ISPs lukewarm on Telstra-NBN Co terms

$11 billion deal progresses but not all good news for some

Australia’s major internet service providers (ISPs) have issued a lukewarm response to the news of Telstra and NBN Co coming to an agreement on commercial terms, months after initially envisaged and following numerous delays in negotiations.

Exetel chief, John Linton, said he believed the Telstra-NBN Co agreement would have no impact on Exetel, nor any other communications provider, as far as he could see.

“The eventual replacement of Telstra by the NBN Co, assuming that happens, is several years away in any meaningful quantities and as can be seen from today’s half yearly report, a great deal can happen to the Australian communications providers in that time,” Linton said.

“The key question for us at the moment is how long Telstra will continue to try and ‘win back’ ADSL customers by spending very large amounts of shareholder money that butchers its own revenue and profit lines?”

Linton has previously commented on this theme in a recent blog post, arguing that Telstra’s attraction of some 600,000-plus residential ADSL customers from rivals was a Pyrrhic victory.

“Losing customers is always a bad thing but when the largest provider in any supply chain spends an amount of money greater than all of its competitor's (bar one or two) gross annual revenue to attack their customer bases then its an inevitable result,” Linton wrote.

iiNet director of regulatory affairs, Steve Dalby, said the ISP was keen to see the “meat and bones” of the agreement, but there was still much to be done before a deal between NBN Co and Telstra was concrete.

“Speaking generally, we are very supportive of the structural changes which accompany the NBN project,” Dalby told Computerworld Australia. “They are a long time coming and very welcome.

“NBN is not just about fibre and gigabits, it's about a much less constrained competitive environment, greater coverage and a national, publicly owned network infrastructure which will be more reliable, have higher performance and more utility than the present, privately owned and restrictive model."

With the advancement in the NBN Co-Telstra negotiations announced this week, it was now time for the government to more clearly articulate how it would use the NBN to drive economic growth, Dalby said.

“I look forward to the development of a national ICT strategy to exploit this new infrastructure across all threads of the Australian economic fabric,” he said. “It can't come soon enough for us.”

Optus government and corporate affairs director, Maha Krishnapillai, said that while teh telco welcomed the news that Telstra has reached commercial terms with NBN Co and an in principle agreement with the Government, it would reserve the right to comment until all aspects of the agreements are made public.

"It is imperative that we have full transparency of the agreements to ensure that no compromises are made that will provide Telstra with an unfair market advantage," he said. "More importantly, the NBN Companies and Access bills which are currently before parliament are crucial pieces of legislation that will provide the appropriate checks and balances and regulatory arrangements for the NBN as it rolls out.

"For example, it will guarantee the wholesale only nature of the network and ensure that we avoid the sort of conflicts we have today, where the dominant wholesale provider is the leading retail provider."

Krishnapillai said Optus had proposed some specific and targeted amendments which it believed would strengthen the legislation.

"These include greater transparency in reporting and provision for a rigorous review of discounting provisions by the ACCC," he said.

Follow Tim Lohman on Twitter: @tlohman

Follow Computerworld Australia on Twitter: @ComputerworldAU

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