Dark day for the ACCC as it abandons competition

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The following article is by Shadow Communications Minister Malcolm Turnbull, in response to an announcement by the Australian Competition and Consumer Commission yesterday authorising NBN Co’s contract with Optus. It first appeared on his web site.

opinion The ACCC has given its final approval to the payment of $800 million of taxpayers money from NBN Co to Optus in return for Optus decommissioning its HFC (cable) network and thereby not competing with the NBN’s monopoly service.

This is a very black day for the ACCC. This agency is established to promote and protect competition. For years, decades, it has railed against Telstra and its quasi-monopoly status in telecommunications and has called, again and again, for more competition. And those calls have resulted in more competition, in open access to Telstra’s network and to broadband prices falling dramatically as telecommunications service providers installed competitive infrastructure around the country.

In every country in the world a key objective of telecommunications policy has been to encourage facilities based competition – in other words to ensure that wherever possible there is more than one wireline available for customers’ premises. In many markets that it is typically HFC and VDSL or ADSL over copper and often of course fibre optic cable as well. But nowhere else in the world has a Government established a new fixed line monopoly and actually paid billions to dollars to the owners of the HFC networks not to provide broadband and voice. It is the very pinnacle of anti-competitive behaviour. The Telstra part of this shabby arranagement was legislated so the ACCC really had no say in it, but they could have and should have blocked the Optus deal.

The reasons given by the ACCC are confused and contradictory.

They acknowledge “the HFC Agreement removes a potentially significant fixed line competitor to the NBN in Brisbane, Sydney and Melbourne. Competitive pressure from the Optus HFC network may have resulted in positive outcomes, notably prompting NBN Co to improve its performance.” And then they say that in their view Optus is unlikely to extend or upgrade the HFC network (well what did you expect Optus to say when there was $800 million on offer) and that in any event over time the NBN would overbuild the HFC and provide a better service thereby putting the HFC out of business.

This ACCC reasoning is unbelievably confused and contradictory.

First, why would you assume as a given fact that the NBN will overbuild the HFC network? Sure they say they will, but if costs continue to blow out they may choose to act rationally and only build in areas that dont have good broadband today. And more importantly if you are going to get the crystal ball out, isn’t there just a teensy weensy possibility there of a change of Government which will take a very different approach to the NBN?

Second, even if the NBN did overbuild the HFC why would you assume that makes the HFC redundant? There are plenty of markets where fibre competes with HFC – the United States and Korea are two of many examples. In fact HFC competes with fibre in Singapore where the owners of Optus can be found. Even if fibre can provide the highest possible speed, that does not make HFC uncompetitive at the lower speeds the vast majority of consumers will want to pay for.

Third, why would the ACCC think it can foresee what technology upgrades are available for HFC anyway? Nobody would have predicted a decade ago that you could 80 mbps running over legacy copper systems as is now available with fibre to the node. The VDSL technology is getting better and better all the time. This is why we have markets to work out which technology will prevail, not bureaucrats picking winners.

Fourth, and this probably the most shocking aspect of the decision, if the Optus HFC network is just about clapped out, and if Optus will never upgrade it, and if the NBN will overbuild it and put it out of its misery as the ACCC asserts, why in heaven’s name is the Australian Government paying $800 million of our taxes to Optus to shut it down?

And who benefits from this transaction?

The public? Certainly not, they could have had a competitive market, they could have had Optus with an incentive to invest in the HFC or sell it to someone who would. And it is their $800 million that is being handed over to Optus. The NBN Co? Well according to the ACCC they are paying $800 million to have an unviable, inadequate network shut down which they would have overwhelmed in due course without turning a hair. Optus. You got it – it is Optus that has hit the jackpot. $800 million in cash.

Of course the truth of the matter is this. The NBN Co are not lunatics who shell out $800 million for nothing as the ACCC suggest. On the contrary, the HFC is an extremely viable competitor with the NBN Co and because its original capital cost was written off long ago, Optus could upgrade it for a modest cost which would enable it to undercut the NBN on price and provide equivalent services for most customers.

Recognising this the Government and the NBN Co decided to use our taxes to buy out this competition just as they have done with Telstra’s HFC. A black day indeed for the ACCC and competition in Australia. And now that this is done it leaves Senator Conroy and Julia Gillard free to focus on their next target – interfering with competition and freedom of speech in the print media.

