Optus has HFC change of heart amid NBN negotiations
Optus has had a change of heart over whether its hybrid fibre-coaxial (HFC) network is capable of supporting wholesale services such as those that could be offered for the National Broadband Network (NBN) as the company begins discussions with NBN Co and the Coalition government.
Optus has said that recent advances in technology could allow it to open up its HFC network to wholesale for use with the National Broadband Network (NBN), despite talking down such a proposal two years ago.
A key component of NBN Co's proposed "multi-technology model" for the NBN will be reusing the existing HFC cable networks owned by Telstra and Optus to deliver NBN Co's services. In addition to needing to renegotiate with two companies to access the infrastructure, NBN Co has said that the cables will need to be upgraded in order to provide a better quality of service that's able to get at least 25Mbps download speeds out to all premises covered by the networks.
However, Optus has previously talked down the notion of opening up the network as a wholesale service. In December 2011, when the Australian Competition and Consumer Commission (ACCC) was investigating whether to allow NBN Co to pay Optus AU$800 million to decommission its HFC network and transfer the customers onto the fibre NBN, Optus said that it wasn't possible to supply wholesale services on the HFC network at the time.
"Optus does not currently have the technical ability to supply wholesale access services over its HFC network, and has no plans (or incentive) to upgrade the HFC network to do so in the future," Optus said in the submission.
CEO for SingTel Group Consumer and former Optus CEO Paul O'Sullivan told journalists today that many of those constraints were due to the technology in the HFC network supplied by Motorola.
"If you look at the technology that was available over the recent years, it was a proprietary technology that was developed by Motorola. And, as a result, there was a particular type of customer access unit that was necessary in order to access the home," he said.
"That, combined with some other technology features, made it very difficult for us to throw it open for wholesale access, not least of which was Motorola stopped manufacturing those units probably five or six years ago, so we've been busy recycling and refurbishing our stock."
But two years on, and now that the new Coalition government is eyeing using the HFC network, O'Sullivan said that Optus is now examining whether the network could become a wholesale network.
"As we move forward, one of the areas now under consideration is whether recent developments in technology would allow us to [free up] the constraint caused by that, and if there's a way we could make it available. But that's obviously under review."
Optus CEO Kevin Russell confirmed that Optus has already entered into discussions with the new government.
"We've had constructive discussions with the new government over the last few months, and we have ongoing discussions with the NBN," he said.
"We have an [existing] agreement with the government that we expect to be consistent moving forward."
Telstra CEO David Thodey said that his company has also entered negotiation with NBN Co, but said that it is too early to provide a timeline on when the negotiations would be completed.