Coalition victory could trigger Internode fibre rollout

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blog Internode chief Simon Hackett has revealed to the Financial Review newspaper that he expects the Coalition to win the next Federal election and cancel the National Broadband Network; an event which could potentially result in Internode becoming a public company and rolling out its own fibre infrastructure.

Click here for the full article, which is available if you have an AFR subscription.

Many in Australia’s political arena currently expect the Coalition to sweep to victory in the next Federal election, due to be held in 2013, based on currently bad polling for Julia Gillard’s incumbent Labor team. Under current Coalition telecommunications policy, a Coalition Government would pause the NBN while it awaited the results of a cost/benefit analysis into how best to serve Australia’s future broadband needs. It is also likely the NBN project as a whole will be reined in.

And If the NBN was cancelled, Hackett adds in a tantalising comment quoted by the AFR:

“If the NBN stops, there are clear avenues to go out and build fibre networks and then the case for listing is much stronger.”

I’ve conducted several financial analyses of Internode over the past few months, and there is no doubt the company is in a strong financial position. A listing on the Australian Stock Exchange would generate a boatload of investment capital for the company and provide substantial options for infrastructure investment.

But fibre? Fibre’s pretty expensive. I would estimate that if Internode did decide to roll out its own fibre infrastructure around Australia, it would need to do so in partnership with a number of other companies — perhaps Optus, iiNet and maybe TPG. Otherwise, I simply cannot see a widescale fibre rollout being economical for the company. It would be very interesting to know more about what Hackett is appearing to imply with this comment.

Image credit: Internode

98 COMMENTS

  1. In relation to the last paragraph, if Internode were to cherry pick I’m sure they’d do alright.

    I give it two hours before we see a press release from Malcolm Turnbull refering to this and saying this is why we should let the private sector look after the future of broadband in Australia.

  2. Well of course they would cherry pick just like they did with their DSLAM rollout, perhaps he is just speculating what life would be like under a Coalition policy, not they have stated that a Hackett type of private cherry pick rollout is in anyway under consideration as a option anyway.

    I

    • Have you looked where Internode / Agile have rolled out DSLAMs and Wireless? Simon is on the record stating that the biggest factor for implementing regional DSLAMs is the cost of backhaul where Telstra is the only provider. In the last 6 months they’ve installed DSLAMs in Port Pirie and Alice Springs, because competitive backhaul has been available.

      • Backhaul pricing in the absence of competitors is subject to ACCC pricing jurisdiction.

  3. of course they will roll it out, as long as they receive $billions in subsidies and then own it. which results in the tax payer being out of pocket by billions and devoid of asset ownership.

    no roi, no assets to resell and billions of taxpayer dollars gifted to private companies.

    yet those who support this approach have the hypocrisy to scream the nbn is wasteful and not a good investment?

    • You know just the coalition will jump on this to support their claim that the private sector can handle it but they also claim fibre is not needed hence the FTTN patchwork. Which way will they flip-flop this time I wonder…

      • err, he didn’t need to, because turbull has already said they will pay subsidies…!

      • err, he didn’t need to, because turbull has already said they will pay subsidies…!

          • ok since the pedantics have again reared their ugly head, as they inevitable do with some.

            where did i claim hackett said this?

          • ok since the pedantics have again reared their ugly head, as they inevitable do with some.

            where did i claim hackett said this?

          • ok since the pedantics have again reared their ugly head, as they inevitable do with some.

            where did i claim hackett said this?

          • heres pepe’s statement again:

            “of course they will roll it out, as long as they receive $billions in subsidies and then own it.”

            nowhere does it mention Hackett is the originator of the statement. how in hell did you come up with that inference? im curious, because to me it takes a flying leap of logic to come to that conclusion.

            ironic that in the same breath you make the charge of making stuff up……

          • thank you dbremner and nonny-moose.

            and for those of you who are interested in what prompted ‘my, not hackett’s actual comment.

            turnbull – ‘In areas where such services weren’t commercially viable, the coalition would provide government support in the form of co-investment, capital subsidies or both’.

            http://www.computerworld.com.au/article/396008/libs_promise_bush_comparable_broadband/

            interestingly turnbull goes on to say telstra are in a strong position, so much for level playing field-transparency and then say with ‘certainty’ telstra may increase the speeds of their hfc.

            certainty previously meant not open access, in relation to adsl2+. but i suppose it could also mean they’ll be allowed to gouge consumers, to receive maximum roi

            looks like back to the future

          • @Pepe

            “but i suppose it could also mean they’ll be allowed to gouge consumers, to receive maximum roi”

            So where does Coalition policy say they are disbanding the ACCC?