Image credit: Office of Malcolm Turnbull

Related posts:

  1. ACCC raises competition concerns over NBN’s Telstra HFC deal
  2. Wireless NBN clause could harm competition: ACCC
  3. “Heroic”: Turnbull savages ACCC Optus sign-off
  4. ACCC chair says NBN should be broken up, compete with itself
  5. ACCC approves Optus’ $800m NBN deal

68 COMMENTS

  1. Question: if NBN Co are footing the Bill for this, that is ostensibly NOT taxpayer money as it will be funded as part of the NBN infrastructure roll out. Am I missing something here?

  3. Bit Chicken Little there Renai don’t you think?

    The NBN (and the associated payouts to Telstra and Optus to stop them delivering services on a competing last mile infrastructure) does not remove competition, what it does do is give all service providers a “level playing field” when it comes to access.

    Hell hypothetically it would mean if you wanted to start up your own local service provider it would be easy, install some equipment in a rack at the local NBN POI, one side goes to the NBN for last mile services, the other side does to a backhaul provider for your connectivity. And because an NBN POI covers a much larger area then an exchange currently then you would only need minimal equipment layout by comparison to be able to access a larger number of customers.

    • The removal of the HFC cable networks does remove infrastructure-based competition from the market. Instead, what we get is a different sort of competition above the infrastructure layer. The jury’s still out on what sort of telecommunications competition is best.

      • The jury’s still out on what sort of telecommunications competition is best.

        Hence my Chicken Little comment.

        • “Hence my Chicken Little comment.”

          Yes. My apologies for not recognising how mature and well-explained your argument was. Sorry dude, but you didn’t go into any of the nuances here.

          • Ouch Renai, going for the jugular huh? :)

            My argument is that removing last mile competition (which is what the money going to Optus and Telstra effectively does) opens up the playing field for all service providers, and removes the single company vertical integration that Telstra currently is.

            And it means should a small local provider wish to send up shop from a single POI, it is now far cheaper (on a $ outlay per potential customer basis) and easier to invest compared to the current infrastructure.

            .We’ll see in the long term if this is better or not, but calling it a “dark day” now is going a bit overboard.

      • “The removal of the HFC cable networks does remove infrastructure-based competition from the market.”

        Renai is spot on here.
        NBN Co neither owns or operates some of the existing major backhaul infrastructure links across Australia. Companies like NextGen Networks are already doing that and existing ISPs are already purchasing backhaul from these other companies.

        “Instead, what we get is a different sort of competition above the infrastructure layer.”

        Again, Renai is spot on.
        What we get is the removal of the wholesale competition towards the retail side of the market, which is just the bit that connects to the premises.
        The result is a push into increased competition within the retail sector which is exactly what we’re seeing with the NBN – many, many Retail Service Providers (RSPs) providing services to end users on a consistent infrastructure framework, nationwide.
        NBN Co and those RSPs will still use the wholesale backhaul services of companies like NextGen, so there is still plenty of wholesale competition in the wholesale market where it belongs!

        There is no reason and, in fact, it is detrimental to have a wholesale provider competing in a retail-facing market – case in point: Telstra’s vertically-integrated monopoly.

  4. I don’t understand Malcolm’s motives here.

    Under (what little we know of) the opposition’s broadband policy, the monopoly would be handed over to Telstra to build a FTTN rollout. Telstra would then use that monopoly to their advantage (as they have done for years) by charging vastly anti-competitive rates for access to wholesale providers whilst simultaneously discounting the prices it’s own retail arm provides to customers whilst simultaneously denying such a practice is occurring.

    Then of course once 95% of Australia’s internet population are connected to Telstra the price just keeps going up and up and up.

    Malcolm needs to look no further than Telstra’s recent price rises in mobile (via reductions in mobile data allowances) to see what happens when Telstra gets enough market share back in anything.

    • I think you just inadvertently answered your own question jason.

      It’s known as dumb political ideology…

      Of course it’s not ok for a well planned governmental rollout of the best technology, using borrowed funds/debt, having the network receive a reasonable return to allow both affordable comms for all Aussies and a ROI which will allow the network to repay the debt and repay itself, inevitably becoming a valuable asset, which will help all Aussies both directly and indirectly…

      Because government owned = waste and reds under the bed. Surely you know that?

      Sorry no conservative worth his Fioravanti suit could ever agree to this, no matter how much sense it may make to the apolitical humans.

      So as a consequence, it is of course ergo ok to gift $b’s to a private company of like-minded chaps, for them to build and own our (but a vastly inferior) network, using our subsidies, with no return to us, no repayment (taxpayers in fact $b out of pocket) for the build, no asset ownership for us and to allow these like-minded chaps to again hold the nation to ransom and give us technologies when they are good and ready thank you, while of course charging like the proverbial wounded bull, for allowing us the privilege of accessing their dated network….

      Because this is flourishing capitalistic democracy in all it’s state of perfect wonderment. Surely you know that too?

