ISPs rip shreds off Opposition broadband policy

"What policy?" Major ISPs express disappointment at Opposition broadband plan

Four of Australia’s biggest Internet service providers (ISPs) have ripped into the Federal Opposition’s broadband policy as failing to provide a competitive market structure.

Representatives from Internode, iiNet, iPrimus and Optus have added their voice to the growing crowd of experts slamming the Coalition’s alternative to the National Broadband Network (NBN).

In a short but brutal reply to his thoughts on the policy, iPrimus chief executive officer, Ravi Bhatia, came back with two words: “What policy?”

Internode regulation general manager, John Lindsay, said most in the industry are generally supportive of the NBN as they understand fibre is future proof and that the Liberal plan had “harked back to an earlier era”.

“They really are just trying to relive OPEL and roll it out on a somewhat grander scale,” Lindsay said. “It is a fairly muddy policy and it is not particularly clear from what they are saying.”

Most of the industry acknowledge the commitment to building out competitive backhaul as being a positive part of the plan, along with conditional support for rolling out fibre to greenfield estates.

But Lindsay was highly critical of the Opposition’s insistence on “market” mechanisms to improve competition and investment. A point made abundantly clear by the Competitive Carriers Coalition (CCC) which said the plan would make competition worse.

“I find this market thing really fascinating,” he said. “I think when the Coalition say the ‘market’, at the policy launch Optus and Telstra got a mention. I think that they think the market is Telstra and Optus.

“Any time that you get three or four competitors, as you have on major inter-capital air routes in Australia, then you get low prices.”

He added the issue of how the market can actually pick up the pieces, as the Opposition hope it will, “is complicated by all of the issues around the regulation around wholesale access”.

“It is in the Coalition’s policy that they will work on fixing the current regulatory model. Tony Smith talked about negotiate and arbitrate as if he knew what it meant,” Lindsay said.

He pointed to Internode recently being kicked out of the South Brisbane exchange as Telstra rolls out a fibre network to 18,000 homes as an example of where access to infrastructure is weighted in favour of the incumbent and directly impacts other players.

The Opposition attempted to use this example as a success story of the market in its launch yesterday.

“What nobody is appreciating is there is no official product for access to that fibre to the premises service,” he said, while adding no compensation has been paid to the Government for the rights to roll out the network. “There is not business grade access, even on trial for it.

“The wholesale access model from Telstra is all about a lack of competition and a lack of regulation,” he continued.

While acknowledging the Federal Government has also failed to get its regulatory reforms through Parliament, Lindsay said any new government would likely face the same hurdles.

iiNet chief regulatory officer, Steve Dalby, applauded all parties for finally putting forward their positions but was highly critical of the Liberal plan.

“It was great to see all three parties there putting their points of view forward and I took positives from all three of them,” Dalby said. “The Liberal announcement is interesting but it seems to me a focus on the short term solution for customers that today have limited broadband access and are either in blackspots in the cities or in the regions. That is good but it is a short term and near horizon solution. It doesn’t really take us into the demand we will see on our broadband networks in the future and that is where I think the fibre-based NBN is really the answer. That is a technological platform that will allow us to deliver services to customers in the future.”

Another other major concern that the NBN brings that the Liberals don’t address is the structural separation of the network from the retail businesses.

“And that to me is fundamental. It is so important to the health of this industry, to relieve Telstra of these conflicts of interest,” Dalby said. “We owe it to them to provide that relief through some form of structural separation.”

Dalby said the Liberal’s don’t have an answer for that – just the opposite.

“Tony Smith said we will not break up Telstra, we sold it as vertically integrated business and we won’t do anything to change that. They are not backing away from that position and it is disappointing.”

Further, the iiNet chief regulatory officer said the plan was a recipe for entrenching Telstra and Optus’ dominant position when it came to possible tenders.

“What is likely is I can see a scenario under the Liberal policy where they go out to tender and someone like Telstra or Optus bids for it. Now, Telstra can bid for something like backhaul in a tendering situation at a very low price because they have the infrastructure already in place; it is already there they just don’t make it accessible to their competitors. So this is really rewarding Telstra for bad behaviour.”

Optus government and corporate affairs spokesman Maha Krishnapillai also warned there were questions over whether the coalition plan would limit competition and entrench Telstra's market dominance.

"What it doesn't do is fundamentally reshape the game, which is the ability for Telstra to continue to control access to that last mile," he said.

Additional reporting by AAP

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