NBN rollout 'too slow' to remove Telstra regulation: iiNet

The retail competitors to Telstra have argued that regulation of the company's legacy fixed-line copper network needs to remain in place until construction of the NBN has been completed.
Written by Josh Taylor, Contributor

The slow pace of the National Broadband Network (NBN) rollout means that government regulation over the prices and access terms for retail competitors to sell services on Telstra's fixed-line copper network should remain in place until the National Broadband Network (NBN) has completed being rolled out, according to iiNet.

The Australian Competition and Consumer Commission (ACCC) is currently reviewing the regulation of six different components of Telstra's fixed-line wholesale services. The rollout of the NBN should mean that over time, as more customers migrate over to the NBN, Telstra's legacy network will not be used as much.

The ACCC has asked whether in such a scenario the regulation of those services on the fixed network would still be required.

The construction of the network, however, has been slower than expected, with NBN Co in March forced to revise down the number of premises it was expecting to pass by the fibre-to-the-premises network by the end of June, from 341,000 premises to ultimately 207,500 premises.

However, NBN Co has stated that under the current forecast, the network will still be completed by June 2021.

iiNet, which has the largest number of customers on the NBN's fibre network already, said that the regulation should continue, because as a vertical operator owning the wholesale network and selling retail services on that network, it is still in Telstra's interest to discriminate against retail providers. The NBN rollout is still gradual, and could not be regarded as an alternative to Telstra's copper network, iiNet said.

"Quite simply, the NBN rollout has been too slow, and its current and foreseeable geographic reach is too limited to act as a substitute for Telstra's copper that can warrant removal of regulation over the next regulatory period," iiNet said in its submission (PDF).

The removal of the regulation now would allow Telstra to raise its wholesale access prices, and could force its competitors to raise prices, effectively providing Telstra with the opportunity to seize a greater market share before the NBN rollout has been completed, the company argued.

Optus agreed with iiNet (PDF), stating that because there are first-mover advantages in picking up customers as the NBN is deployed, it is in Telstra's interest to undermine the competition as the NBN is rolled out.

Macquarie Telecom said that the NBN has so far had "negligible impact" on the industry reliance on the copper network. The transition to the NBN is still in the early stages, according to the telco, and it has "not yet diluted the significance of Telstra's fixed network to the delivery of services to end users".

"The rollout of the NBN and the take-up of voice services provided over the NBN are still in their infancy," the company said (PDF).

No submission from Telstra to the inquiry has yet been published by the ACCC.

The inquiry could be further complicated by a potential change of government after Saturday, with the Coalition planning to have all Australian premises able to access at least 25Mbps download speeds by the end of 2016. This would mean that much of Telstra's copper network will be utilised as part of the Coalition's fibre-to-the-node network, provided the government succeeds in renegotiating with Telstra for access to the copper lines.

Shadow Communications Minister Malcolm Turnbull yesterday indicated that a Coalition government would aim to produce a timetable for the rollout within 60 days after the election.

"We'll have a very thorough review of the business, so we'll all know within 60 days, is our goal, what the currently specified project will cost in dollars and years to complete and what savings in time and dollars we can achieve by making changes along the lines of the ones we've canvassed and others," he said.

"Transparency will be the new watchword of the NBN Co."

Editorial standards