd, with the NBN no one else but NBNCo (on behalf of the government/us - Aussie tax payers) own the one nationwide network and "no one else has to spend money to build another decent network". That's the point and imo beauty of it.

    Look, no comms situation in Australia is perfect. Some say we need competition at wholesale/network level, but private enterprise aren't interested! Unless given multi $b handouts - and we the taxpayer receive 0 ROI and we/gov/taxpayer do not own the network - doubly whammy! And if they were to decide to invest, do we have our f/paths dug up every month or many, many more cables dangling overhead and multiple connections to each house, as more and more "competitors" invest? If the answer is yes, then should we also have multiple electricity cables, water pipes and sewerage pipes... seriously.

    This avenue is far and away, imo, the best compromise (and again it will always be a compromise due to our demographic and geographic) for Australia's future comms needs...!

    Once the NBN is in your town, RSP's just pay "us" (the taxpayer - indirectly via NBNCo) to access it and as a consequence, we the taxpayers receive improved comms nationwide, are readied for historical technological improvements into the future, receive more retail competition (refer below)/better prices and in time, receive a complete return (if not profit) on the NBN investment... win/win/win/win/win/win...hmmm.

    But yet the naysayers who personally will be affected either financially or politically, criticise and wish to stop it and selfishly, hold the nation back! Disgraceful.

    As such RSP's (including Telstra) can stick to their core business, "which isn't construction of networks", it's selling comms products and services. This will in turn leave those dollars not needed to be spent on costly construction/maintenance, to offer better prices, products and services, i.e. much more competition at retail level!

    Look at it from Telstra's point of view... although I believe in a purely business sense they erred not coming to a compromise on FTTN with the ACCC in '05/'06! But now, instead of paying $4.7B to build, they will receive $11B (I believe - so a $15.7B turnaround) and not have to maintain a network, they'll rid them self of the USO and regulations. And they will still be able to access a network and profit.

    In other (your) words they will become leeches and simply resell and profit, just as you have criticised others for doing. But like the others they will be doing nothing wrong and will have $15.7b under the mattress to improve retail products, prices and invest elsewhere? This is what Optus are concerned about and why they need to nut out a deal ASAP, imo!

    But...this is where your precious Telstra will have to (and can) come to the fore, by being competitive. In areas which previously they were the only provider (due mainly to the previous, PSTN roll out mind you, otherwise Telstra wouldn't be there either - hence the need for an NBN) consumers will soon have choice of multiple RSP's, not just Telstra (the retail competition I spoke of nationally).

    Even though the one only provider in some areas I speak of is currently Telstra (and we know your thoughts there, no need at this stage for me to rehash) don't you agree giving those who are currently stuck with inhibitive prices for minimal services... "take it or leave it", will be better off and as a consequence, making the NBN ultimately fairer, all round? Seriously!

    Because the NBN is not both network owner and reseller, and as such the conflict of interest and unfairness is removed, creating this level playing field. Ironically, the same level playing field you for years, vehemently fought against when Telstra had the last mile monopoly...!

    Well, all of this is what makes the NBN ultimately fairer than Telstra's previous monopoly, makes it a level playing field and generally makes the NBN a must/very wise investment, imo...

    And for the record, I think O'Sullivan is just jockeying (as did Telstra) for the best deal he can get... but I laugh at some of his "ridiculous, see-through statements"... very lame, imo!

    • With all due respect............................................(Yeah, right !!!)
  • Sydney, the predictable hullabaloo continues and will haunt the industry for many years to come. Fortunately, the over a decade of lucrative grossed-up dividends income by far exceeds my capital investment and thus the future is all blue sky with not a worry in the world. Even my mate Graeme Samuel is giving up on them and will fly the coop come July 2011.

    The following is interesting, if you have not already seen.

    Have a good day.
    Vasso Massonic
  • Syd, addendum:
    Vasso Massonic
    • Perhaps if Graeme Samuel is flying the coup, it's because his job of keeping the incumbent comms monopolist in check, is done...

      Or maybe he just wants a change?

      Or what about this for being "out there" to perhaps retire, as he is 65 in May!

      Some people do retire don't they (then invest in Telstra and whinge, lie, carry on, make lame excuses about grossed-up divs... sigh, when their capital losses are obvious and had they simply put the $ in the bank they would have done better...LOL).

      Wait for it... I feel a FUDged figures moment about to occur or mwil to the rescue again..LOL!
  • Consumer Telstra Country Wide (Retail)
    Human Resources & Legal Services - provided help to iiNet in AFACT v iiNet trial
    Sensis (Online, and print - UBD, Whitepages etc)
    Telstra Business (Retail)
    Telstra Enterprise and Government (Retail)
    Telstra Innovation Products and Mktg – Name explains its self
    Telstra International Group - (Off shore assets such as Telstra Europe & Telstra Clear)
    Telstra Operations - Maintains the network
    Telstra Wholesale - provides access to the network for all retail business units, and wholesale customers such as AAPT, Optus, and Soul etc.

    I have also read in the AFR that Telstra is also not selling its HFC, or data services such as FRAME
  • Above comment was ment to be in response to RS's comment about telstra's core being Retail.
    • So what amckern?
  • RS I had an answer to your extended letter above but unfortunately I fouled up and deleted the lot. Sad but them th breaks. Thanks for that information Vasso I will checkit out.
    • I bet you did Syd and I'm sure it ended with God Bless Telstra and somewhere in the middle had things like accusing me of being a disparaging opponent, demonising the Aussie icon... there done for you!

      As for Vasmas' URL.. gee a URL to guess where? The UNAustralian, which outlines Telstra wanting more and more than just the $11B.... gee!

      As such I really don't know whose worse, Telstra or as per this topic, Optus?

      I do see TLS is around levels for me to buy again...! Since again falling well beyond the grossed-up, dividend amount, since ex-div date...LOL!
  • If you look at staff levels (These are listed in the Anual report) more people are overall employed in operations at Telstra then in any other business unit. I would expect that a loss earning business unit like that being cut away would boost Telstras operting income by quite a bit - even with no wholesale business income.
  • @amckern...oh ok, I see, sorry... interesting point!
  • Also haven't Telstra claimed for years that wholesale costs them anyway...?
  • RS a tip from the Guru. The Future Fund has held the price of Telstra shares down for some time with millions being disposed of every day. The Fund is now down to 5.75% of Telstra and must soon stop their selling. When this happens might be an opportune time to buy. My other big tip to all is, be kind to your Mum. lol.