Turnbull tells NBN Co's CEO he should back down

While Malcolm Turnbull has attacked NBN Co's revised SAU proposal, industry analysts agree it is a step in the right direction

Malcolm Turnbull has attacked NBN Co CEO, Mike Quigley, stating NBN Co’s backdown with its recently revised SAU proposal means the CEO can no longer claim a government-run “communications monopoly” will be friendlier than a private sector option.

NBN Co released its revised Special Access Undertaking (SAU) on Wednesday this week.

Turnbull, shadow minister for communications and broadband, said having to revise the SAU indicates Quigley should back down from his claim that the NBN was being built for the public good and not to maximise profit.

Quigley has previously stated the NBN "is being built as a public good. It's not being built to maximise profit. The way in which we've approached the network design and the network build is to provide the Australian public with the best possible utility network we can at the lowest cost as a public good."

However, Turnbull said there are three significant problems with NBN Co’s proposed SAU which refutes Quigley's assertions. For example, pricing constraints that are not applicable to all situations. This would allow NBN Co to increase prices and its returns with its CVC charge, Turnbull said.

NBN Co has also failed to provide service level assurances to RSPs, which would mean telcos such as Telstra and Optus would be unable to guarantee a set level of quality to end users, according to Turnbull.

Finally, he believes NBN Co could go unassessed by the Australian Competition and Consumer Commission (ACCC) over whether its planned investment in the network is prudent.

“All of this boils down to one elementary flaw of the NBN. A monopoly given unchecked power to recoup its capital expenditure will always charge consumers more than an enterprise which has invested wisely,” Turnbull said.

He also stated: “Instead of going back to the drawing board to find new ways to gouge consumers, NBN Co should be given the freedom to explore new ways to invest its capital more cost-effectively.”

However, industry analysts have been less critical of NBN Co’s revised SAU proposal.

Paul Budde, communications analyst at BuddeComm, said the review is a clear indication that a new regulatory regime is now in place and “No longer bullied by a vertical integrated telco as we had in the past”.

He said it is in NBN Co’s interests to have happy customers. However, NBN Co also needs to ensure the NBN stays economically viable.

“Another major difference with the past is that NBN Co, the industry and the ACCC are all talking to each other. Trying to solve these problems requires co-operation, something that again is rather new to the industry,” Budde said. “Players will have to learn to trust each other, and that is a slow process.”

Budde said once this trust is established and the adversarial positions of the past have ceased, it will be easier to manage the NBN over the next 30 years.

Chris Coughlan, director research consulting at Telsyte, said it is not surprising that NBN Co’s initial SAU was rejected – submitting entities typically submit proposals weighed more in their favour with the expectation it will be rejected by the ACCC.

“Then through discussion and negotiation with the ACCC, lobbied by industry through submissions, the entity will establish what will be the minimal acceptable position. This is what played out with Telstra's SSU submissions,” he said.

“In this case NBN Co has submitted a new SAU framework as the ACCC had signalled that the current submission was unlikely to be accepted. It would appear to be a better format and provides more certainty and flexibility for industry and the ACCC in the longer term as Module 1 only has a 10-year life[span].”

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More about: ACCC, Australian Competition and Consumer Commission, BuddeComm, CVC, etwork, Optus, Quigley, Telstra, Telsyte
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Comments

Abel Adamski

1

Malcom stop making a fool of yourself. It is National infrastructure to provide the communicationds foundations for the future. Your "prudent" beancounter approach would effectively cripple it and in reality be a big fail.
Your solution would provide just acceptable for rural/regional for now and inadequate for the future, Obviously you wish to deny Rural Australia any real opportunity (1+1=2) . Why?. Only possible valid reason could be to drive the rural population into the cities to drive up propert prices and rents both residential and commercial for your conservative mates. Plus ensure minimum competition for Murdoch. Considering the taxpayer will NOT be footing the bill, what other reason could you have ?

Paul K

2

It's hardly a claim (that the NBN was being built for the public good and not to maximise profit) as is plain to everyone except the LNP.

Alex

3

... and their trusty sheep blurting out baa at every forum.

Allan G

4

Malcolm Turnbull continues to demonstrate his ignorance and lack of vision with statements like these - there is a reason the NBN must be a monopoly, as was proved with the Telstra / Optus HFC fiasco of the mid-late 90's.
It would be a huge waste of resources and investment to duplicate core infrastructure components such as rail networks, electricity, water and sewerage distribution grids and highways that would be run by rival companies - note there is a big difference between duplication and fault tolerant redundancy - these types of infrastructure can only be monopolies since competition does not make sense.
It also makes economic sense that these monopolies are managed by a government agency (or equivalent) for pricing regulation of the monopoly, leaving the commercial competition market open for the provision of goods/services across the infrastructure (eg. providing electricity generators, water/sewerage treatment plants), or in the case of the NBN, the providers of multimedia content or Internet services.
I also see a key scalability in the NBN providing the fibre connectivity between endpoints everywhere as the crucial backbone capability, which can then be complemented by wireless services as consumer requirements and resource limitations such as spectrum bandwidth allow for their commercial viability.

Neil W

5

I think Mr Turnbull has a valid point. The notion that somehow Telstra was always the bad guy and NBN will always be the good guy is very naive.
For sure in 10 years time we will (all those who are left) be groaning about that evil NBN Co.

Abel Adamski

6

Neil W
Telstra is just a listed company like News Ltd. that is looking after it's shareholders interests. Maximise value and dividends.
The best interest of the Nation is NOT their concern. In fact if they put the National interest ahead of their shareholders interest they are BREAKING THE LAW and the board could be charged and sued by the shareholders. So of course it will Lobby and manipulate and make out like a bandit. THAT IS NOT WRONG the board is doing it's legislated job.

The NBN is a Government Not a listed entity whose charter is the National best interest. It is controlled by the Government which is it's only shareholder and strictly regulated

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