TransACT ponders life post-NBN laws

TransACT will have to shift the focus of its business away from being a fibre network provider, now that the government's anti-cherry-picking legislation is the law of the land.

TransACT, which operates a number of fibre networks in Canberra, as well as a number of fibre networks in greenfields areas and a VDSL network and HFC networks in Victoria, will no longer be able to grow its existing fibre network footprint for more than 1 kilometre under new laws that came into power in April.

The legislation bans fibre providers from building out high-speed, fixed-line broadband networks in profitable places that could undercut the prices offered on the National Broadband Network (NBN), where there are uniform prices across the country — unless the provider is willing to offer open-access layer 2 services on the fibre.

The law was supposed to be retroactive to 1 January 2011, but considering it didn't become effective until April this year, TransACT successfully lobbied the government to exempt deals that it had made until April, provided that it keeps offering wholesale products over those networks. CEO Ivan Slavich told ZDNet Australia that he is happy with the result.

"We had applied for a little bit more, but we're happy with the outcome," he said. "The reality is it's really the minister recognising that as a business, this is something we've been doing for 12 years. They recognise TransACT has been delivering through its networks what the government wants to achieve."

Importantly, he said, TransACT was able to upgrade its VDSL network — a fibre-to-the-node network — to VDSL2, and he believes that the company's HFC networks in Geelong, Ballarat and Mildura will be exempt, because the upgrade to DOCSIS 3.0 was rolled out before 1 January 2011.

But after TransACT has finished the upgrades for these remaining contracts, the company will have to shift its focus.

"What will be difficult for us in the future will be providing fibre to greenfields estates, which will be more than 1 kilometre from our existing network, because we believe it is unlikely the minister will grant us exemptions for those networks unless we do layer 2 wholesale only," he said.

"I think what that will mean is that it will be unlikely that TransACT will be supplying FTTP networks for areas that are more than 1 kilometre from our footprint."

The costs associated with complying with the Act would be too great, considering the fact that TransACT is a layer 3 wholesale provider, and would have to become a layer 2 wholesale provider to comply with the legislation. But he said that TransACT is still considering providing layer 2 services in the future.

Slavich said that TransACT will focus on delivering to the customers in its existing footprint and its contracts for managed services with government departments.

iiNet integration

TransACT is currently integrating with its parent company, iiNet, which bought the company in November last year for $60 million.

"We're currently in the process of integrating with iiNet [and] it's going really well. We've integrated the HR systems, we're looking at utilising their off-net products, we're going to look at integrating their billing, CRM and virtual contact centre systems," he said.

Since being bought, Slavich said that the company has continued to win a number of government contracts, including a managed-services contract with Mildura Regional Council. Slavich is eyeing the federal budget, to be announced next month, with departments set to look for external services to lower their costs and thereby push the budget back into surplus.

"In the budget, I think there will be a need for government departments to tighten their belts financially, and that's a positive in terms of going out to market and giving us a chance to win their business," he said.