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The cherries have fallen off the NBN tree

Date posted: 26/03/2011

We have tried to keep an open mind with NBN and the opportunities the concept brought to fundamentally change the telecommunications industry and introduce real competition. However, the amendments recently passed in Parliament regarding 'cherry picking' and NBNCo selling retail should cause anyone with any real interest in competition or the long term viability of the NBN to now become a fierce NBN opponent.

Retail

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With the new retail rules, NBNCo can sell services directly to utilities and other exempt entities. NBNCo is no longer a wholesale access provider, but now a retailer and a vertically integrated retailer at that, just like Telstra. Instead of breaking down monopoly control, the government has recreated another with $36 billion dollars of tax payers money.

Further to this, additional amendments allow NBNCo to provide different pricing based upon volume. Therefore, instead of creating competition with a level playing field, the retailers with the biggest volume (i.e Telstra) will have the biggest advantage.

This outcome is really bad for competition.

Cherry Picking

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The amendments for 'cherry picking' are a real concern regarding the viability of the NBN. One of the arguments for performing the metropolitan fiber build was that it provided additional revenue and infrastructure that can help in subsidizing the regional and rural parts of the network.

Well, with the 'cherry picking' rules, anyone can now go and build a parallel network to the NBN. The network must be a wholesale, open access network, but it's another network all the same.

So if someone comes along and builds a network in key metropolitan areas and then offers access in a cheaper and/or more convenient way, every retail Telco is going to switch to it and the NBN becomes a big, expensive, disused, white elephant.

If you think this doesn't sound plausible, then consider right now, there's over 2,000,000 ADSL2+ tails on non-Telstra DSLAMs today. The only reason to offer a service on a non-Telstra DSLAM is that you can:

1. Get a few dollars off the access tail per month

2. Interconnect at one single location.

Given the economics around NBN's 121+ points of interconnect, parallel networks are going to attract numerous retailers and all the big ones too. If iiNet could for example, shave just 50 cents off the access tail price by using a parallel network instead of NBNCo, they'd increase their annual profit by over $5M alone.

If the NBN is going to be our national broadband network, it needs to be our only national broadband network. Any other way makes no commercial or logical sense.

 
Categories

AFACT, Beagle, Competition, Copyright Infringement, Dialup, iiNet, IPv6, ISDN, NBN, Technical, Telstra, Uncategorized,

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