ACCC rubber stamps Optus’ NBN deal

47

news The national competition regulator has approved an $800 million deal which will see number two telco Optus shut down its HFC cable network and migrate its fixed-line broadband and telephony customers onto the National Broadband Network infrastructure as it is rolled out over the next decade.

In a statement issued yesterday afternoon, the Australian Competition and Consumer Commission said the deal was “finely balanced”; hence the regulator took account of “a substantial amount of public and confidential information” as well as submissions from interested parties in response to its decision.

Its final view, the ACCC wrote, was that the main benefits to the deal outweighed the likely detriment. The regulator saw the main benefits of the deal being the avoidance of the cost of Optus operating its HFC network to provide a similar broadband service to the NBN; and the ability to reduce to the cost of migrating Optus subscribers who are on the HFC cable network to the NBN. There are some 400,000 connections on the Optus HFC cable network.

Balanced against this, the regulator wrote, was the fact that the deal would remove “a potentially significant fixed line competitor” to the NBN in Brisbane, Sydney and Melbourne, meaning that NBN Co would have less competitive pressure on it to keep it accountable.

Despite this negative factor, the ACCC wrote there were a number of “unique reasons” which meant the removal of the HFC cable network as an NBN competitor would have less impact than usually expected. Among these was the fact that Optus was unlikely to extend its HFC cable footprint beyond its current level; the fact that Optus was unlikely to upgrade the network to higher speeds (meaning it would only compete with the NBN on an entry level basis), and that over time, Optus customers on the HFC were likely to be migrated to the NBN eventually anyway as they desired higher speeds.

In addition, “any impact on consumer choice will be minimal,” the ACCC wrote, “since most consumers are likely to choose their fixed line broadband service based on the offer from the retail service provider (eg Optus), not based on the underlying network technology used to deliver their broadband service (eg NBN or HFC network)”. “In other words,” the regulator added, “provided services have similar characteristics in terms of capability and reliability, end users appear largely to be indifferent as to the access network that is used to deliver them.”

The ACCC added that competition between Optus’ HFC cable network and the NBN was unlikely to endure in the long term anyway, due to the “pervasive and enduring economies of scale associated with the NBN”. And the regulator also noted that the need for NBN Co to recover its costs was likely to create an incentive for NBN Co to keep costs to efficient levels and to encourage take-up of higher speed services and greater usage.

NBN Co and Optus welcomed the ACCC’s decision. In a statement, NBN CEO Mike Quigley said the regulator’s authorisation was the latest in a series of commercial, operational, policy and construction milestones that underpinned the progress of the NBN.

“The migration of Optus’ cable customers supports the NBN’s business case and confirms the network as the cornerstone of Australia’s digital communications future,” Quigley said. “The fixed network of the future provides national coverage which is wholesale-only, open-access, and available to any retail service provider on non-discriminatory terms. This marks a shift from the past where a number of companies used their resources to duplicate network access infrastructure.”

“The NBN is expected to facilitate further competition in the retail market, and we are already seeing positive signs of this with over 40 telephone and internet retail service providers signed up as customers of NBN Co. With NBN Co offering the underlying technology platform across Australia to all retail service providers on a non-discriminatory basis, it enables these companies to concentrate their investments on developing new and innovative products and services, leading to flow-on benefits for families and businesses.”

“Today’s final decision by the ACCC marks a further move towards a new industry structure in which open access to the NBN will allow any telecommunications and internet service provider the opportunity to offer a service to any customer via either fibre, fixed wireless or satellite,” Quigley said.

Paul O’Sullivan, Country Chief Officer, Australia said: “Authorisation of the NBN Co/Optus HFC Subscriber Agreement marks a milestone in the Government’s policy reforms to enhance retail competition in the fixed sector and is a benefit for Australian consumers. This decision enables Optus to focus on delivering better service standards and more choice for customers through the NBN. We will continue to work closely with NBN Co in preparation for the rollout schedule and customer migration.”

Optus expects that the large-scale migration of customers to NBN infrastructure will commence in 2014, with payments from NBN Co to be received progressively on customer migration. The program is expected to be completed by 2018 across Optus’ entire HFC footprint. Optus will continue to supply services to customers using its HFC network until the NBN is built and customers have been migrated.

