NBN business plan good for competition: ISPs, telcos

Industry welcomes business opportunities

The NBN Co Corporate Plan will strengthen competition and bring new business opportunities, according to local telecommunications and ISP companies.

The business plan, released on Monday 20 December, outlined 120 points of interconnect (POI) that will offer mobile services backhaul and a feed from the NBN will cost telecommunications wholesalers $24 a month.

iiNet chief regulatory officer, Steve Dalby, said the wholesale broadband prices are identical to what it currently offers consumers.

“We won’t be dramatically changing our prices but as the network won’t be available until next year, there is time to do research and differentiate our services from other providers,” he said

Dalby said the company has been a major supporter of the NBN and he sees opportunity for the company once the rollout begins.

“It opens the market up to competition and means we can provide services to consumers all over Australia," he said.

Internode managing director, Simon Hackett, said that 120 POIs is not his preferred outcome in a company blog posting.

“In particular, 120 points of interconnect will generate higher setup and running costs for all industry players except Telstra, as it looks like these points will all be Telstra exchanges,” he said.

Hackett claims that the large number of POI will drive the industry toward having a smaller number of bigger players.

“The overheads of operating in 120 POIs may be too much for very small players to afford,” he said. “Internode is large enough to do this, but I am a bit concerned for anyone who is much smaller than we are.”

He added that it is great to see the pricing “out in the wild”.

“NBN Co has been highly consultative and so I’m quite sure they’ll listen to views on their pricing with interest now that it is released,” he said.

Australia On Line CEO Michael Bethune said in a statement that the ACCC has forced a redesign of the NBN, requiring that an ISP connect to 120 mandatory points around the country to provide national coverage rather than the originally planned 12 points.

"The ACCC has forced the NBN to increase the number of points we have to connect to by a factor of 10 just so we have to use Optus' fibre to get there, at the same time as the Government is depriving Telstra retail of their fibre assets through structural separation,” he said.

"This dramatically raises the investment required for an ISP to provide national coverage. It also raises the barriers to entry for rural competition. It will inevitably result in less retail competition in less populated rural areas where ISPs get less bang for their investment dollar," said Bethune.

A Telstra spokesman said in a statement that the company now has more certainty on the POI, NBN Co’s pricing and its business plan.

“These are important issues for consumers and the industry and are critical to the value of our agreement with NBN Co,” he said. “So we understand the reasons why the government took the additional time to consider all the implications.”

As a result, Telstra has not yet been able to reach a definitive decision on its binding agreement signed between NBN Co and Telstra in June 2010, said the spokesman.

“All parties continue to work on resolving the outstanding issues and to target a shareholder vote by the middle of 2011,” he said.

Optus general manager, Andrew Sheridan, told Computerworld Australia the company welcomes the release of the NBN corporate plan which appears to be consistent with the NBN Implementation Study released earlier this year.

“In particular we welcome the government’s decision to accept the Australian Competition and Consumer Commission’s (ACCC) advice to enhance the prospects for competition on the NBN by significantly increasing the POIs offered to the NBN,” he said.

Sheridan said that until Optus analyses the location of the proposed POIs, he believes that offering more POIs than the 120 outlined in the plan would have ensured stronger competition in the provision of wholesale backhaul services.

“Competition in backhaul will encourage the industry and NBN Co to invest in future technology leading to greater price intensity and improved levels of innovation delivering greater value for consumers,” he said.

Vodafone Hutchison Australia (VHA) director of strategy and wholesale, Zac Summers, said in an email that the 120 POI will deliver a useful wholesale backhaul resource that will complement VHA’s current transmission arrangements without impacting on areas of the market where there is already competition.

“We are pleased the NBN infrastructure will overcome current bottlenecks and provide competitive access for mobile services backhaul,” he said. “We also support the principle of connecting our base stations to the optical fibre of the National Broadband Network at sites where a building has NBN access.”

Summers would not comment on the wholesale pricing rate prior to the ACCC process, which he said is underway to determine the actual wholesale price.

“We expect that the ACCC process will ensure that NBN Co pricing is based on the cost of building and operating the NBN, and that all cross-subsidies will be made transparent,” he said.

Follow Hamish Barwick on Twitter: @HamishBarwick

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Tags NetworkingNational Broadband Network (NBN)NBN business planNBNTelecommunications

More about Andrew Corporation (Australia)Australian Competition and Consumer CommissionAustralian Competition and Consumer CommissionetworkHutchisonIinetInternodeOptusTelstra CorporationVHAVodafone

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