            “looks like back to the future ”

            So where does Coalition policy say they are disbanding the ACCC?

          • @Pepe

            “but i suppose it could also mean they’ll be allowed to gouge consumers, to receive maximum roi”

            So where does Coalition policy say they are disbanding the ACCC?

            “looks like back to the future ”

            So where does Coalition policy say they are disbanding the ACCC?

          • interesting deflection alain, now that about 6 posters have said wtf in relation to your strange hackett claim.

            being so, nor again did i mention the accc being disbanded or not disbanded, my you have a sneaky little posting style don’t you.

            as nonny-moose rightly said, ironic you accusing others of making stuff up

            but if you are that confident in the accc, then there’s nothing to worry about with the so called monopoly nbn then is there?

            now read the url where turnbull talks about certainty for telstra and tell uswhat do you think he means?

          • @Pepe

            “now that about 6 posters have said wtf in relation to your strange hackett claim.”

            Well it’s only 3 actually, but even so you think the stacked pro-NBN jury glee club means anything in the real world or even to me? – correct it doesn’t.

            “being so, nor again did i mention the accc being disbanded or not disbanded,”

            Good so there will be no rorting then as you indicated will happen by Telstra under a Coalition Government, because that’s what the ACCC is there for just like they are there to stop rorting under the Labor NBN, or the Telstra CAN today.

          • @ alain ‘you think the stacked pro-NBN jury glee club means anything in the real world or even to me? – correct it doesn’t”.

            thank you alain, for telling us what we already know, regardless of any information proving or projecting the nbn beneficial, you are bluntly, not interested in hearing it.

            why is that?

            and instead of inventing something else i never said, how about answering the question you avoided please.

            do ‘you’ think – notice i said you – turnbull meant by, with certainty telstra may improve hfc speeds?

            and just how would they get that certainty?

    • Your words:

      “of course they will roll it out, as long as they receive $billions in subsidies and then own it.”

      ‘they’ in this case is Internode, which is what this discussion piece is all about, Internode is the ISP that are saying they may roll out their own fibre if the Coalition win, Hackett didn’t say they will roll it out ‘as long as they receive $billions in subsidies then own it’ .

      • Oh dear alain, please know when to stop flogging a dead horse. Sometimes you need to learn to pick your fights. Constant pedantic arguments about misquotes, or paraphrasing and the like do not further your cause when you could be making valid and more importantly, *relevant* viewpoints.

        Look alain, Pepe never stated that Hackett was ever saying that they would roll out fibre only if they got billions in subsidies. He wasn’t quoting anything Hackett said at all and he never claimed that he was doing as much.

        What Pepe was doing was presenting a potential scenario in which, if they (Internode) were granted significant subsidies from public funds, then in that case Internode would roll out their own fibre and walk away as the sole owners of their newly built infrastructure after taking that public subsidy.

        Remember, this is all only a POTENTIAL scenario of what could happen. It is NOT a quote and it is NOT paraphrasing anything Hackett has said. It is only a potential scenario of what could happen IF Internode are granted subsidies to build such a network themselves.

        I hope we’re all on the same page now.

      • Yes, Pepe said “of course they will roll it out, as long as they receive $billions in subsidies and then own it.” It’s right there in his post and in yours you acknowledge Pepe said it.
        “Your words:
        “of course they will roll it out, as long as they receive $billions in subsidies and then own it.””
        So where does Hackett come into it? Noone ever said that Hackett said that.
        It was his own opinion that they would roll it out as subsidies being offered to do it. Not that Hackett said it.

      • now read your very first two word line.

        ‘your words’, yes,exactly, ‘my’ words…i see you’ve got it now.

        • So who is ‘they’ if not Internode (waits for semantic tap dance and the back pedal coming off bike).

          Is there a new ISP called called ‘They”, or is ‘they’ every ISP in Australia except Internode. LOL

      • And just because they didn’t say it doesn’t mean its true? From how you talk in these NBN forums its like you would have some idea but i gather you don’t …..