Criticism
In late May Shadow Communications Minister Malcolm Turnbull made a lengthy parliamentary speech damning the ACCC’s then-draft decision to sign off on Optus’ $800 million deal with NBN Co, describing the regulator’s assumptions when approving the arrangement as “heroic”.

Turnbull said that in every other country of which he was aware, one of the key objectives of telecommunications policy was to promote facilities-based competition, which meant encouraging the HFC cable owners — usually pay TV companies — to compete with telcos.

“But here in the socialist paradise of Julia Gillard’s Australia the government is building a massive new fixed line telecommunications monopoly and, just in case there would be any competition with it, the government is paying Telstra and Optus to decommission their HFC networks as well as paying Telstra to decommission its copper network,” the Liberal MP said. “It is difficult, therefore, to think of anything more anti-competitive than a new government owned Telco, the NBN, paying Optus $800 million to shut down the HFC network, which is currently offering high-speed broadband services comparable to those that will eventually be offered by the NBN itself.”

Turnbull pointed out that the ACCC had actually disagreed with many of the assertions made by NBN Co and Optus as part of the rationale for the deal. “… is this a public benefit, or is it really is simply a supposed benefit to Optus?” asked Turnbull. “It all seems a very thin argument. It is as though the ACCC has concluded that what is good for Optus is good for the public of Australia.”

opinion/analysis
I am on record as being harshly critical of this deal the ACCC has authorised between Optus and NBN Co. I encourage you to read an article I published in late May on the topic if you are interested in my views on the matter. In short, I agree with Turnbull that the claimed “public benefits” from this deal are really benefits to Optus, and that the $800 million payout will unfairly advantage Optus against rivals like iiNet and TPG.

In addition, I note that there are several new puzzling statements in the ACCC’s new statement on the deal today. This statement, for instance, appears to be a gross simplification:

In addition, “any impact on consumer choice will be minimal,” the ACCC wrote, “since most consumers are likely to choose their fixed line broadband service based on the offer from the retail service provider (eg Optus), not based on the underlying network technology used to deliver their broadband service (eg NBN or HFC network)”.

The fallacy that people pick broadband connections based on ISP and not on the underlying technology is one that Optus and Telstra have been pushing for a while, with the pair generating confusing marketing messages at the moment about the difference between ADSL and HFC cable broadband. However, I am surprised the ACCC has swallowed this line. Australians are amongst the most tech-savvy early adopter countries globally and many, if not most, do indeed discriminate between which underlying technology provides their broadband service — as well as their differing inherent characteristics.

Secondly, the ACCC’s statement that the Optus HFC network could only compete with the NBN at the low end is demonstratably untrue, given that Optus has already upgraded its HFC cable network to the DOCSIS 3.0 standard, allowing speeds of up to 80Mbps. Sure, the NBN will eventually do 1Gbps speeds, but NBN Co has not disclosed when those speeds will be available, with the network being limited to 100Mbps speeds for the short to mid-term.

I also highly doubt that the need to make a return will provide NBN Co with enough stimulus to avoid becoming an inefficient government bureaucracy and am surprised that the ACCC believes so. Right now, as an organisation, NBN Co appears to be a great deal more efficient, for example, than Telstra. But is it more efficient than a sleek private sector beast like iiNet or TPG? I highly doubt it. There’s already some fat in there, and keeping competition to a minimum will not provide as much incentive for NBN Co to keep its operations efficient as private sector competition would.

I know why the ACCC is ticking the box on the Optus NBN deal. It’s part of the whole package and the Government wants to make sure the NBN project succeeds. But I don’t like the way this is being done. I guess we will find out in a decade or more if the end justified the means.

47 COMMENTS

  1. The problem is Telstra, Optus, etc, have invested vast amounts of money in last mile infrastructure, not just in the initial rollout but also in the ongoing upkeep and maintenance.

    If the government then wants to come along and build a network that directly competes with this infrastructure with the ultimate goal of overshadowing it, then yes both Telstra and Optus should be compensated.

    I could understand if the NBN was a private company but it’s not, this is a government monopoly that will ultimately make irrelevant the network owned by two publicly available companies (Optus is on the sharemarket as it’s parent Singtel).

