Note: Conroy has since admitted his accusation that Internode did not make a PoI submission was an error.
Communications Minister Stephen Conroy has pushed back against strident criticism of NBN Co’s proposed pricing model by Internode managing director Simon Hackett, arguing the ISP had its chance to complain to the national competition regulator during its inquiry on the number of points of interconnect last year.
Hackett last week described the model as “insane” for small internet service providers, warning that none will survive their walk through the “valley of death” transition from the current copper network to the fibre future envisioned by the Federal Government and that they could be forced to buy aggregated services from existing large players like Telstra and Optus.
Speaking on the ABC’s Inside Business program yesterday (full transcript available), Conroy said Internode’s complaint was essentially about the number of points of interconnect which the NBN will offer ISPs.
“… it would’ve been really fantastic for Internode to have made that argument to the ACCC … They didn’t actually put in a submission to the ACCC’s inquiry on this very matter, but as you would be aware there were many companies who argued the exact opposite to what Internode are arguing,” said Conroy.
Presenter Alan Kohler pointed out that Hackett’s complaint was also based on the cost of what NBN Co calls its virtual circuit pricing, but Conroy echoed NBN Co’s comments last week that Hackett’s critique was based on the idea that ISPs would be national.
According to Hackett, there were several fundamental problems with NBN Co’s pricing model. For example, he said last week, the decision by the ACCC to set the number of points of interconnect around Australia where ISPs could connect to the network at 120 nationally disadvantaged smaller ISPs – who would be forced to provide what NBN Co calls a Connectivity Virtual Circuit (CVC) connection to all of these locations in order to provide a national service.
Hackett has previously advocated a model where NBN Co would provide as little as 14 points of interconnect – which he said would serve smaller ISPs much better. A model with more points of interconnect would serve larger ISPs like Telstra and Optus, he said, which already had infrastructure around Australia.
Secondly, he said the cost of that CVC circuit was too high – it should come down dramatically. Instead, NBN Co should charge more per month for each individual customer connection. If NBN Co’s pricing model didn’t change, Hackett argued, the only way which smaller ISPs would be able to afford to connect to the network would be through larger wholesale players like Optus and Telstra.
On the contentious matter of whether Telstra and Optus will become dominant wholesalers, re-establishing control over the local market: “It’s not for me to decide where companies should wholesale from,” said Conroy yesterday. “As I said, I anticipate that there’ll be new players in the market. I anticipate that there will be wholesale aggregators who come in, who may not necessarily be Telstra or Optus.”
The issue comes as the NBN has recently come under increasing attack from the telecommunications industry itself over the past week, as well as the Opposition. At the Communications Day Summit, AAPT chief executive Paul Broad last week called on fellow telcos to stand up and “make noises” to protect competition in the new world order of the NBN, slamming the network as a return to a telecommunications monopoly.
And Shadow Communications Minister Malcolm Turnbull delivered an impassioned speech arguing much of the reality around the nature of broadband has been lost in the national NBN debate, and that Australia’s fibre to the home rollout was unusual even by the standards of international broadband centres like Korea.