Industry ticks NBN plan, but is still divided

The telecommunications industry has broadly welcomed the release of the national broadband network (NBN) business case yesterday, but experts remain polarised on some issues.
Written by Darren Pauli, Contributor

The telecommunications industry has broadly welcomed the release of the National Broadband Network (NBN) business case yesterday, but experts remain polarised on some issues.


(194427 image by, Angell Williams, CC2.0 )

A notable element in the plan is the expansion of the number of points of interconnect (POI) for the network or the points where retail providers tap into the network.

While the decision has been up in the air for months, the business case revealed NBN Co had dumped plans to deploy 14 POIs in the network and will instead deploy 120.

This move favours big internet providers and disadvantages smaller rivals, according to some telco chiefs, because these providers will have to lease backhaul cabling in order to reach a POI.

"This will not help competition in Australia," Primus Australia chief executive Ravi Bhatia said. "The price of backhaul is absolutely extortionate."

His sentiments were echoed by Internode chief Simon Hackett, who said his company could afford to lease the required access, but many others will not.

Exetel CEO John Linton said that as a "small" ISP without an Australia-wide backhaul network, he had a preference for as few POIs as possible. It would level the playing field in terms of making the costs of providing services to 100 per cent of the NBN the same to all resellers, assuming that there was no volume discount, he said.

However, Exetel would be happy with just connecting to 90 per cent of NBN Co users, Linton said. "And if we had to pay Optus (for example) to connect users in 'remote areas' we would do that," he added.

Optus, on the other hand, has called for the government to introduce more POIs, which it said will boost backhaul competition.

"While we can't comment at length until we've analysed the location of the proposed POIs, we still believe that offering more POIs than the 120 would have been a means of ensuring stronger competition in the provision of wholesale backhaul services," regulatory general manager Andrew Sheridan said in an emailed statement.

"Competition in backhaul will encourage the industry and NBN Co to invest in future technology leading to greater price intensity and improved levels of innovation delivering greater value for consumers."

Telstra too welcomed the POI decision.

"We now have more certainty on points of interconnect, NBN Co's pricing and its business plan," communications head Andrew Butcher said.

On pricing and the business plan in general, Butcher said that the issues in the business case were critical to the value of the telco's agreement with NBN Co and were needed to complete definitive agreements for the deal with NBN Co. "So we understand the reasons why the government took the additional time to consider all the implications."

Internode and Optus welcomed the release of the plan in general, with the latter saying it appeared to be consistent with the Implementation Study released earlier in the year.

iiNet's Michael Malone said that the document looked quite promising "so far".

"I believe that the entry-level pricing of $24 will not require an additional phone-line rental component, so it compares well with ULL pricing (once other costs are included)."

He said he'd like to understand the impact of usage-based charges, however, "especially given the dramatically increasing trends of data consumption in recent years".

The NBN plan gave details for whole-access pricing. But while it gave indications of what download limitations could be like, it didn't specify any.

But one public NBN opponent, Exetel chief John Linton, rubbished the document.

"I thought Exetel had sub-standard business plans … but ours are an economic work of art compared to the drivel released yesterday purporting to be the 'NBN2' business plan for the next nine plus years," Linton wrote in his blog.

"I wasted part of my life yesterday reading the newly released NBN Co business plan — or more correctly described — the NBN Co draft outline of some ideas for possibly constructing an unbudgeted infrastructure with no underpinning facts to show why it would be a good thing to invest an unknown (because there was no factual basis for almost all of the assumptions) amount of money in.

"As a 'business' document it lacked any credibility to any sensible investor — but then the investors, you and I and every other taxpayer, were never consulted before this Krudd cover-up was foisted on us."

TransACT chief executive Ivan Slavich was contacted, but he was not prepared to comment.

Renai Lemay contributed to this article.

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