      And those in the Fioravanti suits and their precious dividends smile all the way to the bank and live happily ever after. While we enjoy “premium Telstra emblazoned tin cans – at a premium price”!

      :/

  5. Personally I don’t think it was right to pay to have it removed.

    If it is a competitor then whatever. That shouldn’t affect the NBN anyway, the NBN should be put in place, then any other network HFC or whatever, should be able to attempt to compete if they wish.

    Of course there is possibly more to this than we are seeing.

  6. Sorry Renai. While I agree that the $800 Million is a big kick in the teeth, this is VITAL for the NBN. And the NBN is VITAL for Australia. The ACCC know that, THAT is why they have allowed this. AND why these points only JUST outweighed their normal mantra of “Increase the competition”

    “First, why would you assume as a given fact that the NBN will overbuild the HFC network? Sure they say they will, but if costs continue to blow out they may choose to act rationally and only build in areas that dont have good broadband today. And more importantly if you are going to get the crystal ball out, isn’t there just a teensy weensy possibility there of a change of Government which will take a very different approach to the NBN?”

    Because they are mandated by the government to do so. It’s that simple- 93% MUST include these areas with HFC. The costs are LEAST likely to blowout in the metro areas, so these are the MOST likely to get done, as they also ensure the business case better than the regional areas. Yes, there could indeed be a change in government- which is EXACTLY the reason the ACCC have allowed the deal. They KNOW the NBN is the BEST deal Australians can get compared to whatever weakling, useless thing the Coalition currently have. Hence, they are subtly pushing the political agenda to make it MORE difficult for the Coalition to scrap the NBN.

    “Second, even if the NBN did overbuild the HFC why would you assume that makes the HFC redundant? There are plenty of markets where fibre competes with HFC – the United States and Korea are two of many examples. In fact HFC competes with fibre in Singapore where the owners of Optus can be found. Even if fibre can provide the highest possible speed, that does not make HFC uncompetitive at the lower speeds the vast majority of consumers will want to pay for.”

    Because it has ALREADY made HFC redundant. Uploads ALONE do that. HFC in this country is a pale shadow of what it is in Asia, Europe AND the US. Our nodes have MUCH higher contention ratios than the rest of the world, because it was built with ONLY TV in mind, to a small (relative to say the US) population. HFC would need hundreds of MILLIONS invested in it to even EQUAL the NBN and both Optus AND Telstra have publicly stated they are not interested in this, even BEFORE the NBN. HFC will not be competitive to the lower speed customers….because in less than 10 years we’re not likely to HAVE “lower speed customers.” You have printed the results of the NBN tier uptake yourself. It indicates we want higher speeds and in 10 years, that’s only going to be higher again. Therefore those competitive advantages at “lower speeds” on HFC disappear- AGAIN why the ACCC approved the deal in this light.

    “Third, why would the ACCC think it can foresee what technology upgrades are available for HFC anyway? Nobody would have predicted a decade ago that you could 80 mbps running over legacy copper systems as is now available with fibre to the node. The VDSL technology is getting better and better all the time. This is why we have markets to work out which technology will prevail, not bureaucrats picking winners.”

    There is NO question tech for HFC will get much better. But it’s ALREADY behind GPON and it will only get further behind. DOCSIS 3.1 isn’t even out of R&D yet and won’t even match GPON, let alone GPON10 and BOTH those are available now. It is a case of what the LIKELIHOOD of HFC being better or equal to GPON in ability AND price, when we all have GPON- and the likelihood is, very small. Hence AGAIN why the ACCC have agreed to the deal.

    I think the ACCC’s decision in this is actually one of the more concise victories FOR the Australian consumer. In ONE swoop it makes the deals between Optus/Telstra and NBNCo. VERY difficult to undo, ensuring a higher likelihood the NBN continues under the Coalition if they are elected. AND it also strengthens NBNCo.’s business case NOW so that the Coalition have LESS ammunition against them AND so equity in the private market is easier to come by.

    This was a POLITICAL decision to help consumers long term- NOT a regulatory decision to help consumers now. It makes little to no difference to consumers NOW- neither Optus NOR Telstra were going to significantly invest in their networks. They haven’t in the last 15 years, why would they now after writing them off??

    It ISN’T a very palatable deal in the context of competition. But it is VITAL for the NBN to continue and have the best chance OF continuing. And the NBN IS the best for consumers in the long term. The ACCC haven;t abandoned their ideals at all- they are simply seeing PAST the today and THROUGH the political veil to see the ULTIMATE goal being much, MUCH better for the Australian consumer than ANYTHING we have now.