  4. So lets see, on one side we have articles dissing the NBN, the other side, Internode getting supported via articles, the other side, is that there are simulated scenarios?

    To me it sounds like:

    a) too much bullshit.
    b) conflict of interest.
    c) Internode sold it’s sole ages ago along with the coalition, or did they team up recently?

    How much bs from sites like this through our media of when will the Australian population get a stable and fast future proofed Internet ?

    Does everyone have small and short memories of how long Telstra did NOTHING?

  5. Simon Hackett is good at getting ahead of the debate, which is what he is doing here.

    I suppose we should be grateful that this is an attempt to put some substance onto a future Coalition worldview, which has been all smoke and shadows so far, entirely lacking in detail.

    But from Hackett’s perspective, it’s a way of shaping the future early on. I mean, it is not a controversial view that the ALP is unlikely to be re-elected to Government in 2013. It is therefore good planning to get in now to influence the future environment.

    Because no one knows what will happen after the next election. No one knows when the Coalition spins their policy dial what settings will come up. Will they call an abrupt halt to the volume rollout, or let it complete its contracts? Will they just hand the NBN infrastructure over to Telstra? Will they do nothing for the several years it will take to reach a new agreement with an emboldened Telstra over structural separation or access to copper assets for a FTTN network? Will they pick winners and throw wads of money to the big telcos (have to get in quick, Simon!) to build private, closed-access fibre networks to the privileged well-off suburbs? Will the suburban fringes and NBN-less regional centres get so much as a look in for the first term of a Tony “Tech Headless” Abbott government?

    Who knows? None of us do – least of all the Coalition. They will go to the election with little policy detail of their own, giving them a blank cheque mandate.

    • “Simon Hackett is good at getting ahead of the debate, which is what he is doing here.”

      Getting ahead of the debate or artificially creating the debate?

      “I suppose we should be grateful that this is an attempt to put some substance onto a future Coalition worldview, which has been all smoke and shadows so far, entirely lacking in detail.”

      Hackett is not the creator of Coalition policy.

      “But from Hackett’s perspective, it’s a way of shaping the future early on.”

      Hackett is not the creator of Coalition policy.

      ” It is therefore good planning to get in now to influence the future environment.”

      Hackett is not the creator of Coalition policy.

      “Because no one knows what will happen after the next election.”

      Least of all Internode.

      “No one knows when the Coalition spins their policy dial what settings will come up ……

      [SNIP]…….

      Will the suburban fringes and NBN-less regional centres get so much as a look in for the first term of a Tony “Tech Headless” Abbott government?”

      Or none of those.

      “They will go to the election with little policy detail of their own, giving them a blank cheque mandate.”

      They will? it’s not even 2013 yet why do you care that until then the full policy is not released, the Coalition could use the Rudd/Conroy method of releasing policy, release one policy before the election than change the minds completely after they got in, not only that the Coalition don’t have to release any Business plan until AFTER the next election following the 2013 one.

      There is obviously no hurry.

      • It must hurt you so much that Labor is in power and implementing – because it sounds like you have nothing positive to say about Fibre, NBN, or even the value of the internet itself (which begs the question why you always spend so much time on a site devoted to technology in Australia).

        Your snide partisan remarks at people like Quigley is a testament to your character.

        • You are going to have to try bit harder then that to come up with a decent argument

          All I hear is a personal attack

          • I don’t think he was trying to argue. I think a personal attack was what he was going for.

          • I don’t think he was trying to argue. I think a personal attack was what he was going for.

          • I don’t think he was trying to argue. I think a personal attack was what he was going for.

          • All I hear is a personal attack

            Point out what part of Steve’s post was a personal attack.

          • If that was a personal attack so was your comment. (and mine)

            IE it was a comment on his comment. thus completely oftopic,

            Now I’ve gone all meta and made a comment on your comment on his comment on alains comment.
            Comments?

        • “Your snide partisan remarks at people like Quigley is a testament to your character.”

          What snide partisan remarks?

  6. Yeah, I’d love to see Internode go ahead and do it, then watch Telstra overbuild them…

    • Well, it might work for Internode (which is fair enough, I’m hardly opposed to the success of enterprising private companies), but what incentive would they have to roll out fibre in less populated areas, mid-sized regional centres and other places that currently lack decent service of any kind?