    You can argue the $11B Telstra is being paid (that’s the figure from memory), or the $800M Optus is being paid all you want, maybe they are too high? but in my opinion at the end of the day both need some sort of government compensation if it’s the government who is going to effectively compete against them.

  2. The deal to shut down Telstra’s copper and HFC is just as anti-competitive. Here’s one economist describing the NBN as a “hidden tax” where the city subsidises the bush — which is what various people have been saying all along, and obviously the ACCC knows it but for political reasons can’t say it out loud.

    http://economics.com.au/?p=9130

    • “Here’s one economist describing the NBN as a “hidden tax” where the city subsidises the bush”

      So what does he describe the current copper, the roads, electricity, gas and everything else where the city dubsidises the bush?

      • Yes but Noddy… “the current copper, the roads, electricity, gas and everything else are all inconsequential”…

        Just ask anyone on a mindless crusade to apply such ridiculous rules to the NBN only :/

    • If you look at the pricing to build satellite based on the number of users it comes very close to breaking even (7% return). So while it is more expensive to supply a service there, it merely means that the gov is making less profit there then in the cities (NBN cost of borrowings 3%, ROI 7%)

  3. Telstra and Optus are not being “compensated”, they’re being bribed. (Where’s the compensation for Transact’s FTTP estates that are being overbuilt?) Without bribing Telstra and Optus to not compete against NBNco, Labor’s NBN is a total non-starter.

    On this point, it’s worth mentioning that Telstra’s getting the $15-20bn “purchase price” for its copper network under the current NBNco deal. If you add the $11bn migration payments to the $6-8bn (depending on future evolution of copper wholesale pricing) in revenue leading up to migration, you arrive at a total cash value within the $15-20bn mentioned by Conroy. (The $15-20bn figure reflects the payment required today if migration is completed now as opposed to staggered over 10 years.)

    So, Senator Conroy was lying and misleading the public when he implied in a Four Corners interview that building FTTP avoids the $15-20bn asset realisation value to Telstra.

    • “$11bn migration payments”
      This isn’t just migration. It’s to decommision the copper network. Use of ducts and pipes, to save NBN Co digging new ones and also Telstra backhaul that will become part of the NBN network.

      ” $6-8bn (depending on future evolution of copper wholesale pricing) in revenue leading up to migration”
      That’s a long stretch, if there was no NBN there would be more wholesale charges as there would be more copper. Who’s twisting things to make out that someone is lying?

    • @Michael

      I Don’t even know where to START with that one.

      The Migration payments are $4 Billion, not $11 Billion. The other $7 Billion is for duct and exchange leasing and USO.

      The “$6-8 Billion” for future revenue you pulled out of thin air. Where is the evidence for this?? From my small amount of reading on revenues from Telstra fixed-line I’d say more like $3-4 Billion. So that’s a total of $4 Billion + $4 Billion = $8 Billion to Telstra + $800 Million to Optus….STILL cheaper than the $11 Billion “Bribe” you’re so cut up about it. That $8 Billion is about what the ACCC puts the copper worth at by the way….because alot of the value of it works off revenue FROM the copper.

      At least get your numbers right if you’re gonna argue.

    • Senator Conroy is either a liar or a fool when he nominates certain obstacles to the Govt pursuing the FTTN option. Here’s why: He told Four Corners that,

      1/ Telstra would demand $15-20bn in financial consideration to exit its wholesale copper business.

      That is the asset realisation value if Telstra hands over its wholesale fixed-line business immediately (i.e. revenue to Telstra drops to $0 overnight). Because the NBNco deal is structured as a decade-long staggered asset acquisition process, Telstra will continue to earn residual revenue from the CAN long after the contract is signed (until the wholesale customer is actually migrated). This cumulative revenue over the next decade has been estimated by some broking analysts to be as high as $8bn. (The realized figure will depend on ACCC triennial pricing determinations.)

      So, the amount of consideration NBNco has to offer Telstra is that $15-20bn figure less the projected residual CAN wholesale revenue over the period of migration. It appears that the Telstra board was happy to set the value of direct compensation at $11bn; the residual CAN revenue makes up the rest of the mooted $15-20bn in asset realisation value.