      • Yeah….quiet at work… :P

        I don’t like the fact, at ALL, that we have to PAY these companies AGAIN, after paying them ALREADY to give us these crappy services.

        But it IS the way to GREATLY increase the chances of the NBN which is, without getting too hyperbolic, the saviour of our telecom services…..

    • I like it. BUT you put the caps on a lot of words that did NOT need them. :) Other than that I think this a good thing, although I’m sure the anti-NBN biggots will use this to try knock us back to 1999. It may not be fair Optus and Telstra get to cut deals to sell back some of the hundreds of millions of dollars that they invested (although half heartedly) into these places, but TPG ect will never have a chance at making this a competative market without the NBN. It’s a nessasery price to pay.

    • Holy shit man, I think thats almost the best thing I’ve ever read.

      #1 still goes to Renai’s rebuttle of Joe Hockey’s 4G claims…

      But mate, you didnt just hit MT’s post on the head, you knocked it straight through the wood.

      • Lol. Cheers.

        I feel exceedingly strongly about the NBN. And this deal was vital for that. But I do not in any way advocate decreasing competition elsewhere. Australia’s capitalist market is, in general, quite good (perhaps with the exception of the supermarkets maybe- but at least the consumer wins there) and I would expect the ACCC to maintain that as that is their foundation- increasing competition to benefit the consumer.

        It only doesn’t wholly apply in the case of the fixed-line telecommunications sector because…..where, who, what competition??

        P.S….I’ll try and use bolding more often….people seem to think I’m yelling at them and I don’t mean that….usually :D

        • I agree. The NBN is likely to be Generation Y’s crowning achievement and gift to the country. Unified Telecommunications Infrastructure that will last beyond our generation. Its not short-sighted, its not poorly planned. Its well-researched, well-planned and backed up by many many MANY engineers that are happy to agree – because its the RIGHT solution.

          Labor may get many things wrong, but they’ve listened to the actual engineers here. They’ve listened to the people. Dont half-ass it, do it once, do it right, do it with Fibre !

          PS – Bold and Italics are your friend bro :D

        • I fully posted a modified version on Malcolm’s site.

          I doubt he’ll read it. But you never know. And at least those who come to see what he is saying will have the alternate POV instead of a one-sided, heavily conservative POV only.

    • To add to seven_tech’s point, even the large HFC operators (Comcast etc.) see FTTH as the future – they are going direct to FTTH for upgrading pre-HFC cable plant, building PONs for their business services and there are compatibility layers that allow them to provision FTTH connections using DOCSIS infrastructure.

    • “While I agree that the $800 Million is a big kick in the teeth, this is VITAL for the NBN. And the NBN is VITAL for Australia.”

      The NBN is vital. Paying $800 million to Optus for their HFC isn’t vital to the NBN. NBNco should not pay them anything for something that will die naturally as a result of the NBN existing.

      • True on one aspect HC- NBNCo. don’t need no stinking Optus HFC customers enough to pay $800 Million….but if that amount produced enough political momentum by making it too difficult to undo the Telstra/Optus deals and hence ensured the NBN….?

        Would the $800 Million be worth it then….? Seeing as we’re not paying for it and all too.

        • I agree with that but only tentatively, on the one hand as you say it gives the NBN more political momentum however it is also something that can be used against the NBN in the future “see see, I told you so, the NBN is only successful in those areas NOW because Optus was paid $800 million”

          I am confident NBN will destroy HFC regardless of how much Optus is paid, it would be nice if the people making these decisions did too. There is a big opportunity here to say something like: “You want infrastructure competition??? OK you got it, let’s do it, let’s show you how pointless it is with this HFC exercise by steamrolling Optus with our fibre. Optus can try and compete with our fibre if they like, when they’ve run out of HFC customers because they all moved to our superior services on the NBN we’ll offer a grand total of $0 for it” yeah, aren’t Optus lucky they are dealing with people more diplomatic than me…

  7. Competition isn’t the be all and end all in this equation stop reducing the argument to such simplicities

    • +1 Simon

      ZD Net’s take – “The ACCC’s stance was that benefits to the public outweigh the detriments…”

      In the end that’s their mission, to weigh up the pro’s and cons and then do what ‘s best for consumers.

  8. While I agree with some of what you’ve said here, what I’m interested in is your third and fourth points.

    “Third, why would the ACCC think it can foresee what technology upgrades are available for HFC anyway? Nobody would have predicted a decade ago that you could 80 mbps running over legacy copper systems as is now available with fibre to the node. The VDSL technology is getting better and better all the time. This is why we have markets to work out which technology will prevail, not bureaucrats picking winners.”

