NBN delay is NBN Co's fault, not ours: ACCC

ACCC chairperson Rod Sims has answered questions over of the watchdog's approval of an $800 million deal between Optus and NBN Co

The chairperson of the Australian Competition and Consumer Commission has hit back at claims from NBN Co that the time it took the watchdog to approve Telstra’s structural separation is to blame for a six-month delay to the National Broadband Network (NBN).

ACCC chairperson, Rod Sims, told a joint committee on the National Broadband Network in Canberra last night that NBN Co was responsible for the delay for handing the ACCC the agreement late.

While NBN Co had forecasted the ACCC approval of the structural separation by mid-2011, Sims said the ACCC didn’t receive the document until the end of July 2011.

“So to approve it in one month would have meant we just close our eyes and sign,” he told the inquiry.

“I think the key delay was the negotiations between NBN [Co] and Telstra,” Sims said.

“Our role necessarily was always going to take an amount of time, whether that was four or five or six or nine months. These things do take time, so I don’t think we contributed to the delay at all.”

NBN Co announced last week that a nine-month delay to the NBN had been a result of a delay in the approval process by the ACCC of the $11 billion definitive agreements between Telstra and NBN Co on Telstra’s structural separation.

While NBN Co stated it had been able to make up some of the time lost, the NBN is still running six months behind schedule.

Sims also fielded questions from the committee on the ACCC's approval of an $800 million deal between NBN Co and Optus, with Sims previously stating the agreement was anti-competitive.

The ACCC chairperson has come under fire for the approval, including from Malcolm Turnbull, the shadow minister for communications and broadband, and a member of the joint committee.

Turnbull has previously slammed the ACCC approval of the Optus and NBN Co agreement, stating that “nowhere else in the world has a government established a new fixed line monopoly and actually paid billions [of] dollars to the owners of the HFC networks not to provide broadband and voice. It is the very pinnacle of anti-competitive behaviour”.

“If cherry picking isn’t the issue, what detriment is there by leaving the competition in place?” a member of the committee asked Sims.

“At first glance it is a serious take-out of the main competitor and not something that sits comfortably with us,” Sims said.

Sims conceded that the cost of servicing the HFC network would be borne by Optus and not by the public, but reinforced earlier comments that the positives of the agreement for outweighed the negatives.

“Society is spending less resources if NBN does it than if Optus does it … The money paid is not relevant to the calculation. It’s all about where extra resources are going to service those customers,” Sims said.

“The HFC areas are quite wealthy areas, so we think the NBN would want to be there even to get the two-thirds of customers because they would be more likely to want high speeds than people in the rest of the country.

“We weren’t concerned about the risk of [Optus] going out of business. What we were saying is that over time as people wanted higher speeds, Optus would transfer its customers off the HFC onto the NBN, but we don’t know when that is. It may be 10 or 20 years out – we don’t know.”

Optus currently has 433,000 customers on its HFC network.

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13 Comments

Francis Young

1

Disingenuous half truth from Rod Sims here, folks. Yes, the NBN contract was late, but it was the ACCC that caused the major delay.

Here's what actually happened.

The original NBN Corporate Plan 2010-2013 was annoyingly delayed to December 2010 after the November 2010 capitulation of the ACCC to a handful of longhaul fibre owners.

Telstra/Optus/Soul/TPG lobbied the ACCC to massively increase NBNCo's efficient architecture design of 14 Points of Interconnection in capital cities to provide for 202 POIs, with the intention of forcing small retail providers to purchase longhaul fibre capacity from them to reach regional customers.

The ACCC comically chose to split the difference and decreed there shall be 121 POIs. At a stroke, they forced NBNCo to now negotiate access and facilities in a further 80 suburban and 40 regional localities, which they would not have needed to do in the original plan. This also raised the operating costs of NBNCo, which had to be recovered in a higher common wholesale access price, in turn recovered from customers. And it created a two-tier cost structure for four providers versus everyone else.