      That’s the difference between private companies and the government. Unlike government, the private sector has no particular interest in providing services in regional areas that have marginal returns, at best. And don’t try and tell me about subsidies. Companies that have to be bribed with subsidies have an uncanny habit of gobbling them up and coming right back for more, crying poor the whole time…

      I have no doubt they could finagle a deal that would make money for them in the cities and other profitable markets, but what is everyone else supposed to do? Wait for Telstra’s beneficence, and its eye-watering prices?

      Don’t forget, before we hail Simon Hackett as the lead backer of the free-market Coalition approach to all things, that he was one of the loudest supporters of the original 14 POI model of the NBN, a model which put far more of the network under government ownership than the final, ACCC-endorsed model of 121 POIs. In other words, he backed the ALP’s original plan, which really did guarantee absolute pricing equality for all regional customers over the eventual result which tilts things towards the private backhaul owners.

    • Why couldn’t they do that now ? or the fact the last 10 years eludes them?

      Sorry, but ISPs are continuing screwing us around.

      • Because Telstra is still vertically integrated monopoly

        If you want competition in fixed line infrastructure, you need to split up natural monopolies that were created by governments (and often sold to private enterprise). Thats what was done in Britain/USA/Japan/NZ and it has had marvelous benefits.

        Sorry, but you are oversimplifying the issue, no ISP is “screwing” you around

  7. A fibre network run by the most innovative and technically best ISP in the country? Sign me up yesterday.

    Simon is on the record complaining about the slow speeds and excessive data charges on the NBN.

    • I hadn’t seen him saying the NBN was slow. Where was this? I’d like to have a read. I assume you mean the NBN itself and not the ISP at the end of it being slow.

  8. If rolling your own is such a great idea why wait for a (maybe) Coalition win in 2013 to do it, why not roll out HFC now or start up a business like Opticomm rolling FTTH into Greenfield estates, or buy out TransACT in the ACT and expand the fibre rollout into SA?

    • Telstra is still a vertically integrated monopoly, thats why

      Telstra can put the whole weight of its company in overpowering any competitor to fixed line infrastructure if it has its own there, which it can’t do if its separated (and further separated into regional areas, as Malcolm is planning)

      • Yes but the separation deadline for Telstra is 2018, we will have at least two elections before then, I wouldn’t count on the separation of Telstra meaning much in 2013, we are still 5 years away from that deadline.

        • Well the liberal parties agenda is to split Telstra asap if they get into power in 2013, its only Labor’s plan to split Telstra that takes so long

          • it is now, only since late last year, iirc, finally the Liberal party’s agenda.

            but they had from 1996-2007 to split telstra, when in government, especially up until 2006 when the government were still the major shareholder, which would have made it much easier. but they chose not to.

            now you expect us to believe that if, or as it would currently seem, when, they are elected, after years of denial and arguing against a telstra split, this time they will get it done asap?

          • Well the current legislated deadline is 2018, unless Telstra see a clear reason to bring that forward, that is it will benefit shareholders to have two separate companies before then I don’t see them putting their hand up anytime soon.

            If the Coalition win in 2013 and want Telstra split pronto, once again Telstra will have to agree and Parliament will have to change deadline legislation.

            I agree with you (surprise surprise), I don’t see Abbott and Turnbull getting the big stick out to Telstra seeing they could be a key to Coalition policy and the change of existing Labor NBN policy.

          • Coalition easily has a big stick to pull Telstra, remember the under the coalitions plan, Telstra will need to split to be provided any subsidies to service regional areas (something they are currently getting). Turnbull clearly stated that in order for Telstra to apply for assistance in regards to funding, they would need to split

            If Telstra was to service regional areas without any financial assistance, their finances would turn into a massive wreck.

          • so it’s not ok for one side of politics to pay to use their ducts but it’s ok for the other side to pay them incentives to separate?

            funny for someone who claims not to support any political party, although an admitted current coalition voter, you seem to side with them, 100% of the time?