      The allocation of the $11bn value of the NBNco deal between “migration payments” and “infrastructure rental” is arbitrary in a sense. However, by contractually tying only $4bn of the total consideration to actual customer migration, it means that in the event of a contract termination, only the $4bn component is no longer receivable. NBNco will remain liable for the billions in infrastructure rental payments no matter what. This is clearly to Telstra’s advantage as a protective (windfall) clause in the event of NBN termination. Also, l believe there are CGT tax reasons for minimising the value of the migration payments and reallocating to “infrastructure rentals”. This is why the NBNco deal was subject to ATO approval for deal structure.

      2/ Telstra would overbuild the Government’s NBN.

      Telstra will overbuild the Government’s NBN regardless of whether Labor builds 90% FTTN or 90% FTTP. This is why anti-cherry picking provisions were included in the NBN legislation. In fact, because a 90% FTTP network is at least three times more expensive to build than a 90% FTTN network, the opportunities for cherry-picking the current FTTP NBN are actually much greater than those for an FTTN NBN. The same anti-cherry picking provisions which protect the current NBN would protect an FTTN NBN.

      Senator Conroy wins the “Ministerial-full-of-sh-t award” hands down.

      • Michael, you may have a valid point (benefit of the doubt, because I didn’t bother).

        Because having seen your previous election campaigning (under many other names) one thinks that if we all looked out the window and saw a beautiful clear blue sky and Conroy said – “gee that’s a nice blue sky” you’d still suggest he’s full of shit, so…?

      • @Michael

        “…This cumulative revenue over the next decade has been estimated by some broking analysts to be as high as $8bn”

        It’s also been estimated, thanks to NBN rollout and increasing competition at the forefront because of the NBN, at less than $3 Billion….hence why Telstra want the deal as it props up drastically falling fixed-line revenues. Your numbers are high. Mine are low. But you’d never admit it might be somewhere in the middle….

        “The allocation of the $11bn value of the NBNco deal between “migration payments” and “infrastructure rental” is arbitrary in a sense. ”

        Wrong. It is quite clearly set out in the contract. They are 2 separate payments. One to be over the migration period, from 2014-2018 (probably slightly longer) and one from June last year, for 30 years for the lease of the ducts and exchange space.

        ” NBNco will remain liable for the billions in infrastructure rental payments no matter what.”

        2 things:

        – And yet, even if this were true, the Coalition still believe this wasting of these billions to change to a flawed, lower speed, lower capacity, lower reliability technology, is better than just letting the NBN complete as is….

        – It’s not necessarily liable. This is what the Coalition are talking about with their “renegotiations”

        “2/ Telstra would overbuild the Government’s NBN.”

        Change to- Telstra will overbuild anything the government builds regardless of if it’s “this” NBN or a “Coalition” NBN. If they can get away with it they’ll do it. This is not unique to the NBN.

        ” In fact, because a 90% FTTP network is at least three times more expensive to build than a 90% FTTN network, the opportunities for cherry-picking the current FTTP NBN are actually much greater than those for an FTTN NBN. ”

        Evidence? Justification? This is just right-wing propaganda without justification. Telstra’s equipment and fibre, being smaller in amount and scope, would be more expensive than NBNCo.’s equipment and fibre. They are therefore already at a disadvantage to cherrypick. And, all it takes is for a person to be on FTTP, to realise, when Telstra rolls out their’s, which will be the same speed, there is no gain to be had switching to Telstra, specifically because Telstra would have to charge MUCH more than NBNCo. to justify the small infrastructure build and gain a commercial return, which NBNCo. doesn’t have to.

        “The same anti-cherry picking provisions which protect the current NBN would protect an FTTN NBN.”

        Wrong. Because Telstra can overbuild FTTN with something BETTER- FTTH, even after the cherrypicking laws run out (2021). They cannot do this against the NBN. Because we won’t use the full capacity of GPON (1Gbps) by and large by 2021, so rolling out, say, 5Gbps is a waste of money. The only thing Telstra could compete on would be price….and seeing as the NBN would have the entirety of Australia as its’ scope…..I’m not really sure how Telstra could even hope to compete with that.

        Your logic, thought train and ideology are irrational and flawed.

        Thankyou, come again.

  4. I agree with the ACCC normal people don’t know how they connect to the internet. We can see this with people who think everything should be wireless seeing they have a wireless router in the house.