In summary, it is very easy for the ACCC to say NBNCo took more time to deliver the contract, but the ACCC's flawed decree on POIs was a major cause behind the contract delay.

Oh, and the task of determining the optimal POI design and number should be handed back to NBNCo engineers, in order to deliver the stated project objectives of the lowest possible universal wholesale access price and maximise the potential for retail competition.

fourbypete

2

Judging by the comments ( or lack thereof) very few people seem to be interested in the truth. Good on you for putting it out there!
But the message needs to go Australia wide!

fourbypete

3

My great concern for the NBN is that when people who have the NBN connection running, they will then vote Liberal and join all the silly voters who think that Abbot can do it better, Thereby leaving the rest of the country with substandard communications.

gnome

4

@3 fourby, the really great concern is that when the Coalition is elected, they will abort any future contracts of NBN so that all we will be left with is whatever had been signed off before then.

After which they will impose a shonky grab-bag of quick and dirty 'broadband' bandaids, which they will disgracefully and misleadingly continue to call NBN.

And the final coup de grace will be when they do another Telstra-type fire sale and sell the lot off. Now let me see - who would be likely to want to add to their monopolistic stranglehold by getting their foot on a national broadband network?

Abel Adamski

5

What is truly scary is the consequences once the Libs get in

http://technologyspectator.com.au/why-nbn-shouldnt-follow-atts-lead

http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

http://en.wikipedia.org/wiki/Tolstoy_syndrome

Jas

6

Francis young...

Efficient architecture?

Your network needs to be design which a guiding principle, one of them is competition and access...which is why accc is at them nbn

If that means you take longer and cost more, it's probably for a reason and why engineers scrutinise the nbn.

If the nbn wants to start with 14 POI and in its staged deployment phase in POI expansion in its engineering to need its projected budget and timeframe , it would have to be accepted by the accc... No smoke and mirrors please.

This would need to be assessed then if this deployment plan meets the criteria as you are playing with the longevity of ISP and free market principles.

Of course due process and business impact determine engineering and deployment outcomes such as cost and time. You have to really ask did the nbn plan hold up or did the accc have a case.

Abel Adamski

7

Jas
Competition and free market principles, the very reason we have an advanced national communications system covering all of our Nation at no cost to the taxpayer.
Oh No, we don't how can that be so ?

http://delimiter.com.au/2012/08/14/blowouts-no-the-nbn-is-very-much-on-track/

Actually look up this link and do some research. The US Feds are paying $1,000 in subsidies for every Man Woman and child in the US to fix the consequences of what you and the Libs and Media worship. That is on top of many Billions in subsidies by States, and Counties and Cities )with NO Return to the Taxpayer/Ratepayer) to the private Companies who have still largely failed to deliver.
With any imperfections the NBN will deliver what the US methodology cannot for all the subsidies and at no eventual cost to the Taxpayer

http://technologyspectator.com.au/why-nbn-shouldnt-follow-atts-lead

Abel Adamski

8

You would do well to heed the wise words of Bernard Baruch.

“Every man has a right to his own opinion, but no man has a right to be wrong in his facts.”

Jas the tt-boy

9

Curious... In the labor govt RFP to carriers in TERRIA etc. symposium it request that consortium carrier must address the govt criteria for nbn. Telstra did not address SME business plan...u remember...

But wait now govt say...no RFP we decide ourselves...but wait just cos now you are going to build withTAXPAYER money that you don't need to address overarching guidance criteria eg. Competition? What is this I see ?

Of course the catch, the nbn require accc consent as it is augment telco industry by absorb carrier and Telstra infrastructure ...can you deal with Telstra with going accc ok?

Finally, your nbn problem is your business and regulatory guidance was not finalise before you propose ur engineering solution architecture... Haha can we see now? Or maybe u know this to happen already

...this require much investigation ie. called feasibility study. Engineering require guidance and must have framework to fit in regulatory system. Must also mitigate project risk. All factor into deployment management

Ttboy or jas

10

Again... I ask you accc looks like Done impact study...

