news The nation’s number two telco Optus has described the idea of getting Telstra to give up part of its copper network for a fibre to the node upgrade as “a litigator’s picnic”, due to the complex legal issues around compensation for the telco handing over its property.
Over the past few weeks, the Coalition appears to have evolved its alternative National Broadband Network policy to focus squarely on the so-called fibre to the node network rollout style which was rejected by the Labor Federal Government’s expert NBN committee in early 2009. The current NBN project revolves around a fibre to the home network.
However, speaking to a parliamentary committee on the NBN yesterday, Optus director of government and corporate affairs Maha Krishnapillai described the potential FTTN model as being legally difficult. “You will be aware that we did put forward a proposal for fibre to the node on NBN Mark 1, if you like, and part of that assessment process was very clear that there would be significant compensation issues to pay to Telstra for either buying out or shutting down components of that last mile copper,” the executive said.
“It was impossible for us to put a specific dollar figure because effectively there are some tests around the High Court you would probably need to go to. I would make the observation that clearly that is a litigator’s picnic and there would be significant compensation, I think.” The issue is believed to revolve around a section of the Constitution which states that the Government must compensate property-owners for the value of their property if it acquires it.
However, Krishnapillai also noted there were difficulties with the FTTN approach in general. “Certainly there are advantages and disadvantages on any broadband proposal we have seen as part of government policy, but there are significant issues that remain in today’s regulation of the copper network that would remain in the fibre to the node network,” he said. “They are simply moving the node from an exchange deeper into the network but you still have the same gatekeeper issue at the node.”
“We have indicated that we have had some concerns, I guess, around where the gatekeeper power remains. If Telstra remains in control of the copper from the node to the customer’s premises, we are in exactly the same position as we were beforehand in terms of having to trust and hope a regulator can enforce quality of service, pricing and enforcement of those services, as we do today. In other words, the last mile would not change whatsoever, so whatever we have today—and we do not think it is satisfactory today—will be what we have with a fibre to the node network.”
However, Krishnapillai noted later on during the proceedings that Optus’ view on a national fibre to the node network would change if, as Shadow Communications Minister Malcolm Turnbull put it, “the copper between the node and the customers’ present premises was not owned by Telstra or controlled by Telstra in any way”. “Absolutely,” said Krishnapillai. “We have said all the way through that the key issue for us is the ability of a wholesale provider to discriminate against a variety of retail providers, particularly itself.”
Asked by Labor Senator Doug Cameron whether Telstra’s ownership of its copper network could be “removed”, the Optus executive said it was not a question that he could answer directly.
It is interesting that as certain aspects of the NBN are delayed more and more (first by the agreement with Telstra, then by construction contractors, and perhaps recently by the delay in Telstra’s Structural Separation Agreement being signed off by the Australian Competition and Consumer Commission), debate in the sector is turning more and more towards what would happen if the Coalition wins the next Federal Election and rolls the project back somewhat — or at least pauses and modifies it.
It’s hard to know whether Turnbull and the Coalition are completely serious about the FTTN plan they have advanced over the past few weeks, or whether — as the Liberal MP seems to do so often — Turnbull is forming policy while learning about the whole concept himself on the run (for those who doubt this statement, consider Turnbull’s HFC revelation after returning from Korea).
But Optus’ statements this week in Parliament reveal that the telco, at least, takes the prospect of being faced with a FTTN NBN proposal seriously. And it’s not a vision of the future which appears particularly enticing to the SingTel subsidiary.
And why would it be? Under a FTTN NBN, Optus would lose a great deal of the ground it has gained with the current FTTH NBN. It would lose a vast chunk of government investment in the telco sector, its $800 million customer migration deal would likely die — even as its legacy HFC cable network would live — and it would be forced anew into a future dealing with Telstra constantly as a wholesale provider — a future which it had hoped to avoid with the formation of NBN Co.
Optus’ statement also forms somewhat of a reality check for Turnbull. Like it or lump it, the Member for Wentworth must face the fact that Telstra’s deal with NBN Co will structurally separate it in the long run. It remains extremely unclear, as Krishnapillai pointed out, whether a similar deal could be satisfactorily signed with respect to fibre to the node. And at that point, Telstra would also be dealing with the issue from a position of renewed strength.
Welcome to your new life as Communications Minister, Mr Turnbull is what Optus is saying. If you want to push through a FTTN NBN policy and break Telstra’s will in the process, you’re going to have to have balls of steel, endless patience, boundless energy, and a level of tenacity in dealing with regulation in the telecommunications sector the equal of … dare we say it? Communications Minister Stephen Conroy.
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