Thursday, November 11, 2010

Australia - ATUG criticises the lack of interconnection points on the NBN

[it wire] The communications sector's peak user interest lobby has joined the chorus of industry voices objecting to the NBN Company's points of interconnect proposals, saying it risks reducing infrastructure competition into the future.

Australian Telecommunications Users Group managing director Rosemary Sinclair says the NBN Co proposal to initially build out to just 14 points of interconnect would drive all but the largest infrastructure-based providers out of the market, and discourage future investment in the sector.

Sinclair said the issue needed to be resolved through a policy clarification within NBN enabling legislation expected to come before parliament in the next two weeks.

ATUG says the NBN Company proposals seem to reflect priority objectives of building the network to a timetable and at reduced or lowest costs, and to allow for uniform wholesale pricing across Australia.

Sinclair says the NBN enabling legislation - in relation to NBN Company objectives - which includes the specific phrase "long-term interest of end users" should give the NBN Co a more nuanced approach to the competing priorites of uniform pricing, roll-out timetables, and the long term impact on the competitive environment.

She said ATUG was deeply concerned about the NBN proposals - which are contained in an ACCC discussion point on Points of Interconnection - because they presented a "much wider footprint" for NBN than first envisaged, well beyond local access and regional backhaul.

The proposal would stifle infrastructure competition and ultimately enable retail services competition only, Sinclair said, reducing the opportunity for innovation as a competitive differentiator.

NBN Co has proposed 14 certain points of interconnect and 195 other points that would be build out based on as-yet-undefined NBN Co business rules, creating uncertainty in the market for other players.

"We think that people will exit the market and that we will be left with just a handful of large players," Sinclair said. "The problem we see is that with the 14 (points of interconnect), that NBN Company might overbuild some existing infrastructure - and that will further discourage competitors, and possibly accelerate the process of people leaving the market."

"We started off with NBN addressing two problems: Local access and uncompetitive regional backhaul. What we have now is the possibility of NBN having a much wider footprint - from one end of the country to the other - with no room for anybody in the middle," she said.

"We are saying that having increased retail competition - if that's all we've got - is just like having retail competition over the Telstra network. We lose the opportunity to have some infrastructure-based competition - which in our view os a stronger form of competition," she said.

"We just don't want them to forclose other entrants in the market in terms of infrastructure just because of their interpretation of how we get uniform wholesale pricing - that should be a policy decision for the Government, rather than a network design decision for the NBN Company."

NBN interconnect plan to stifle competition

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