Ok, nbn corporate plan, 8 yrs...but explain how nbn will impact ISP ...especially if nbn take over Telstra. How is competition affected by nbn.

First look 14poi offered, nbn to take Telstra infrastructure ... But nbn is wholesale competitor ...should nbn have to wholesale back haul to ISP? Looks like the 14poi says they don't want to...for how do ISP connect? So if nbn grows big does that mean nbn control all of back haul? Even if they wholesale to ISP..ISP can't connect to back haul ...but accc already approve 14poi?wtf? Will ISP die? Wait worse....cos nbn now control Telstra too? What benefit to the ISP retail business? ...ah can't do business no more...only option ? Lol wholesale from nbn only? Wow....

Jas.

It's me jas again

11

Wait wait test this...why not nbn ULL? Why it won't work 14 poi...

Can nbn sell ULL to ISP? Why not? ... Why do ISP must purchase cvc ? Why cannot ISP purchase fibr last mile and by pass nbn back haul, can't because no poi...from nbn fibr access CAN to ISP back haul why? No poi. Solution ? Use nbn back haul cvc...means? Pay money.

14 poi mean all wholesale access seeker must by end to end VC ... Mean u cant bypass for haul because 14 poi not enough. This is a lock in....

Eg.100 poi... ISP make competitive back haul by connect to nbn poi-poi-poi bypass nbn back haul charge...why not? If ISP build own back haul to many nbn poi why cannot they use it? Why have to use nbn? Nbn then just supply last mile....

But 14 poi won't wok why? Pointless for ISP .... Maybe now u see why many poi is not good for nbn ROI... Maybe numbers not look too good. Because "competition" in back haul area.

This problem same for SME ..................

Abel Adamski

12

jas
1) POI's. There is a subsatantioal cost for connection to a POI, to have National coverage for a RSP theyMUST connect to every POI, no problem for Telstra, Optus, TPG they have the National fibre network and are large enough as is iiNet to absorb the cost. However smaller RSP's cannot afford the large cost of connecting to 121 POI's Plus paying for the backhaul to get there, forced to lease off another fibre provider. So forcing the smaller RSP's either out of business or limited to local operations only. = So limiting competition, increasing costs both for the NBN and the RSP's that don't have their own substantial fibre networks giving them a major advantage.

2) Sell ULL. In case you were unaware TELSTRA OWNS the copper which is degrading anyway, ULL is only available in limited localities anyway. So NBN would have to buy or lease the copper then have to fork out a fortune patching and maintaining it. Many Billions anyway for no real medium or long term benefit. No ubiquitous business capable network, still need modems and all the hassles of ADSL or VDSL. This would also mean no fibre to the area unless FTTN so any future upgrade would not have economies of scale or established teams to provide at minimum cost. So extremely expensive. More than likely Customers will have to pay many thousands to have the fibre connected picemeal and the FTTN deployment and cabinets would really not be compatible with a FTTP solution. Poor economics especially considering the bang for buck
3) Taxpayer money si not Building it, haven't you noticed the fuss over the interest on the borrowed money. The Coalition and Media deceptions are being exposed, you weren't one of those suckers they conned to believe the taxpayer was paying for it were you?

Did you read that link I provided
http://technologyspectator.com.au/why-nbn-shouldnt-follow-atts-lead.
AT&T are shutting down their copper and DSL, they are even quitting on FTTN even though they received Billions in subsidies to provide Fibre.
With a competitive private sector model, look to what happens in the US as our future, Their U-Verse is twice the NBN price, even their DSL is dearer, because of competition and the ROI requirements and there is no wholesaling. Many are concerned that the US's competitivenes will be handicapped

Abel Adamski

13

jas
Did you notice recent news, the Vic. Government was complaining about the speed of the rollout in Vic. even though they tried to sabotage it.
The interesting bit was that the private sector was not prepared to install and provide alternative as they could not compete with the NBN when it arrives, they would be more expensive, especially if the NBN takes half their customers leaving the other half to pay off their network, operating costs and a profit
Infrastructure Competition provides cheaper and better ?

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