    We’ve had successive governments attempting to use a market-based approach to fixing our telecommunications woes. With the advent of the internet itself, John Howard made a fatal mistake in allowing the sale of Telstra with its fixed-line assets intact. You know it, I know it and we all know it. It was a mistake in the grandest form. After that sort of bungle, you can hardly blame people for wanting unified infrastructure. Its a bit like moving house and playing a guessing game as to whether you’ve got power lines to your house or not.

    VDSL is good. But its not a long-term solution. Your idea hinges on the principal that we should build for now rather than later. Thats silly. This needs to be something with the legs to expand beyond the basic need. Needs change, so should be basic infrastructure. HFC also fits this bill. its very much a ‘now’ solution, not a 50 year plan. Wheres your plan Malcom? because at the moment, its looking alot more like NO plan than plan.

    “Fourth, and this probably the most shocking aspect of the decision, if the Optus HFC network is just about clapped out, and if Optus will never upgrade it, and if the NBN will overbuild it and put it out of its misery as the ACCC asserts, why in heaven’s name is the Australian Government paying $800 million of our taxes to Optus to shut it down?”

    While I agree that it wasnt the BEST decision I’ve seen – I certainly wouldnt have given Optus this sort of money… I do think that your question here may be an internal admission that Optus has ZERO intention of upgrading. If only Telstra upgrades HFC, then wheres your market-approach gone? The NBN will overbuild it, Optus has written it off. Stop flogging a dead horse and realise that we’re at the end of the HFC rope. It works well now sure, but you have a solid chance of being elected NOW purely over this policy.

    Get your head in the game. Take up the NBN wholesale and do it properly, not this half-assed admission you have that they ARE actually right !

  9. “First, why would you assume as a given fact that the NBN will overbuild the HFC network? Sure they say they will, but if costs continue to blow out they may choose to act rationally and only build in areas that dont have good broadband today. And more importantly if you are going to get the crystal ball out, isn’t there just a teensy weensy possibility there of a change of Government which will take a very different approach to the NBN?”

    Oh dear. This is the worst argument I’ve ever seen.

    You’re effectively saying “Optus shouldn’t shut down its HFC network and transfer customers to the NBN because the NBN might not build in those areas”.

    Please, Turnbull, tell me all about how Optus would transfer their customers to a network that isn’t there.

  10. “Second, even if the NBN did overbuild the HFC why would you assume that makes the HFC redundant?”

    It’s redundant because it does nothing that the fibre doesn’t.

    “There are plenty of markets where fibre competes with HFC – the United States and Korea are two of many examples. In fact HFC competes with fibre in Singapore where the owners of Optus can be found.”

    Yep, and it doesn’t seem to result in lower prices. I heard that Verizon recently upped their fibre pricing…

    “Competition exists!” doesn’t equal “infrastructure competition is better than a regulated open access wholesale-only network with strong retail competition”.

    “Even if fibre can provide the highest possible speed, that does not make HFC uncompetitive at the lower speeds the vast majority of consumers will want to pay for”

    If your concern is the cost of services, costs for NBNCo customers are lowered by having more people on their network (and not on a redundant “competing” network). I understand that the concept of a natural monopoly may be different to grasp on your side of politics, but please try.

  11. “Third, why would the ACCC think it can foresee what technology upgrades are available for HFC anyway?”

    Technology isn’t magic. It’s pretty easy to work out what is possible in the near future.

    “Nobody would have predicted a decade ago that you could 80 mbps running over legacy copper systems as is now available with fibre to the node.”

    Actually, the VDSL standard was approved in 2001, after first being proposed in 1991.

    Don’t forget to mention the words “up to”, and (if you’re brave) throw in a % figure of how many customers will actually get the full speed under a coalition government. I am going to boldly propose 10%, based on current ADSL2+ statistics.

    “The VDSL technology is getting better and better all the time.”

    No, it isn’t. The original ADSL hit the physical limits for speed on copper lines of certain lengths. ADSL2+ added more speed on shorter lines. VDSL did the same. VDSL2 did the same. Very few advances were made. Pretty much all each advance did was scale up the previous standard, increasing speeds at DECREASED line lengths.

    The “speed at 3km” has not changed in a very long time.
    The “speed at 2km” has not changed in a very long time.
    The “speed at 1km” has not changed in a very long time.

    Vectoring was the last trick in the book. Unless a new magic way appears to remove noise from the line, speeds at fixed distances will not increase.

    “This is why we have markets to work out which technology will prevail”

    Here lies the problem. The market is not defaultly “right”, and the technology with prevails is not necessarily the best for consumers.

    This is the main ideological difference.

