Internode now admits that a full copper cutover is required to rollout a viable National Broadband Network – but says its position has been forced by political and not technical considerations. Internode’s backflip came on the same day that Telstra accused Terria—the NBN consortium to which Internode belongs—of trying to “take Australia back to the last century” with apparent plans to remonopolise telecoms infrastructure, which it says would be a hammer-blow to innovation and investment.
Internode MD Simon Hackett previously argued against a full cutover, claiming that allowing legacy services to endure side-by-side with new NBN services would be good for competition.
But Hackett told CommsDay yesterday that while dual networks were a technical possibility, his hand was forced by a “spineless” political approach to the NBN which meant anything but a full node cutover would be uneconomical.
“We’ve had a lot of internal conversations about this inside Terria and… the gist of it is, the economics win,” he said. Hackett believes that the NBN Request for Proposals had left policy settings wide open, which could result in a loss of competitive tension and would be “dangerous” for consumers. “I think it’s being built on the wrong policy settings but if that’s the policy… then that’s how we have to do it.”
“I have had to agree that this network, whoever builds it, it needs to be built with a full node cutover… if you leave the old [copper network] alive it destroys the business case for the new one,” he said. “The bankers don’t think the money’s going to turn up in the absence of a full node cutover.”
SAYS NBN WILL COST $20B: Hackett said the Federal Government’s price estimate for the build was severely below the mark, forcing the cutover case – “no one in the real world thinks it’s less than $20 billion.”
But the other problem surrounds the access cost of ULLS. “Today the access cost is seventeen dollars and change,” he said. “The Terria business case… works on the presumption that because there will be less of the copper length left you’ll pay less for the ULL.”
He said that since loops would be roughly a third the length, costs should also be roughly a third at $5. “The only way that Terria or anyone else could unambiguously argue to pay less for a sub-loop is if the only things left are sub-loops.”
Meanwhile, Telstra struck out at Terria bid manager Michael Simmons, who had reiterated Terria’s argument that there should be no competing network to the NBN, presumably a reference to Telstra’s stated ambition to expand its own HFC network if it loses the tender.
Telstra policy chief David Quilty accused Terria of “hypocrisy” by asking for a guaranteed monopoly, saying infrastructure competition ultimately benefits consumers.
“Providing one company with a guaranteed monopoly certainly has not been introduced anywhere in the world and if it happened here it would turn Australia into the pariah of global telecommunications,” he said.
Quilty followed with a grim warning that if Terria won the bid, Telstra would not be a customer on the network. “Telstra will compete hard using its existing network assets and the resources available to it to provide consumers and businesses the choices they deserve,” he said.
But Optus government and corporate affairs directs Maha Krishnapillai turned Telstra’s argument on its head, saying competing builds would actually drive prices up. “It would be economic vandalism for Telstra to knee cap the NBN by overbuilding in metro areas,” he said. “Duplicating in certain areas will jack up overall price. The goal is a single, cheap as possible, universally available core fibre network.”
Michael Simmons agreed. “[Telstra’s] shareholders would ask, ‘why are we building a network when you can buy [on the NBN] at a lower overall cost?,” he told CommsDay.Luke Coleman