The Australian Competition and Consumer Commission (ACCC) has come under intense fire after it announced its decision to tentatively sign off on the $800 million deal between Optus and NBN Co. The deal will see the subscribers on Optus’ HFC network migrate to the national broadband network (NBN), one of the many forced migrations that are part and parcel of the NBN. The deal is a win-win for NBN Co, which will gladly embrace the subscribers, and Optus, which will welcome the money.
However, for the time being it’s the regulator that is copping flak for essentially rubber-stamping a decision that was always on the cards. While the regulator has tried to cloak that fact in a statement that purportedly points to how close the decision was, a number of commentators have derided the move. The most vocal criticism has come from the opposition communications spokesman Malcolm Turnbull, who apart from labelling the draft determination an egregiously "contradictory” document, has hinted that perhaps this is a decision that is destined to be recanted following the period of public consultation.
There are a number of pertinent points raised here by Turnbull and the commentators, but let’s just remember that Optus had made it abundantly clear that it wasn’t going to put money into its network even before the NBN got started, through its decade of inaction. The reasons for this are simple: Telstra’s overbuild of almost 80 per cent of the network pretty much stole Optus’ thunder and the second is that even HFC networks will be superseded by a fibre to the home network. That’s not to say that there’s no place for the HFC network. In fact, there is a good case here for the networks to be actually used as the rollout continues. According to telco analyst Paul Budde, there is at least another five to eight years of life in both HFC and ADSL2 . This will be an interesting feature of the NBN story after the next election. If the Coalition does come to power it could force Telstra and Optus to upgrade their respective networks. The only catch will be the cost of such an endeavour and unfortunately, there is no way of predicting that cost without a cost benefit analysis that the Coalition is so fond of mentioning.
So is there place for infrastructure based competition in the post NBN world? That’s not how the ACCC sees it and it would point at the HFC experience of the 90s to reinforce that view. Also the assertion that Optus may at some point decide to reinvest in the HFC network is highly unlikely.
But what about the $800 million? Well at some point Optus was going to be given a chance to cash in its chips, especially in the wake of Telstra’s $11 billion deal. The regulator’s statement would suggest that as Australia’s second largest telco is getting a good deal, but when you have a government that is keen to fundamentally change the telco landscape then compensation will be handed out, some larger than others. While the ACCC’s decision is not final and its curiously worded statement raises some eyebrows, it’s unlikely that this decision will be overturned in a hurry, even if the Coalition wins the next election.
NBN Co boss Mike Quigley has come out of the senate estimates hearing relatively unscathed and all the attention on the ACCC should give him some breathing space before the revised NBN corporate plan is handed down.
The plan should generate plenty of commentary but Quigley has amply demonstrated he is not easily dismayed by the harrying of Coalition MPs and perhaps the greatest asset for Quigley is that he has clearly used the hearing to pre-empt a lot of the bad news that the revised plan may hold. He has highlighted the problems that the rollout has had to contend with and he might have plenty of talking to do once the corporate plan is revealed.
No on EMAs
In other NBN-related news, NBN Co has rejected the idea of using overseas workers on enterprise migration agreements to cover for skill shortages that may occur during the rollout of the NBN. The migration agreements came into frame after the federal government permitted the use of enterprise migration visas for Australia’s booming mining sector.
Given the contentious nature of these EMAs, the last thing the NBN needs to do is get embroiled in that controversy. Skills shortage is a fact of life in the mining sector but any move to move away from sourcing workers locally will be political poison for NBN Co and the Gillard government.
Telco eyes continue to pry on Tasmania
Elsewhere in NBN news, iPrimus hooked up its first NBN customer in Triabunna, Tasmania. The telco used the occasion to spruik their partnership with NBN Co and its new credentials as an NBN provider, saying the occasion was a milestone in their accelerated rollout of its broadband services.
iPrimus has aptly named their new NBN plan the ‘no worries’ bundle; but there may be cause for competition concerns with another telco, MyNetFone, also flagging interest in the island state.
This week MyNetFone joined the telco bandwagon announcing their NBN Co certification as both a retail and wholesale NBN services provider. In declaring their certification, MyNetPhone outlined their plans for expanding their wholesale arm, Symbio Networks, into what they call the "long over-looked market” of Tasmania.
With Tasmania being the first state to be covered in fibre, it wouldn’t be a long shot to expect every budding NBN service provider flocking to the island to test out their fibre offerings before the rest of the country is hooked up.