After "a healthy debate" with NBN Co chief executive, iiNet supremo Michael Malone has been convinced that the National Broadband Network will be delivered.
iiNet chief Michael Malone(Credit: iiNet)
"Before I walked into that meeting," Malone told
ZDNet.com.au yesterday, "I thought there was a 50/50 chance
this thing will ever get built — even with all the right
Within 10 minutes of meeting Mike, I thought, boy, this guy can do it. He is incredibly impressive.
iiNet CEO Michael Malone
Malone, who heads up Australia's third largest ISP, is in
Federal Court this week defending iiNet against AFACT's claim that
it authorised its customers' breach of copyright.
While numerous high profile executives, such as Cisco's Les
Williamson, are keen to meet with Quigley, few, besides those that
have attended the recent round of industry briefings, have had the
chance. Malone said he had met with Quigley a few weeks ago, and
described him as "incredibly impressive".
"Within 10 minutes of meeting Mike, I thought, boy, this guy can
do it. He is incredibly impressive. I know the government's got
KPMG (and McKinsey & Co) out there doing the implementation
study, but Quigley, within 10 minutes, he was able to show there
were a few things that are obvious about the roll-out and it was
bang, bang, bang, bang," said Malone.
iiNet had previously expressed concern over where ISPs would connect to the planned fibre network and last year Malone said the initial NBN proposal would be a "monumental failure", which would likely threaten its investments in broadband equipment connected to phone exchanges. Yesterday, Malone pointed out that Quigley had headed up AT&T US metro-fibre roll-out, U-verse, and understood the complexities involved in building "back-to-base alarm" systems, lifeline services and the switch to digital television.
Asked whether his concerns had now been allayed, Malone said, "we had a healthy debate about it" and that he was able to propose to Quigley a network access structure which would protect the value
of existing fibre networks.
"Saying that everybody has to connect in the CBD of each state
ultimately is not a good result," said Malone. "A lot of carriers
would have to write down fibre assets. And it would be a bad look
for the government if you're talking about fibre being the way
forward and everyone having to write down fibre," he said.
Instead, Malone said he would like ISPs to be able to hook into
the network at multiple points. "And that you incentivise for
hooking in closer and closer to the customer. I don't think anyone
wants to see volume discounts — that only benefits one party
in the industry."
Instead of discounts based on the size of an ISP or telco's
customer base, he wanted to see an infrastructure-based discount
schedule. "I think having some form of discounted value, which is
because you're collecting in the suburbs or a regional town and
that you're paying for the fibre to come back to the CBD itself,
that that would give you some benefit," he explained.
Malone said iiNet planned to maintain its current $30 million a
year capital budget for new broadband equipment — Digital
Multiplexer Subscriber Lines (DSLAM) in phone exchanges —
despite the impending arrival of the NBN, which may render DSLAMs
"Our payback on installing a DSLAM is less than two years. NBN
is five to eight years away. Until we learn something different, we
will continue," said Malone, who explained that it currently
depreciates the technology over five years, while it has an eight-year lifespan.
"If we got some indication tomorrow that NBN is hitting Perth,
it's not going to remove all our DSLAMs in two or three years. The
worst case if there was a Perth roll-out would be that it might
reduce the depreciation schedule to three to four years," he said.
The critical factor in determining the lifespan of its DSLAMs in
two key regions — Bathurst, NSW and Geraldton, WA —
was how long it will take to fire up the planned backhaul builds,
currently out for tender.
"Both regions have been promised new backhaul coming sometime in
the next year. What we don't know is how long after the backhaul comes
online will NBN fibre to the home come online," said Malone.
Once the NBN has been sufficiently delivered across major
metropolitan areas Malone said there will be two major assets that
will differentiate ISPs: the number of customers and notoriously
complex billing systems.
"If you have a fully commodotised network layer, it's the
billing relationship that will be important. If you make a 10-cent
mistake, you can make a $100 error too. [Customers] won't trust
your billing system, so getting a trustworthy billing system is