blog From a parliamentary committee into the National Broadband Network today (and associated submissions released over the past week) comes news that energy utilities want to be able to buy services directly from NBN Co. Quoth ZDNet yesterday:
“The energy industry has rejected calls from Optus, Telstra and the Federal Opposition for the National Broadband Network Company (NBN Co) to be prevented from supplying retail services to utilities, saying that receiving retail services would over-complicate energy networks.”
Telstra and Optus obviously don’t want the energy utilities to be able to buy services direct from NBN Co … because they want to be the middle man in any relationship end user customers have with the new national wholesale monopoly.
But the far more interesting than this question was the question posed by Liberal Senator Mary Jo Fisher to the committee this afternoon about whether or not a bank, for example could get a licence as a carrier and then use that licence to obtain services from NBN Co for internal use. The question is very pertinent, of course, because the banks have massive deals worth hundreds of millions of dollars with the major telcos — ANZ with Optus, for example, to the tune of $500 million, and CommBank with Telstra, to the tune of a full billion.
In my opinion, there is no way that a bank or an energy utility should be able to be classified as a retailer service provider and buy services from NBN Co — as fundamentally, these companies are end user companies, not service providers, and should be classified as such. There are companies like Macquarie Telecom which have been set up specifically to service the business market.
In addition, the line about whether an organisation is a retail service provider or not should not be whether they have a carrier licence — because the major banks are obviously large enough and have big enough legal teams to get one. This is a line which needs to be drawn very carefully but with a great deal of emphasis, so that nobody is unclear where it lies.
Thoughts?
Image credit: Michal Zacharzewski, royalty free
Retail Service Provider (RSP) is actually a better name – can’t really call them “Internet Service Providers” (ISP) any more, because the NBN will be able to deliver services other than just “internet”.
Just a (valid) terminology change.
Oops…bloody click finger happy!
Secondly…I don’t think the Macquarie example is valid – they are no different. They retail services to business. iiNet – (just to pick on them as an example) – provide retail services (primarily) to home users.
It’s all still retail, whether it’s the business or home market.
The question of utility companies being allowed to sell services…well, I’m a bit in two minds there. If they are going to sell services, they don’t necessarily NEED a carrier licence – you can operate under the category of “Carriage Service Provider” and be equally valid/legal as a provider of services.
Telstra and Optus are calling for them to be required to have one, because they are defending their turf. Carrier licences are worth a lot of money, and in trying to get one to be compulsory, Telstra and Optus are seeking to make it less attractive for them to enter the market by having that cost imposed on them.
Their biggest fear is that if the utilities are allowed to sell retail services, those utilities will be able to bundle up packages.
AGL would be a perfect example. They do gas. They do electricity. They might end up doing internet and voice services – imagine the package pricing they’d be able to offer people as a bundle. They’ll also easily be able to do connections for smart metering – (jury still out) – and turn themselves into a very attractive one-stop-shop.
That’s what Telstra and Optus fear – losing out to the existing utilities who can deal better with consumers with a bundle deal.
Should they be allowed to? I can’t see an issue…the NBN is all about fostering retail competition – Telstra and Optus will just have to sharpen their pencils, just like everyone else.
Arrrgh…did it again!
As for banks…I don’t think they should be allowed to do that. The legislation needs to clear that anyone with a carrier licence in an NBN world must not be able to “sell” services to themselves.
I haven’t read the rules for carrier licences for ages – (not since I was arguing with a SIP provider over caller ID information some years ago) – and I can’t remember for sure, but that’s largely how it already is.
The NBN changes things a bit – so I think it just needs to be clarified and made unambiguous. Sounds reasonable.
Renai –
Some of the utilities are already carriers (ie, licensed by ACMA to build, own and operate telecommunications networks). Are you suggesting they should relinquish this status in the post-NBN world?
For them, the value in purchasing from NBN Co is not necessarily to act as competitors to Telstra / Optus / Mac Tel, but to extend their networks without building their own fibre.
However, if a utility wants to enter the telecomms market as a telecomms player, why should it be prevented? Why would it be at a disadvantage to anyone else entering the market?
If the utility does not want to be an RSP, but merely wants to extend its control network, I still don’t have a problem. These guys either (a) don’t buy from the telcos, but run their own fibre, or (b) buy from Telsta and almost nobody else.
