Bass Strait limits options for Tasmania's NBN customers
An NBN customer in Hobart has a choice of 13 retail service providers, whereas a customer in Kiama in NSW has a choice of 45, according to the NBN Co website.
The NBN is being built with 121 points of interconnect (PoIs). Retail service providers must deliver their traffic to the PoI, connecting each customer they want to serve. It is not economically feasible for them to connect to every PoI so they use intermediaries.
NBN Co has PoIs in Hobart and Launceston, but there are only two means of getting traffic to these: fibre-optic cables across Bass Strait owned by Telstra and Basslink. Service providers say the prices charged are prohibitive.
Andrew Connor, a spokesman for consumer lobby group Digital Tasmania, said Tasmanians were "missing out on the innovation that smaller players have generally provided to the Tasmanian market. Adding Tasmania to some national contracts offered to small service providers [by intermediaries] doubles the cost."
Rob Appel, chief executive of ISP AusBBS, uses the services of Nextgen and AAPT to reach NBN customers, but neither of these at present serves PoIs in Tasmania.
"We simply can't offer services at all in Tasmania unless we go through a provider who is down there ... but the more aggregators we have, the more complicated the whole offering becomes," he said.
ISP Exetel says bandwidth cost from Tasmania to Melbourne is "50 to 100 times more expensive" than from Brisbane to Perth.
Prices for capacity across Bass Strait are set by the ACCC. It says they should be no more than 40 per cent above the price for similar mainland distances.
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Frequently Asked Questions about this Article…
Tasmania has fewer NBN retail providers largely because of the cost and limited options for getting data traffic across Bass Strait. Retail providers must deliver traffic to NBN Points of Interconnect (PoIs) in Hobart and Launceston, and the only two ways to do that are via fibre owned by Telstra or Basslink — costs many providers say are prohibitive, so fewer choose to serve Tasmania directly.
According to the NBN Co website cited in the article, an NBN customer in Hobart has a choice of 13 retail service providers, whereas a customer in Kiama in New South Wales has a choice of 45 providers — illustrating the limited provider choice in Tasmania.
PoIs are the 121 locations where retail service providers must hand over traffic to the NBN. Because it's not economically feasible for every provider to connect to every PoI, many use intermediaries. The number and location of PoIs — and who services them — directly affects which providers can offer services in a region and therefore competition and choice.
The article states the two means of getting traffic to Tasmania's PoIs are fibre-optic cables across Bass Strait owned by Telstra and Basslink, and service providers say the prices those owners charge are a barrier to entry.
ISP Exetel is quoted in the article saying bandwidth cost from Tasmania to Melbourne is '50 to 100 times more expensive' than from Brisbane to Perth, highlighting a significant cost differential that affects service provision.
Because small providers can't economically connect to every PoI, they go through intermediaries or aggregators that already service those PoIs. But the article notes this can double costs for small service providers when adding Tasmania to national contracts and makes offerings more complicated, which can deter smaller players from operating there.
The Australian Competition and Consumer Commission (ACCC) sets prices for capacity across Bass Strait. The article reports the ACCC says those prices should be no more than 40% above the price for similar mainland distances.
Practically, Tasmanian customers face fewer provider choices and may miss out on innovations smaller providers deliver, according to consumer group Digital Tasmania. For everyday investors, limited competition and higher interconnection costs can influence how ISPs expand, compete and price services in Tasmania — factors worth watching when assessing companies exposed to regional broadband markets.
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