iiNet to NBN Co on fibre overbuild: bring it on

iiNet has warned NBN Co that it will compete fiercely in areas where iiNet has a fibre network, but the government-owned company is building its own fibre.

iiNet CEO Michael Malone has issued NBN Co with a challenge: either buy up iiNet's existing fibre-to-the-premises (FttP) and hybrid fibre-coaxial (HFC) networks, or be prepared to compete with a company that has half the cost base of the National Broadband Network (NBN) company.

The acquisition of TransACT in 2011 gave iiNet 4,500km of fixed infrastructure across the country, including a 200km fibre network in the ACT, as well as an HFC network in Geelong, Mildura, and Ballarat. The acquisition of Internode also gave iiNet a substantial fibre-to-the-premises network in the CBD of Adelaide.

Under legislation passed by the government to ensure a level playing field across the country, fibre providers are banned from building out new high-speed, fixed-line broadband networks in profitable places that could undercut the prices offered on the NBN, unless the provider is willing to offer open-access layer 2 services on the fibre.

Although iiNet will not be able to build out its network farther than 1km from where it is today, it is still able to compete with the NBN in those areas where it already has the infrastructure. Speaking to shareholders at the company's annual general meeting (AGM) today, Malone said that if NBN Co is not willing to buy out iiNet's networks at AU$1,050 per premises — in line with what he said Telstra and Optus are being paid to shut down their respective networks — then NBN Co can expect to compete with iiNet in those areas.

"NBN can't force us to turn it off; they would have to buy it off us or compensate us to shut it down," he said. "At the moment, they have announced that they are going to overbuild us in Geelong and Ballarat. They're going to build NBN side by side."

Malone said that when Telstra's copper network has been shut down in those two areas, it will only be iiNet and NBN Co competing on the infrastructure level.

"Our cost base is about half of NBN's, if they really want us to stay there and compete for that; bring it on," he said. "If they would like to do a deal with us to shut that down as they have with Telstra and Optus, then we stand ready, and so do our bankers."

He said that if NBN Co were to strike a deal with iiNet, it would cost AU$200 million for the TransACT network alone.

"We would be delighted to do a deal with NBN for AU$1,050 per premises passed. That would put the value of the TransACT network at over AU$200 million. That is approximately the replacement cost of that network," he said.

ZDNet has asked for a response from NBN Co.