        • there was absolutely no serious talk or endorsement of structural separation on either side of politics until the FTTN tender collapsed and Labor decided to go FTTP whole hog.

          the structural separation provisions in the CCS Bill were specifically designed to migrate customers from CAN to NBN, and not to dismember Telstra per se.

          i’m going to go out on a limb and predict that when the Libs get in power, Telstra structural separation will be abandoned altogether.

          • firstly toshp300, it ‘wasn’t a fttn tender’. it was a rfp to roll out and operate a nbn, of fttn ‘or fttp technology’. and the process didn’t collapse. the panel of experts who were brought in to adjudicate, deemed all bids inadequate.

            if only telstra had not been playing games eh?

            but please as you will, massage the facts, in your own inimitable way.

            secondly and another surprise, surprise in just a few comments i agree, i believe the coalition do not truly support telstra’s separation, as they had plenty of opportunity and in the end begrudgingly jumped onboard, and if elected, will abandon it.

          • *firstly, it ‘wasn’t a fttn tender’.*

            ROFL.

            go read the G9/Terria SAU, Telstra proposal, ACCC discussion papers and submissions and the entire surrounding debate. the only network design ever proposed/discussed is FTTN.

            even though the RFP didn’t specify FTTN or FTTP, it is obvious to blind Freddy that FTTN is the only viable technology to deploy in Australia.

            *if only telstra had not been playing games eh?*

            LOL

            iiNet was part of G9 wasn’t it? there are explicit suggestions in iiNet’s Senate testimony that the whole G9/Terria submission was merely a charade or strategic exercise, i.e. they weren’t serious about building FTTN (had zero financing), but just wanted to “buy-in” or influence the process of determining the FTTN regulatory regime and eventual network design, even if Telstra is the natural builder and successful tenderer.

            the whole notion of Telstra tendering to upgrade its own network is LAUGHABLE.

            *i agree, i believe the coalition do not truly support telstra’s separation, as they had plenty of opportunity and in the end begrudgingly jumped onboard, and if elected, will abandon it.*

            structural separation was never a Labor policy either. even Conroy made statements in Senate Estimates that suggest he was agnostic on structural separation. it was only implemented to force Telstra to play ball with NBNco. (why do you think the whole SS process is dragged out till 2018?) when you dissolve the NBN and NBNco, there’s no longer any reason to impose structural separation.

          • tsk tsk toshp300.

            http://www.minister.dbcde.gov.au/media/media_releases/2008/023

            from within: – ‘have the network rolled out and made operational progressively over five years using fibre-to-the-node or fibre-to-the-premises technology”.

            gee that was from the official media release/invite for rfp from the government not Telstra, G9 or blind freddy.

            and look from Acacia remember them – “Acacia NBN consists of three complementary network components, namely: Core Backbone Infrastructure; FTTN/FTTP Access Infrastructure; and Radio Access Infrastructure”.

            http://acaciaaustralia.com.au/our-proposal.asp

            of course fttn was the obvious choice for most, considering the copper is already there, but it “was not” a fttn tender as you claimed, as the governmental announcement and Acacia clearly proved.

            so i will indeed rofl, while you are amassing your inevitable, but, but, but excuses accordingly!

            funny i had the same argument with your mate a few months back who did like you. now when anyone pro-nbn says fttn tender, he jumps on them saying it wasn’t a fttn tender and uses my/this very proof, he tried to shout down previously.

            of course G9/TERRiA was a charade, never said it wasn’t don’t get all telstra defensive and start jumping to conclusions. after all they didn’t actually bid, did they?

    • Perhaps he does need the government handouts first. Wonder what him and Turnbull have spoken about.

    • because, to go around in circles with you again, he wants the subsidies promised by turnbull ;)

  9. A thought to send a chill down the back of every business in Australia – What if she gets back in !!

  10. Thank God we have a Simon Hackett to inject some intelligent comment and provoking thoughts that may change the brainless mindset that has set in over the last year.

    I think it is time for Malcolm Turnbull to enlighten us as to the Oppositions plans should they win the next election. People do want a satisfactory NBN but at the most economical cost.

    • would that be the same simon hackett who was, until this, a leech sucking on the telstra vein?

  11. Old things have passed away and all has become new with the level playing field that is upon us.

  12. is Hackett proposing FTTP or FTTN? If its FTTP I can’t see Internode being worth $32b on the open market.

