blog Business Spectator commentator Alan Kohler has taken an axe to the Federal Government’s flagship NBN policy, describing the project as “effectively a joint venture with Telstra”, following a series of contentious issues erupting around the network in the past week. Writes Kohler:
“A large part of both the construction and operations budgets will be paid to Telstra for the use of its ducts and for the decommissioning of its copper wires. After it’s built, Telstra will be the NBN’s biggest customer … Telstra will be the largest supplier of backhaul. In fact, the ACCC has enshrined Telstra’s position as the key wholesaler in the future of Australian telecommunications.”
At this point I am finding it hard to disagree with his general thesis. While most of Kohler’s points are debatable, Simon Hackett’s critique of NBN Co’s pricing model, and the subsequent debate around the expected rise of both Telstra and Optus as NBN Co wholesalers, is an extremely disturbing turn of events. We should not allow NBN Co’s pricing model to be set in such a way that small ISPs have no choice but to buy wholesale services from Telstra or Optus. That would defeat the whole purpose of the NBN.
Image credit: Sigurd Decroos, royalty free
Dunno about this one. Sure – the NBN would be hard to build without Telstra’s involvement, but even if Telstra had absolutely ZERO to with the construction, they’d still be the largest customer of it.
On the other hand, without Telstra the copper might have been maintained – but this is the crux of it really. Telstra spend a shed load maintaining the copper network ever year – (and still not enough) – and coming to the NBN table, they will largely be relieved of those costs.
If you want to go to the Nth degree, you could say it is a joint venture, since Telstra are building the Brunswick first release site.
In the end, it’s all just arguing semantics at this stage.
Telstra is the elephant in the room and that’s that. They own the ducts and channels and these valuable assets cannot possibly be replicated………..utterly impossible.
Therefore Telstra calls the shots, this being a free enterprise system.
I think Thodey can be trusted to be fair, but businesslike.
Agreed.
Ultimately he has the legal responsibility to deliver the best possible outcomes for his shareholders. Amongst all the to-and-fro of getting the NBN to the starting line, I think Thodey’s has been admirable in his approach.
Sol Trujillo on the other hand…
@MichealWyres
“Sol Trujillo on the other hand…”
… fast tracked the NextG build, from which Telstra are doing extremely well thank you very much, at the expense of the other wireless carriers who are still in desperate catch up mode and in the future at the expense of future lost revenue to the NBN Co as customers flock to wireless BB only solutions.
Alain, do we really need to point you to ABS website again?
Do we really need to indicate the number of customers who used fixed line services in the 2009 to 2010 financial year increased by 80 thousand which shows a net increase in fixed line subscribers?
Yes, wireless is great, I use it all the time, yes there are a million new wireless customers in the 2009 to 2010 financial year, yes, the data usage stats do not include smart-phone data usage which likely accounts for the fact there was an apparent net decrease in wireless data usage, yes some companies are losing fixed line customers left right and centre, but Alian, once again, the net result was, and based upon the performance of companies like TPG, and will likely continue to be next year, a net increase in the number of fixed line subscribers.
Please go and study the list of wireless spectrum that is due to expire over the next 2-5 years.
http://www.acma.gov.au/WEB/STANDARD/pc=PC_364
Yep it’s pretty much all of it, so currently most of the wireless operators have substantially written down or written off the value of their spectrum hence one of the reasons why it is so competitive at the moment.
Now try and guess how much all those wireless operators and others are going to bid for spectrum for the next 15 years. Can you guess? No I can’t either, but given the size of the wireless market and the potential growth it’s going to be a big number with BILLIONS in it, and the winning bidders are going to have to pay off that spectrum somehow.
So lets just say it’s not going to be cheap and it’s not going to deliver IPTV, Foxtel, or probably video on demand, which leaves it right where it is now as a niche alternative or popular mobile complement to a basic or premium fixed line service.
Precisely.
Just as the fixed line market has evolved from where it was a decade ago – (just a way to make phone calls, and dialup to the internet) – to where it has been pushed close to its limits, it is now evolving again to where that “little hole in the wall” it will be needed for more things than ever.
There is only one thing that is certain…and that is change. Anyone who thinks things won’t change and we can stay just they way we are has a very narrow view.
The whole purpose of the NBN is as they say to “provide the infrastructure that will allow wholesale and retail service providers to deliver advanced digital services to the nation.” There is nothing that dictates how many ISPs must be allowed to exist, and so no defeating of purpose.
I just don’t understand the small corner store ISP nostalgia.
There are currently only 3 national wireless wholesale operators in a very competitive market, and economics 101 dictates that there will eventually be only a small number of national wired broadband operators under the NBN, but no one operator will be able to operate at existing Telstra like 50%+ margins without others entering the market.
Since we are gradually seeing the consolidation of ISPs and backhaul, or mini monopoly greenfields I can’t see how the situation would be better under any alternative scenario, or why it is best to ‘strand’ all the existing player’s backhaul for the benefit of those who have no skin in the game.
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