Remember that the NBN’s architecture is such that it won’t be supplanting either carrier fibre (where utilities use it) or utilities’ own fibre for long-haul applications. If Transgrid needs to get from Sydney to Broken Hill, it won’t do so on the NBN.
I think the era of the specialised Telco is suffering a slow and painful death already. When all you are is a dumb pipe provider then it’s quite hard to justify one’s existence. Already we are seeing services heavily supported by a higher value service (TPG). The NBN is just going to speed up this trend. Hopefully Telstra are being smart and will focus on their best asset, the LTE network, come NBN.
I think we need to distinguish between high level services and low level services.
In the former category I would include internet browsing, file transfer, video/voice transfer, cloud computing etc. In the latter I would include low level hardware monitoring and control such as might be undertaken for a distributed system e.g control plane of NBN itself, energy/water infrastructure smartgrids.
I question whether there is a genuine need for competition in the low level service sector – it might be better to allow the NBN to operate those retail services itself.
i tend to agree with this – as far as i understand it, utilities only seem to be requesting basic access services, rather than the whole gamut of services an isp (or RSP or carrier) might. if you are using the NBN for mere command and control of and between powerboxes thats not quite the same as using the NBN for carriage of service – hauling bits from the business/household to their destination. im not sure that a power company for instance would use the NBN as anything more than a mesh between devices – would their bits ever wind up on another network? in any case i think it is a slightly different kettle of fish and the basic nature of what they are asking for probably deserves its own treatment.
there should be limits though – Wyres mentions the power of someone like AGL who might be able to put together a bundle, and at the same time take away business from Telstra or Optus by chopping them out as middlemen (and anyone in that position must be crapping themselves at that sort of prospect). Provided the ACCC is given power to make determinations and set limits on access seekers id probably be happy with them to say “no, you require a full carrier license for that circumstance” or “you only require basic service; if that status does not change we will allow you to seek direct access from NBNco, under strict limits”.
“Retailer: A business which sells goods to the consumer, as opposed to a wholesaler or supplier which normally sell their goods to another business.” – buisnessdictionary.com
Obviously a bank (or whatever big network _user_) wouldnt be a retailer by that definition unless they also start selling to the general public in significantly greater qunaitites than they use themselves.
The services provided by NBN Co are not suitable for end-user consumption. To be an RSP you would need to invest in all the hardware to accept the NBN feed.
Also the other problem is the NBN provides that National telephone network as well!
It just all gets down to how they decide to technically define “carrier” under the terms of the carrier licence, who qualifies, what those “carriers” are allowed to sell, and to whom.
There’s no doubt whatsoever that the NBN will necessarily see a lot of definitions shift and migrate around the centre line a bit, but that’s fine.
In fact, it’s great – they don’t call it structural reform for nothing… ;) And it’s been needed for a long time.
Most people forget that the early steps of the structural separation of Telstra started some years ago, when the network arm was rebranded “NDC” – (Network Design and Construction) – ready to be split off and sold. Somewhere along the line, they stopped, and the NDC logos came off all the vans, replaced with Telstra ones again.
Don’t think it will stall this time.
I agree with your statements.
I believe the term “carrier” is defined in the Telecommunications Act which they are not going to change for the NBN, I have been told
Why shouldn’t they be able to? Bearing in mind NBNCo sell only one component in the chain (last-mile and possibly some backhaul within the state), why does it matter who buys it?
NBNCo isn’t allowed to retail but what NBNCo sells isn’t a retail service anyway.
If they really want to limit it, specify it in a manner that the majority of the purchased units need to be purchased for the purposes of resale. But if the banks what to screw the big Telco’s on those deals, I’m not fussed :).
I agree with this article completely, the utilities should either get a carrier license or go through an investment firm
NBN should be allowed to only sell to companies that provide goods or services at public infrastructure level over an extensive physical plant network or retail level over a data network.
This would include traffic management, rail, gas, and other utilities who do own extensive physical plant networks, but exclude banks.
The tricky part is in the wording.
Do we really think that every traffic light needs to pay $24/month for what would amount to barely more than a dial up connection? No. But do we think they should remain on antique copper? No.
So it makes sense to deliver services to public infrastructure.
*shrug*
So is the issue with these connection, to your mind, that they will be given a “better deal” then other providers ie a less then 24Mb connection at low cost?
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