    If we don’t have the optus deal then optus would leave the customers on the HFC cable until the cables are falling off the poles to get as much money as they can. They will just lock everyone into contracts so they can’t move anywhere else. Then if the customer is locked into a contract they don’t have to move them to NBN.

    Also you can’t say 100mb on HFC is the same as 100mb on GPON you just can’t

    I live in a place where I have a choice between optus HFC or ADSL2+ I picked ADSL2+ seeing I know how bad HFC can be during peek times. (my DSL is not with optus as well)

    • @Simon

      Right on. Most people wouldn’t give 2 hoots, nor necessarily even KNOW what internet they have. They just know how much it costs and how fast it is.

  5. It depends if you accept that the NBN will meet the criteria of a Natural monopoly. It can totally destroy any other network in terms of speed and reliability. In addition, With it’s low wholesale cost, It can easily out compete Optus’s pricing on HFC (after all, Optus can’t get capital at 3%, and could not have a business plan where 7% was the goal). The 80mb/s upgrade is not everywhere (or even most places), and crawls during periods of peek access, when the bandwidth is shared by the hundreds on each node. People currently on Optus HFC know this, and would switch as a matter of course over time.

    IMHO it’s unfair of the gov to overbuild them without compensating them in some way. This is less about competition, and more about fairness.

      • @Renai

        No, they’re not. But that was not anywhere near the same investment level as Telstra/Optus. However, I WOULD feel better if they WERE compensated, seeing as they were the ones to pioneer it.

        And in fact, they are at least partly:

        http://www.zdnet.com/govt-to-pay-isps-for-nbn-voice-migration-1339339776/

        No, it’s NOT for broadband. But then at least they get SOMETHING. AND they WANT the NBN, because it levels the playing field. I think they’re happy to take the writedown (if there is one, which I doubt, seeing as they’ve likely paid them off already) on the DSLAM’s to get the access to the increased revenue the NBN is likely to bring through increased market share.

        • “No, they’re not. But that was not anywhere near the same investment level as Telstra/Optus. However, I WOULD feel better if they WERE compensated, seeing as they were the ones to pioneer it.”

          So who should compensate them? The government (via NBNco) or Telstra the ones who are standing their assets due to the deal. Also should we be compensated by ISPs for our stranded ADSL2+ modems?

          • @HC

            They’re being compensated for voice services. That should be enough to cover most of the DSLAM outlay, without which, many millions of Australians would be still on ADSL1, like the rest of us.

            iinet, Internode and TPG did the real competition work in Australia. If anything it should be them and NOT Telstra who get compensated. But Telstra own the lines and the ducts, so it is necessary by law. It also saves NBNCo. time and money to boot. Quite alot of time and money actually.

      • Who said the DSLAMs were stranded? It’s actually a massive opportunity if handled correctly.

        The NBN is only being rolled out to premises, any internal wiring is up to the building owner, so take for example a shopping centre, unless the building owner changes the wiring then the internal will still be copper and the delivery to the building will be fiber.

        Along comes service provider EnigmaNet (the mystery provider who could be anyone), who strikes a deal with the shopping centre chain to put DSLAMs into the comms room and supply high speed services over the short internal cabling. An 8W bonded service for example could easily push 40M/40M over the distances we are talking about, far above and beyond what a lot of these businesses would currently be operating on, and it means improved reliability since the most failing portion of the network, the copper, is far far shorter and all building internal.

        Take into account that the providers you listed along with others could easily have in access of 1000 DSLAMs (allowing for multiple DSLAMs in exchanges) and you would only need 1 DSLAM per shopping centre it’s entirely feasible that this could be done.

        • @Tezz

          Interesting idea. Very innovative actually. I’d not thought of them using the DSLAM’s afterwards, but with these sorts of connection systems, it certainly seems a viable way to reuse them. :)

      • But iinet and TPG can move a DSLAM to a different exchange
        and only after the copper has been shut down in an NBN area
        can’t do that with the copper network or the HFC network

        Also iinet and TPG can sell the DSLAM after they don’t need them anymore

        Why should they be compensated for that?

        Also should Telstra compensated an isp if they put in a RIM and make the DSLAM useless in the exchange?