    Labor is saying that the market has failed, and that the government must intervene to make sure consumers get the services they need. I am inclined to agree.

    The Coalition is unable to say that the market has failed, because the ideology defines the market to be successful. This leaves them in an awkward position where they attempt to half-fix the problem without directly admitting that it exists. It’s almost painful to watch.

    “not bureaucrats picking winners.”

    You can’t talk. You picked FTTN and HFC as your winners.

    • “Labor is saying that the market has failed, and that the government must intervene to make sure consumers get the services they need. I am inclined to agree.

      The Coalition is unable to say that the market has failed, because the ideology defines the market to be successful. This leaves them in an awkward position where they attempt to half-fix the problem without directly admitting that it exists. It’s almost painful to watch.”

      You’ve hit the nail on the head here. Ideology is fine, but you need to be able to recognise that it’s not black and white. I’m all for letting the market decide, but, there are situations where leaving it to the market will fail. It’s pretty clear that in the case of telecommunications infrastructure the market has failed and will fail in a market like Australia. The coalition need to learn to accept this fact and move on.

      It’s time to be a little more pragmatic Malcolm.

      • @Justin

        “The coalition need to learn to accept this fact and move on.”

        You are kidding right?? You must be?? Malcolm might, just might accept it, maybe. But Tony NEVER would.

        End of story.

        • :-)

          I said they need to learn to accept this and move on. I have no illusions that they actually will. Certainly Tony never will. Even if Malcolm does, I doubt he’d voice it.

  12. “Fourth, and this probably the most shocking aspect of the decision, if the Optus HFC network is just about clapped out, and if Optus will never upgrade it, and if the NBN will overbuild it and put it out of its misery as the ACCC asserts, why in heaven’s name is the Australian Government paying $800 million of our taxes to Optus to shut it down?”

    It makes the transition smoother. The network shuts down progressively as the NBN rolls out, rather than after 5-10 years of messy competition.

    The only valid argument is that the price was too high, but it’s not the ACCC’s job to decide if NBNCo is getting a good deal. In fact, almost all of this isn’t their job. It isn’t their job to set policies.

    I won’t bother addressing your conclusions, since they are based on false arguments, misunderstandings and misrepresentations.

  13. I am somewhat confused as to how Malcolm says that competition gives us lots of choice of broadband. Competition did not do anything like that in Perth metro area. Telstra put in a small bit of HFC and then stopped , OPTUS put none in. Some ISPs put in fibre in thet CBD and cherry picked and that was that.
    Please show me Malcolm how the competition (which was very empowered during the last coalition Govt) gave us all these amazing high speed internet offerings choice over a variety of infrastuctures.
    Telstra also did sfa and left large numbers of Perth residents on RIMS with no hope of internet. Any sign of Telstra puting fibre up our street ….dream on.
    Malcolm also appears to want to restrict the speed available to residential customers for some unfathomable reasons like “12Mb/s is fast enough”…for what a household, per person in the house (that would be a better promise…there are 8 regular interenet users in our house….does that mean Malcolm will somehow let us have a min of 96 Mb/sec ?).
    I am all for comptetition bu tonly if it deleivers and in regrads to ubiquitous internet has so far badly failed,
    end rant

  15. The funny thing is if NBNco had acquired Telstra’s and Optus’ wholesale business outright, Labor’s NBN would indeed be impossible to undo (you can’t rescind a completed sale transaction few years later).

    But by structuring the transaction as a piece-meal customer migration process tied to NBNco’s decade-long, glacial rollout pace, Labor has actually made the NBN comparatively easy to undo.

    So, this ACCC rubberstamp is of no consequence.

    • @Michael

      “The funny thing is if NBNco had acquired Telstra’s and Optus’ wholesale business outright, Labor’s NBN would indeed be impossible to undo (you can’t rescind a completed sale transaction few years later).”

      That would’ve cost almost as much as the NBN to be constitutional. And then they’d just build over it with the compensation. What a ridiculous suggestion.

      “So, this ACCC rubberstamp is of no consequence.”

      Keep thinking that. Then watch as you realise the Telstra deal is void if you undo the Optus deal or vice-versa….and the penalty payments make up nearly half the total contract cost by the time you take into account renegotiations, and you end up with nothing for it….good luck to them with that….

          • NBNco is directly paying Telstra $11bn in net present value terms. After factoring in the billions more earned from the CAN over the next decade (post contract-signing but prior to actual customer migration), Telstra will realise cumulative value within the $15-20bn ballpark (unless the ACCC declares free copper access tomorrow).

