The National Broadband Network Company (NBN Co) would not need to pay Fujitsu $100 million of taxpayer money to install fibre to new housing developments if funds for Universal Service Obligation (USO) were redirected to existing providers, according to fibre company Openetwork's CEO Michael Sparksman.
(Optic fibre image by Hisa Fujimoto, CC BY-SA 2.0)
This morning NBN Co announced that it had signed up Japanese tech giant Fujitsu to roll out fibre to new housing developments — known as greenfields — in a deal expected to be worth $100 million in the first 12 months.
With the deal now in place, Sparksman told ZDNet Australia, Fujitsu and NBN Co would be putting commercial fibre companies such as Openetworks out of business by offering developers to install this fibre upfront for no cost.
"Even Telstra charge for the upfront costs of building a network, they used to charge for a build cost in the Greenfields for around $3500 to $4000," he said.
To keep competition in the industry vibrant, Sparksman suggested redirecting the $1000 per premise that Telstra receives in order to meet its universal service obligations (USO) to provide a landline service to every household directly to fibre providers to install fibre at these new premises.
"Instead of giving Telstra the $1000 per connection, which is equivalent to $145 million annually, they could give that $1000, which effectively — with a relatively small connection fee that the commercial operators would have to pay — would build an NBN-quality network without the need for the NBN at all," he said.
"That same amount of money is all that the developer would require for you to obviate the need for NBN to be in greenfields at all."
Since the announcement last year that NBN Co would guarantee that all new developments with over 100 premises would receive NBN-compatible fibre, NBN Co's intention has been to be the fibre provider of last resort for new developments. According to Sparksman, however, developers were opting instead straight for NBN Co fibre first rather than paying existing fibre companies to install the fibre.
As a result, Sparksman has been meeting with the Productivity Commission's Australian Government Competitive Neutrality Complaints Office, which is investigating whether NBN Co's greenfields guarantee is anti-competitive towards existing fibre providers.
Sparksman said that meetings with the office were progressing, and said that he would be giving a presentation on the matter to the parliamentary committee on the NBN in Sydney on Monday.
USO currently remains the domain of Telstra; however, as part of the $11 billion deal with the government and Telstra, USO will be relinquished to a newly created government-owned entity known currently as USO Co.
NBN Co and the office of Communications Minister Stephen Conroy were contacted for comment but had not responded at the time of publication.