      • I’d argue that iinet and TPG are being compensated by virtue of the fact that I shouldn’t require their services once the NBN is built. What value do they add to me? Why can’t I just buy a pipe to the internet from one of the big pipe players if that’s what I want from this network? All I want is to connect my business in location A to my business in location B. The NBN is doing that already. Why do I need iinet and TPG???

  6. Since when has the ACCC’s job included “being the avoidance of the cost of Optus operating its HFC network”?

    If “Optus customers on the HFC were likely to be migrated to the NBN eventually anyway as they desired higher speeds” why is the NBNCo paying $800m npv to make it happen?

    The NBNCo-Optus deal is a condition precedent of the NBNCo-Telstra deal. The Optus deal has to happen so the Telstra deal can happen. We all know this process has been a sham. The result was always a foregone conclusion.

    • “If “Optus customers on the HFC were likely to be migrated to the NBN eventually anyway as they desired higher speeds” why is the NBNCo paying $800m npv to make it happen?”

      Because they make more than the $800m in aditional revenue by having them migrate now.

    • Come on CMOT, the timing will be flexible- the contracts will allow changes.

      You’re nit picking for the sake of it. You don’t like the deal, fine.

      But without it we get no NBN, as you said, because we get no Telstra deal.

      Would you prefer that?

      • “Come on CMOT, the timing will be flexible- the contracts will allow changes.”

        Paul O’Sullivan is reported elsewhere today as … “The program should be completed – and the 800 million smackers banked – by 2018, Sullivan said.”

        This sets a clear expectation today that the migration will be complete by 2018. It’s perfectly valid to ask how they will achieve that.

        I’m in an Optus HFC area. I was expecting to be among the last covered by the NBN. I’m delighted they’re doing us early. I suspect Renai is quite happy too.

        • The expectation may be there CMOT, doesn’t mean it can’t change or be renegotiated.

          But seeing as the NBN is rolling out by transit and backhaul in place as well as most efficient path, not by connection type, there’s no reason to believe you’d get it any earlier or later than 2018 anyway.

        • Paul O’Sullivan is reported elsewhere today as … “The program should be completed – and the 800 million smackers banked – by 2018, Sullivan said.”

          Completion by 2018 is up to NBN Co keeping it’s rollout on schedule, not Optus.

        • @CMOTDibler, it is at least two years since we were first told that the HFC customers would probably be migrated in the 2014-2018 timeframe.

          This is because the NBN priority is to get services to underserved areas first, and those blessed with cable in the 1990s were selected by Optus (and overbuilt by Telstra) as high-profit markets.

          Few HFC customers would still be satisfied with coax seven years from now, of course, but for now they are considered less needy than regional areas.

  7. Thanks for a great article and analysis, Renai,

    In your more recent article today, you have re-published Mr Turnbull’s article and, of course, used the same title, which is quite expected. As we all know, Mr Turnbull’s comments are most definitely not in favour of the ACCC’s decision.

    In this article, you have, as you normally do, split the article into categories of News, Criticism and then your own opinion/analysis. The key element of this article that I wish to raise with you is this article’s title and the use of the term, “rubber stamp”.

    As we know, “rubber stamping” commonly refers to the act by a person or organisation of blindly authorising a transaction, regardless of any potential impact, though they have the authority to reject it.

    In exercising its duty, it seems that the ACCC has given significant consideration to the NBN Co – Optus arrangement and, in this case, has made a determination to allow the arrangement to proceed.

    As we have seen with the recent rejection of the NBN Co Special Access Undertaking, the ACCC certainly does not have a track record of simply rubber-stamping all arrangements regarding NBN Co.

    By using the “rubber stamp” terminology in a headline title of a contentious issue, it seems as though you are undermining the value of the ACCC’s role and existence and are insinuating that the ACCC will always blindly support the government’s position.

    You, naturally, have your own view on the matter, which you have made clear in the opinion/analysis section of this article, as well as previous articles. Hopefully most people, certainly myself and also anyone reasonable and open-minded, respects and appreciates your input.

    As a highly-respected journalist, is it not prudent to provide appropriate headlines for articles which indicates the content of the article and also does not reflect a bias or attempt to sensationalise an article before readers have a chance to get past the headline?