            You didn’t really think the corporate sharks on Telstra’s Board along with high-powered advisors would let Senator Conroy short-change them, did you? They don’t elect clowns to the Telstra Board ;)

          • l didn’t say they were.

            Hypothetically, if NBNco acquired all of Telstra’s wholesale revenue today, they would have to cough up $15-20bn today.

            While NBNco is only paying $11bn today in net present value terms (under the FTTH build), this does not represent a “discount” because of the staggered migration of wholesale revenue from Telstra Wholesale to NBNco over the course of a decade (as opposed to immediate accrual today).

            The bottomline, regardless, Telstra is getting their $15-20bn to give up its wholesale business.

          • Od course it’s staggered decomission, whether it is FTTN, FTTH, or magic physics defying wireless, it takes time to install it and move people over. They were always going to decomission copper over time. Do you think they would just turn everyone off at once or if not run the network and maintain the copper for nothing and give the government all income from the copper if they didn’t?

          • Since when have our creative friends (ahem) ever had even one rational argument ?

            Just more of the same FUD I’d say.

          • @Michael

            Not only is what Noddy says true, that the NBN has nothing to do with what Telstra earn on the CAN (considering buying it outright would’ve resulted in Telstra taking that money and building over anything useful the government could’ve done with the copper, rendering any money spent on purchasing teh copper completely wasted) but here’s some numbers:

            Telstra’s revenue (NOT profit) on the CAN this year was $2.5 Billion. Down 9% on last year. Let’s assume, being generous, the NBN only removes, say, another 5% from that. That’s a 16% loss next year, down to $2.1 Billion, followed by another downgrade (cause we’re getting into full speed rollout now) of another generous 20% the year after, down to $1.68 Billion….but Telstra has only JUST at this stage in the final year started switching the copper off as per the 18 month requirement. So it is paying $1 Billion per year, each year, to fully maintain the copper for these years.

            JUST working on those numbers, that’s $2 Billion expenses for $3.78 Billion revenues….a profit of possibly $1.78 Billion. And it only goes DOWNHILL from there as the NBN is in full swing and people are flocking away from the CAN…but there’s STILL a delay of 18 months on every year in Telstra allowed to switch the copper off, meaning they lost more money each time overall.

            Tell me again, where is this mythical $7 or $8 Billion extra magical money coming from on the CAN?…..

          • Go read the Telstra submission to the most recent ACCC fixed-line services review discussion paper. The estimates calculated by various broking analysts ranging as high as $8bn is footnoted in the submission.

            $15bn < $11bn + "billions" < $20bn

            slamdunk.

            (P.S. your numbers are nonsensical. sorry.)

          • @Michael

            I fail to see your point?

            That money doesn’t come from NBNCo. Or the government. Who cares if Telstra make it. At least we don’t pay them.

            You’d have us buy it outright and pay them ALL that money direct instead??? Why should we?? We’ve already paid for the copper once. ANYTHING to pay less for it a second time is better than buying it AGAIN. We pay them $11 Billion and they make, say, $15 Billion out of it. But we STILL only pay them $11 Billion. In your scenario, we’d pay them $15 billion regardless…..that makes no sense??

            Your numbers are the non-sensical ones by the way. I got mine direct from the Telstra Finance report:

            http://www.telstra.com.au/abouttelstra/download/document/tls819-half-year-results.pdf

          • “I got mine direct from the Telstra Finance report”

            LoL — you reckon we should reject the estimates calculated by institutional broking analysts with professional qualifications who get paid six figure bonuses for the research they produce and accept your 2 minute rubbish “calculations”?

            Haha! You’re a natural comedian.

          • Your argument is senseless. Profit to Telstra does not equal cost to build the NBN. The money is just normal income. You may as well add in all the money Telstra made since 2007 and say that is part of the price.

          • @Michael

            “LoL — you reckon we should reject the estimates calculated by institutional broking analysts with professional qualifications who get paid six figure bonuses for the research they produce and accept your 2 minute rubbish “calculations”?”

            I dunno….do you reckon we should reject actual figures coming out from Telstra? Or for that matter, do you reckon we should reject advice from the industry itself in saying that buying the copper is NOT the best way to get value for money??

            I’m not gonna argue this point, because…..because it isn’t a point. Telstra will earn money on the copper during the migration…..great. I don’t care. Neither does NBNCo. They don’t have to pay for it. Neither do we.

    • “The funny thing is if NBNco had acquired Telstra’s and Optus’ wholesale business outright, Labor’s NBN would indeed be impossible to undo”

      And no one would scream like a harpy “Stop the waste!”?

      • Acquiring an existing profitable business is not wasteful. Overbuilding with FTTP to charge ADSL rates is the wasteful bit.

