NBN Co focus is in the wrong place

Kevin Russell
Vocus Group

Vocus CEO Kevin Russell has said that NBN Co should be encouraging investment from other telcos by providing new competition to "monopoly infrastructure" however this is not happening.

Russel said that instead of building new fibre to fill the gaps in under-servedareas, NBN Co is actively prioritising building in already well-served metropolitan areas.

"Vocus’ own Melbourne office exemplifies this problem," Russel said at the CommsDay Melbourne Congress.

"If you go into the communications room in the basement of 452 Flinders Street, you’ll find no fewer than six fibre providers that have invested capital to provide competitive services.

"And recently, NBN became the seventh.

"Is this really where NBN should be spending taxpayer dollars?" Russell said.

By doing this, Russell explained, it penalises private investment by reducing the value of existing fibre, it also takes NBN’s focus and dollars away from where it should be building.

Wholesale-only promise

Russell criticisedthe national broadband network builder's wholesale-only promise suggesting NBN Co proactively contacts telcos' customers and signs contracts directly.

He also brought up the warning ACCC issued to NBN Co on 9 October over giving preferential treatment to Macquarie Telecom.

"And I’m glad to see that the ACCC has acted on at least one of these issues," he said.

Russell said Vocus sees a positive role for NBN in Enterprise where it can work with the customer to determine the most economically efficient blend of its own fibre, NBN’s fibre, and that of any other wholesale provider.

"However it is not economically efficient when NBN Co promotes its own fibre, to the exclusion of all others.

"Infrastructure investors are being undermined by tenders seeking 100 per cent NBN fibre – favouring providers who have not invested in infrastructure, over those who have built similarly capable assets.

"This has long-term implications for the Enterprise market," Russell said.

"While NBN will say that wholesale-only fibre provides retail optionality for end-users, it does so at the expense of infrastructure competition.

"Do we really want an Enterprise market where the underlying infrastructure is dominated by a Government-subsidised provider?" he added.

Changes

Russell said that when NBN Co was created it had no enterprise business or products and therefore the Statement of Expectations provides no guidance on its Enterprise behaviour.

Now he is calling out for an updated Statement of Expectations with "clear rules of engagement" for NBN in enterprise.

He suggested NBN Co should only build to enterprises which currently have no fibre, or only one fibre provider. It should also prioritise Enterprise services in under-servedareas of regional Australia.

And, in order to ensure NBN Co operates within its remit it should not design tenders with end-users, should not enter contracts with end-users, should not negotiate buying commitments or terms of service with end-users, should not sign confidentiality agreements with end-users and should not recommend retailers to end-users.

"But right now we need a long-term vision for the NBN, to ensure we are making conscious decisions that foster an environment which encourages investment and creates a sustainable industry," Russell added.

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