    It is unfortunate that other news outlets often employ this exact method of attracting readers. Thankfully, Delimiter isn’t just another one of those news outlets.

  8. Ahh 800 mill for Australian’s future small chickens :)
    On a side note, anyone still following the Leighton’s Singapore to Perth cable? It was announced a year back, still waiting to hear more news about it.

  9. Renai, I completely disagree with you on this occasion.

    NBNCo has the task of expediting delivery of universal, long-term broadband infrastructure, which by definition means fibre to every dwelling and business in the urban footprint.

    The Telstra agreement delivered a saving of $8 billion and several years on the construction cost.

    It included agreement for an admin fee for migrating customers from coax to fibre when available, because it makes no sense to wrangle over the minority of HFC users in a fibre area, when they will all want it by 2018 anyway.

    The Optus agreement likewise saves NBNCo the delay and cost of revisiting areas to retrofit fibre years after the main rollout has gone through an area.

    Bringing HFC customers onto the NBN sooner expedites the repayment of the NBN construction loans.

    Telstra is now 46% up on its twelve-month low of $2.69, proving that these agreements are NOT detrimental to business as portrayed by MT.

    In short, both agreements regarding the 500,000-odd HFC customers serve to expedite the 100% rollout, reduce its build cost and appropriately compensate the modest revenue loss that would otherwise be incurred by Telstra and Optus, as required for all compulsory acquisition, since NBNCo is government owned.

    They are beneficial to customers, and foster retail competition, hence the ACCC approval.

    • @Francis

      Well said. However, just to nit pick, because I can…. :P

      It’s actually close to 940 000 customers on Telstra/Optus HFC, not 500 000 :D

        • Welcome Francis. I try to be as accurate as I can, to minimise FUD makers ways to squirm around actually answering arguments.

          You appear to have the same attitude, so thought I’d just point it out :)

  10. Yeah, great. I wish I could get 80mbs on the DOCIS 3 optus HFC. I only get 20 because of congestion.

    Fail.

  11. Renai, although I agree with the ACCC today on the Optus customer migration arrangement, I utterly disagree with their insistance on 121 Points of Interconnection, which created a two-tier wholesale structure that gave a benefit only to four incumbent fibre longhaul owners including Telstra and Optus who lobbied to raise it from the technically optimal 14 POIs.

    THAT was an anti-competitive decision, which raises the base cost for all other retail providers and cannot be justified as good for either Consumers or Competition.

    Two redundant POIs in each capital city could have been cheaply accessed by any would-provider, giving them access to all customers in the nation. But the extra 107 POIs add a third-party wholesale access cost burden unless you happen to be Telstra or Optus. It even costs NBNCo more to operate them. They are anti-competitive and raise the cost of retail services, and the ACCC should allow NBN engineers to determine the optimal network design and the retail market to operate freely.

    • @Francis

      Agree Francis. The ACCC was bullied and badgered into this by Telstra, Optus, iinet and TPG. 14 POI’s may have been enough, but even, say 40 would’ve been a thousand times better than 121.

      THIS right here, the 121 POI’s, is Turnbull’s vaunted “market forces”.

  12. Its simple.

    You need the majority on the one network (NBN) to make it reality and a success (IE, to make enough money to pay it off). If you have copper, and 2x cable networks, its not going to work is it because some people have no idea how much better fiber is to their crummy adsl.

    From a customers POV, its a win, because you’re going to get a far better service (current and future), along with the choice of being able to choose multiple providers (unlike only two on the two cable networks, being Optus and Telstra) to the MAJORITY 93% of the population (something cable does not do)

    I’d move off cable to FTTN in a heartbeat.

  13. Hey everyone,

    thanks for the debate over the past couple of days. There have been some good points raised.

    However, at times I fear the conversation has been getting a little heated at times on Delimiter and sometimes a little circular. Sometimes the argument has also gotten a bit irrational. This isn’t what I’m really aiming for with the site — what I want to promote is new ideas, new discussions, to help push things forward.

    I want Delimiter to be a forum of open-minded individuals, debating things based on evidence. I don’t like inherent political bias and I have felt recently that some of this has crept back into our conversation.

    With this in mind I’m closing this thread. I’ll consider over the next couple of days how to stimulate things more in the direction I’m after.

    Cheers,

    Renai

Comments are closed.