TECHNOLOGY SPECTATOR: NBN Buzz - Keeping Optus honest

Optus and NBN Co have finally come together over the wholesale broadband agreement, not surprising given it still stands to gain $800 million from the government for a network it plans to shut down.

Technology Spectator

NBN Buzz is a weekly wrap up of everything that's going on with Australia's largest infrastructure project. For previous editions visit our NBN Buzz page.

It’s steady as she goes for NBN Co, with Optus finally deciding to bite the bullet and back the wholesale broadband agreement (WBA), but political showboating is never too far from the picture with the Victorian government expressing its disappointment with the NBN. Meanwhile, Telstra has fired back at rivals over wholesale ADSL prices and TPG has broken its long silence about Telstra’s revised structural separation undertaking.

Optus signs NBN Co WBA

There would have been considerable relief at NBN Co after it finally managed to get Optus on board with regards to its wholesale broadband agreement, given the telco’s stout opposition to the document so far. It would seem that the last minute concessions made by NBN Co earlier this month have been enough to end the standoff.  You would think that after five attempts at devising a viable WBA NBN Co would not have been in a mood to make further concessions, but it really didn’t have a choice against the recalcitrant ISPs.

NBN Co’s strong arm tactics of preventing them from signing up new customers unless they signed the dotted line was counterproductive, the NBN needs the customers, and given the leverage that the ISPs have with regards to dictating the future of the NBN a conciliatory approach was the only way forward. Optus has now become the 25th ISP to accept the WBA but that doesn’t mean the telco is done talking with NBN Co. The nation's second largest telco has made it quite clear that while progress had been made on the issue of regulatory oversight the current agreement was still not ideal. So there are still unresolved issues, which will no doubt figure in the talks between Optus and the ACCC over the long-term version of the agreement. For the time being NBN Co will be happy with the result, the 12 month contract is now set in stone and Telstra will join the party as soon as it’s SSU gets the nod from the Australian Competition and Consumer Commission.

Staying with Optus, the telco has reportedly withdrawn and resubmitted the authorisation application for its $800 million NBN deal. The move was made necessary after NBN Co backed down on its plans to stop Telstra from promoting its wireless internet services as a substitute for the NBN. Optus has had to incorporate this change into its deal with NBN Co and resubmit it to the ACCC. The deal should sail through without any problems but news has prompted The Australian's John Durie to point out that the $800 million handed to Optus to shut down its HFC cable is just another example of government largesse.  Optus has consistently downplayed the capabilities of the HFC network since the deal was struck in June last year.  The network is unlikely to be an "effective competitive constraint" to the NBN and the telco has said it does not possess the technical ability to supply wholesale access services over the network. With $800 million coming its way it's little wonder Optus isn’t interested in doing anything to the network anymore, other than shut it down. According to Durie, $800 million is too high a price to pay for decommissioning a network that was never going to cut it anyway. On the flip side the government presumably reckons that $800 million isn’t too much for adding 500,000 customers to the NBN.

Telstra, NBN Co give and take

With ACCC oversight a hot button topic Telstra was very much in the thick of things this week. Let’s start with the latest salvo from Telstra on the push by its rivals to get the ACCC to set prices and terms for wholesale ADSL broadband prices. As the regulator mulls over whether it should control wholesale ADSL pricing, Telstra’s rivals have clamoured to ensure the telco is kept in check. However, Telstra has told the regulator in its latest submission that the entire exercise was wholly "unwarranted” and unnecessary. Despite the fighting talk, there is clear acknowledgement that Telstra is prepared, and with the ACCC taking control of pricing and with billions of dollars at stake the telco is unlikely to rock the boat too much.  

The same sentiment applies to the current situation at the telco’s South Brisbane fibre network and the greenfields sites where it offers its Velocity service. Only this time it’s the ACCC and the government treading softly.  

The South Brisbane fibre-to-the-premises network has generated a lot of controversy with Telstra’s rivals making a justifiable fuss over access to the network. The ball got rolling last year when Telstra said it was going to replace the copper connections to about 20,000 premises on the South Brisbane exchange, which is making way for the new Queensland Children’s Hospital, with fibre. The likes of iiNet and Internode were none too pleased with the turn of events given they were losing their copper connection to their customers. On top of that there was unhappiness about the higher access prices and Telstra’s reluctance to allow rival telcos to provide support for naked broadband or multi-cast IPTV streaming services over these networks. What they want is NBN-level wholesale access on the networks but it looks like Telstra has managed to dodge that bullet.

As things stand, Telstra pretty much gets to do whatever it likes in this area because the deal struck with the government will see Telstra get regulatory exemption on pricing for the networks. In exchange, Telstra will provide "an open access wholesale service” on the network and I am pretty sure that Telstra’s version of "open access” is not going to be same as that of iiNet or Optus. There’s a good chance the networks will be absorbed into the NBN and the ACCC and NBN Co have bigger things on their plate at the moment, making the structural separation of Telstra a reality.

Better late than never at TPG

The split is likely to get the regulatory blessing next month but that hasn’t stopped TPG from finally releasing its scathing critique on the plan. TPG said in its late submission to the ACCC that Telstra’s revised commitment gives its too much wriggle room. TPG is still not convinced that Telstra is committed to charging its wholesale customers the same prices it charges its retail arm. 

Victorian government's silly  showboating

Finally, we end on a political note and another example of just how ridiculous the showboating around the NBN can be. The Baillieu government said in its submission to the Regional Telecommunications Review that the NBN wasn’t meeting the need of Victorian residents.

Victorian technology minister Gordon Rich-Philips, who wasn’t that long ago spruiking just how good the NBN was going to be for the state, said in a statement that the NBN alone does not address all telecommunications services that are critical for regional and rural Victoria, and the submission emphasises the importance of fixing mobile network coverage and quality – something that the NBN policy does not cover.

He added that the early stage NBN rollout had not prioritised the regions in Victoria and would not solve the issue of mobile telecommunications in regional Victoria — with the network to focus on fixed infrastructure.

The statement is wrong on so many counts that it’s not worth getting into, so I will point you in the direction of ZDNet’s David Braue  who does a great job of ripping into the state government's argument.

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