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Exetel boss bets against NBN and Quigley

Boss of internet service provider Exetel, John Linton, says the National Broadband Network should be handed to the only company that can build it — Telstra — and he's not impressed by NBN Co chief Mike Quigley.
Written by Liam Tung, Contributing Writer

John Linton, chief of internet service provider Exetel, says the National Broadband Network (NBN) should be handed to the only company that can build it — Telstra — and he's not impressed by NBN Co chief Mike Quigley.

Linton regards the Rudd Government's $43 billion plan to build a fibre network to Australian premises as nothing more than a political stunt aimed at covering up its failure to deliver a network by the end of 2008 as initially promised in 2007.

"As a political stunt, it's worked amazingly. So now they have made a promise based on nothing: there's no costing, no plan and the government has not said how it can be done," Linton told ZDNet.com.au.

"The 'politicians-that-be' went to the last election saying their version of the NBN would be up and running by the end of 2008. That was a stupid statement."

Linton has run Exetel since 2004 and claims to have 100,000 customers. His criticism of the NBN centres on its impact to the wholesale telecommunications market. Linton reckons the industry has "semi-stalled" since the first NBN process was killed and complains that his company has begun to face increasing difficulties successfully applying for port access at Telstra, AAPT and Optus' exchanges.

Because of the bottle neck, Linton says there is almost no chance customers will see new ADSL-type products over the next six to nine months. "The situation as I see it is that the suppliers — Telstra, Optus, AAPT — are not really investing in anything new, especially when you're referring to ADSL type broadband products."

"The current suppliers are holding on to the margins they have at the moment, and if anything they will seek to increase them rather than reduce them," says Linton.

Despite the constraints put on the business by the government's plans, Linton says the current system — with regulatory oversight by the Australian Competition and Consumer Commission (ACCC) — has not worked. On the other hand, he fears splitting Telstra won't either. "After 17 years, you can definitely say that didn't work, but tearing apart the one company that has a national structure is another thing altogether."

His view, as head of a licensed carrier, is rare amongst an industry which has thrown its support behind the government's latest plan — with the notable exception of Telstra. Members of the Competitive Carriers' Coalition and newly-revived Terria Access Seekers Association (TASA) are urging the federal opposition to allow government's plan to proceed, in particular the plan to end Telstra's vertical integration.

The only one who can do it is Telstra. It would do it cheaper than a bloody government.

John Linton

For instance, Michael Malone, managing director of Australia's third largest ISP, iiNet (a TASA member), recently admitted to ZDNet.com.au that scepticism he had towards the NBN evaporated within 10 minutes of meeting the NBN Co's chief, Mike Quigley. But Linton is not convinced by the Quigley magic.

"Is [Mike Quigley] god? Can he reverse 100 years of telecommunications going one way and say, 'Oh, I'm Mike Quigley, and I haven't worked here in 30 years, I know nothing about running major networks, but someone has paid me $2 million a year so I can pretend I can'," Linton scoffed.

"The only one who can do it is Telstra. It would do it cheaper than a bloody government."

Linton's search for the holy grail
"We've been searching for the holy grail of routers ... one with an HSPA chipset included, which means you don't have to pay this inflated price for an HSPA modem any more," says Linton.

As fixed line broadband opportunities dry up, Linton sees huge potential in the evolution of High Speed Packet Access (HSPA) services, thanks to the falling price of said chipsets and major network expansions by the major carriers. One example of this includes switch and router maker, Huawei, recently launching a raft of carrier-branded devices which bundle standard Wi-Fi features with HSPA chipsets.

"Now they're beginning to make money out of HSPA, it's funding the provisioning of towers," says Linton.

Telstra, Optus and Vodafone Hutchison Australia have all recently undergone major mobile network upgrades. Growth in mobile broadband has also attracted new entrants, such as Channel Seven owned ISP, Vivid Wireless, which recently commenced building its WiMax network in Perth and has made tentative plans to expand the network to other major metropolitan regions.

Exetel is also on the verge of a major push into the business-end of broadband, and Linton says he plans to make its business revenue exceed consumer revenue by the end of 2010. To do that, he estimates, Exetel will need around 10,000 business customers on high grade data services. He says it currently has 1000 such customers.

"That's pretty ambitious for a small company," says Linton.

Policing the internet
Linton believes that the Australian Federation Against Copyright Theft's (AFACT) Federal Court attack on iiNet was predictable and that he could tell it was gearing up for litigation.

"There was no doubt [AFACT] was looking for someone to take to court. We're not 'silly Michael Malone' saying 'pick me, pick me'. We don't have the money or the time [to deal with that]. 'Pick someone else,' we said."

For five years, says Linton, Exetel has forwarded AFACT's infringement notices to customers, and he openly admits all he wanted them to do was to deny that they are using Exetel's service to share copyrighted material.

And the tactic may have worked. At the heart of AFACT's case against iiNet is the claim that by opting not to forward its notifications, the ISP had implicitly authorised its customers' infringements.

There was no doubt [AFACT] was looking for someone to take to court.

John Linton

iiNet has defended its inaction on the basis that parts of the Telecommunications Act, which deal with customer privacy and interception, prevented it from forwarding the notifications; if AFACT wanted iiNet to send them, iiNet has argued that AFACT should have obtained a court order first.

Linton says iiNet's interpretation is garbage and that Malone's approach was arrogant. And while he does not appear to side with AFACT's cause, his understanding of what an ISP can do in a similar situation is in line with the copyright lobbyist's — essentially that notifying customers of an alleged breach is not illegal.

"We have standard terms and conditions," says Linton, "which say you may not use this service for illegal purposes. If someone comes to us and says [some customers] are, we pass that on, and say: 'Hey, someone says you're using our service illegally. Tell us you're not, or go somewhere else.' Then the whole point then becomes moot. You have one person saying one thing and another saying another. Then the proper course of action is going to court."

Linton also has well-formed views on one of the government's more controversial initiatives — mandatory ISP filtering — but he says, when Exetel approached the government to take part in the trial it was knocked back. Many of the ISPs in the pilot were much smaller than Exetel. Linton says he does not know why Exetel was not selected.

In the end Exetel went ahead with a trial of its own, conducted by New Zealand company, Watchdog International. He says he did it because the company wanted to know what it may face, should the policy be brought in. It turned out that his customers were of the type that Conroy's filter was meant to frustrate.

"We were told that some of the more pernicious sites scored a surprising number of hits, which is disappointing to learn. But would it slow the internet to a crawl? Would it cost you a fortune? The answer from our small tests was that it wouldn't have any effect at all."

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