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Blog, Telecommunications - Written by Renai LeMay on Thursday, July 4, 2013 11:49 - 56 Comments
iiNet threatens to ditch NBN altogether
blog In one of the more outlandish statements we’ve seen regarding the at-times fraught relationship between NBN Co and its bevy of retail ISPs (RSPs), the nation’s number three fixed line telco iiNet has publicly threatened to walk away from its relationship with NBN Co, in a move which would mean NBN services would no longer be available through the telco. The Financial Review quotes iiNet regulatory chief Steve Dalby this morning (we recommend you click here for the full article):
“NBN Co needs us more than we need them and that is not portrayed in any way by their attitude,” he said. “If nobody signs their [wholesale broadband agreement] and nobody agrees with their [special access undertaking] and they have no success as a business then they’re f—ed.”
I’d like to write a fair bit more on this situation, and if I get time this week perhaps I will. But what I will say for now is that it is my opinion that Dalby’s threat here is purest bullshit of the highest order. I really cannot see a situation in which a national broadband player like iiNet would discontinue its relationship with NBN Co, and especially not as the fibre wholesaler is currently entering its massive ramp-up construction phase. Put simply, NBN Co doesn’t really need iiNet when it has the next two largest players — Telstra and Optus — locked in through existing government contracts. If Telstra and Optus offer NBN services, iiNet must as well. Anything else would be commercial suicide. With the evidence showing that a massive proportion of early NBN adopters pick iiNet as their RSP, iiNet does need NBN Co. Dalby’s team very much sees the NBN as a once in a lifetime chance to steal market share from Telstra and Optus, and I really doubt we’ll see iiNet walk away from this gold rush anytime soon.
To be honest, we’ve seen this ‘take no prisoners’ approach from iiNet before. Those with long memories will recall that in January 2012, the head negotiators from most of Australia’s major ISPs — at least including iiNet and Internode, but likely Telstra and Optus as well — informed NBN Co that they were not planning to sign the comprehensive wholesale agreement which it had labored with them for some 15 months to develop.
As with this morning’s example, at the time we saw the use of strong language by the RSPs in discussing their problems with NBN Co. As with this morning’s example, we saw negotiation through the media, specifically the Financial Review newspaper — no doubt chosen because of its credibility. And as with this morning’s example, the threats of walking away from the whole process ultimately proved to be no more than a negotiating tactic to ensure the RSPs got more from the NBN relationship than they would expect to otherwise.
Having said all this, there is some evidence that retail ISPs are able to play a bit more hard ball with NBN Co than others. Australia’s fourth major fixed line ISP, TPG, for instance, still doesn’t offer NBN plans and appears to be waiting to get on board with the new fibre paradigm until NBN Co actually shows that it’s capable of achieving scale. We’re betting TPG will find it a little easier to negotiate with NBN Co over the precise terms of its agreement after all of those tricky little contractual details have been hammered out by Telstra, iiNet and Optus first.
However, I’m going to call Dalby’s bluff on this one. There is, frankly, no way that iiNet will ditch its relationship with NBN Co and walk away, no matter what the circumstances. This morning’s comments are nothing more than a negotiating tactic and should be treated as such. The NBN offers iiNet too many benefits over the existing copper paradigm for the ISP to ever give up on it. And that is just the honest truth.
Image credit: iiNet
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