NBN delivers business case as Optus declares network anticompetitive

Optus has attacked a network rollout proposal put forward by the ACCC and NBN Co., saying the plan would actually reduce competition and result in another telco monopoly.

The comments come as the National Broadband Network Company has finally handed over its business case to the Government, with communications minister Stephen Conroy planning to release the details “shortly”.

The Australian Competition and Consumer Commission has finally closed submissions for its POI discussion paper, released on October 21. The paper discusses how many “points of interconnect” would be necessary for the NBN to sustain a competitive environment.

A “point of interconnect” is where a retail operator connects to the NBN. The discussion paper proposes a model where each capital city only has 14 POIs.

Telcos warn that not only does a limit of 14 POIs restrict just how much coverage a telco can offer, the use of POIs in rural areas will create a situation where existing backhaul links are made redundant.

“NBN Co has proposed a highly aggregated model for connecting to the NBN that would see interconnection practically offered at only a very small number of POIs located in each of the main capital cities,” Optus says in its submission, according to ZDNet.com.au.

“Optus is strongly opposed to this proposal since it will have a dramatic adverse impact on current and future investments and competition in the fixed line markets.”

The company also warned that if the POIs are as limited as the ACCC discussion paper proposes, then it would result in “significant claims for compensation, likely to run into the hundreds of millions of dollars”.

This isn’t the first time a telco has warned such limited POI infrastructure would result in compensation. Last month, AAPT chief Paul Broad told The Australian that if the POIs are as limited as the discussion paper puts forward, “they had better start writing cheques for compensation”.

However, telco experts have warned that the discussion paper is merely a preliminary document and the nature of the infrastructure plans will change as the network is rolled out.

Opposition communications spokesperson Malcolm Turnbull also released a statement of his own, saying that the paper has created more uncertainty in the retail market.

“After today the ACCC will no longer accept submissions to its public inquiry into the location of Points of Interconnect. This hasty process has created regulatory uncertainty for investors in backhaul – particularly in rural and regional areas – which can only reduce capital spending and push up prices.”

“This underlines our argument for a rigorous cost-benefit analysis of the NBN proposal which would objectively analyse all of our existing fibre infrastructure and identify the most cost-effective way of using it to deliver the objective of universal and affordable broadband.”

Meanwhile, the NBN Co. has finally delivered its business case to the Government, the company said yesterday.

“NBN Co, the company formed to design, build and operate a high-speed national broadband network, has today delivered its Corporate Plan to its shareholder ministers. Submission of a Corporate Plan is an obligation as a Government Business Enterprise.”

The confirmation comes after NBN Co. chief executive Mike Quigley said last month the project will produce a “return for the public which is above the bond rate on reasonably conservative assumptions”.