        • @Michael

          And yet that “profitable” business both Telstra and Optus are happy to offload for a lump sum considerably less than what they have put into them over the years…..

          Something tells me it’s not as “profitable” as you’d like to make it out to be.

          And seeing as that FTTP which charges ADSL prices WILL make a return, it’s not wasteful at all. It is a massive boon for consumers for the next 30 years minimum and returns a simply adequate amount to government for loan repayments and future upgrades.

          I know which I’d rather have- The blue chip shares thanks…..

        • “Acquiring an existing profitable business is not wasteful.”

          Your suggestion of purchasing these networks outright is actually wasteful and downright ridiculous. With this scenario you’d still have some arguing to keep the HFC and squeeze as much as they can out of the copper rather than roll out fibre as intended and they’d be more vehement about it too since the government paid for it. NBNcos goal is 93% fibre, not HFC or FttN, any money spent on these things is either a waste (purchasing outright) or an unnecessary (imo) expense (paying Optus for HFC customers).

          “Overbuilding with FTTP to charge ADSL rates is the wasteful bit.”

          I guess you don’t quite grasp what the NBN is all about and that is to charge affordable prices for faster speeds. That’s called progress and it’s called raising the bar. There is no point building a FttH network (and one that is a replacement for the worn out copper) and then artificially charging high prices that are more than what people currently pay, there is no value or point in that at all.

          • l never said the Govt should acquire anything. l just pointed out if they did an outright purchase, then the deal would indeed be impossible to reverse.

            As things currently stand, it is a virtual certainty that Labor’s NBN will end up completely cancelled and abandoned in 2014.

          • “As things currently stand, it is a virtual certainty that Labor’s NBN will end up completely cancelled and abandoned in 2014.”

            Why are you here then? If you believe that is true and a “virtual certainty” the rest of your arguments are simply waste of time. Since you approve of wasting time and effort it’s no wonder you would endorse a FttN patchwork. Thanks for stopping by.

          • @Michael

            “l never said the Govt should acquire anything. l just pointed out if they did an outright purchase, then the deal would indeed be impossible to reverse.”

            So you don’t want them to buy the copper….

            “As things currently stand, it is a virtual certainty that Labor’s NBN will end up completely cancelled and abandoned in 2014.”

            But their current plan, including NOT buying the copper is doomed to fail….

            So you have….NO opinion then? Or you just like being contradictory for the sake of it?

            Or you just think the Coalition can do “it” better….whatever “it” is, seeing as you don’t even seem to know what you want, let alone them….

            Well argued….

  16. Remember the HFC is not going to be decommissioned right now only once the FTTH is in.
    In regard to overseas competition with HFC.
    1) Their cable networks have been upgraded for B/Band
    2) When Verizon or AT&T or Google install FTTH or FTTN it was done with the intent of providing Wholesaling, as the potential customers love their cable TV and the B/Band available on cable is adequate for their CURRENT needs, there has been inadequate migration. Wholesaling went out the window, in fact fibre roll out has slowed as a result when competing with cable. In 20 years time when the customer and SME demands make Current Needs very inadequate, there is no alternative.
    3) Any wholesaling whether fibre or cable is very limited and expensive where available as the companies need to operate vertically integrated to cover costs and make a profit in a competitive infrastructure environment.
    4) This has limited the ability to load shed from wireless, creating issues for the Mobile providers. In fact some of the smaller “local” mobile operators have been forced to pay exhorbitant wholesale rates to allow their customers to load shed onto the local cable provider.
    5) Singapore was quoted. They have some issues there with interconnects and capacity, load shedding etc between their carriers. There was a recent article re that matter. In fact I posted a link to the item previously

    DavidHarry made a point re the effective practical limiting of what is available to residential whether metro or rural.
    Note the explosion of internet enabled TV’s and Media systems, in the US Netflix commands 40% of the evening download traffic (that is actually peak usage time). It is bigger than the total Cable TV volumes.
    Netflix is not the only provider of legal paid content so the paid TV volumes must be massive.
    Any wonder there is pressure to lock in the incumbent Pay TV operators in Aust and block competitors ( in the cause of infrastructure competition, cheaper and faster ). Don’t forget it is not just the payTV operator, But a Major Hollywood studio is involved in the mix (Fox). Plus increasing the propganda reach of a particular Goebellian Media operator
    In the Telstra Fibre areas where wholesaling occurs the isp’s are just resellers and cannot offer alternative Video or TV services. This will be spread Nationally when Malcolms quid quo pro NFN network replaces the NBN ( Borrowing Vailles applicable term “Fraudband”).

    Sorry about the rant, but perspective is needed

  17. 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.