    If Internode floated and got a heap of cash (say a $1-2b) then one would simply acquire in place assets. First off you could pick up AAPT for about $400m. Cheap. Then you’d look at buying TPG. See with TPG you’d have a massive customer base to give you a good scale of economy in which to leverage the fibre assets of AAPT. You would also with purchasing AAPT have access to the carrier/peering arrangement, which generates a crap load of cash for very little cost.

    The purchase of TPG would give you access to the Guam interconnect further lowing your international wholesale IP costs. With access to southern cross that you’d stitch up in the AAPT deal with TNZ you’ have a huge amount of bandwidth, very protected network, running at a very low cost. That would put you on a position to compete with Optus in the wholesale market for Wholesale IP.

    you’d still have a bit of cash left over after all that to fund a massive marketing rebranding exercise.

    • I think at this point, we should remind everyone that 32 billion is the price for a 93% FTTH, and internode are not going to do a national FTTH installation.

      What would more likely is different companies in different areas would do FTTH installations, which is called distributing capital amongst telecommunications sector

  13. Oh Blimey! I see Delimiter comments are now becoming “He said. She said”. Why is the Conservative side of Politics so entrenched in wedging all discussions in the world that refuse to fit into the world as they wish it to be? Can we please keep discussions to benefits and caveats of the subject instead of this infantile stupidity that infests the present dialogue of Australia now?

    Flame me if you like. I really care little about petty squabbling. I hear enough everyday and I think most of us dread the constant, annoying mewing that just does not let up by some people. I don’t have all the answers! You don’t have all the answers! Let us discuss and find out if any of us can find the answers to our problems that this silliness that infects us presently has caused us.

    Grow up! If you can breed, then you should have the ability to create constructive dialogue and leave the wedging for the followers of the “Dark Side” in Canberra, since they are so fond of it.

    My apologies to Renai for blowing my fuse about childish behaviour of some of his readers which demeans his hard work.

  14. Oh Blimey! I see Delimiter comments are now becoming “He said. She said”. Why is the Conservative side of Politics so entrenched in wedging all discussions in the world that refuse to fit into the world as they wish it to be? Can we please keep discussions to benefits and caveats of the subject instead of this infantile stupidity that infests the present dialogue of Australia now?

    Flame me if you like. I really care little about petty squabbling. I hear enough everyday and I think most of us dread the constant, annoying mewing that just does not let up by some people. I don’t have all the answers! You don’t have all the answers! Let us discuss and find out if any of us can find the answers to our problems that this silliness that infects us presently has caused us.

    Grow up! If you can breed, then you should have the ability to create constructive dialogue and leave the wedging for the followers of the “Dark Side” in Canberra, since they are so fond of it.

    My apologies to Renai for blowing my fuse about childish behaviour of some of his readers which demeans his hard work.

  15. Hackett, I have just one thing to say buddy. If the Libs win the next election, CHERRY PICKING WILL LIVE ON!!

      • so a nationwide nbn with many ‘cherry pickers’ would be about as economically efficient as one can get, going by ‘your’ analysis?

        • In terms of economics (and practicality) monopoly are the least efficient model you can have

          • so cherry picking, i.e. one player having the assets and others accessing in profitable areas is not efficient after all, then.

            another one who loves the old buck each way.

            and practicality, you think it’s more practical to have 2, 20 or 200 cables running into your home, for ‘competitive efficiency’, rofl.

  16. Great idea , would make an interesting bet ?.
    Only problem is if there is no NBN ,then the POI’s ammendments would be reveresed .
    And do you think Telstra will allow free access to major POI’s ,not likley .
    This would mean $ for infrastructure to all interconnects ,only way possible would be a
    slow investment or JV —–).

  17. It would take immense cajolies to roll out the full FTTH ans who said age was
    inversely proportional or orthogonal to cajolie size .
    Bring it on , iinet & node + others =JV ,share price 20% higher than Telstra. .

  18. Haven’t seen any of these “competitors” in Katoomba, it’s just like the Foxtel rollout, Internode follows iiNet and TPG none ever go to regional or rural areas.
    No such thing as competition ever been in the coalition telecom policy, it’s all about favoured monopolies and “preserving the Liberals Telstra privatisation legacy” and not allowing a Labor NBN legacy, its all politics not good policy.

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