Monday, April 4th, 2011 by Simon Hackett
Last week, I stood up at a conference and described the NBN’s pricing model as “insane” for small Internet service providers. I said that the NBN’s pricing model would only be feasible for ISPs with desires for national coverage if those ISPs already have more than 250,000 customers – specifically limiting the potential directly attached national customer base for the NBN to little more than Telstra, Optus, TPG, iiNet and Internode.
I followed up last week’s presentation at the CommsDay Summit in Sydney by publishing a proposal to re-balance the NBN Wholesale pricing model: http://blog.internode.on.net/2011/04/01/rebalancing-nbnco-pricing-model/
Since then, Federal Minister for Broadband, Communications and the Digital Economy Senator Stephen Conroy has repeatedly claimed that I and/or Internode should have raised this “important contribution” earlier. “The complaint being made by Internode is a very important contribution, and it would’ve been really fantastic for Internode to have made that argument to the ACCC,” said Senator Conroy in an interview on ABC TV (Inside Business, with Alan Kohler).
He continued by saying: “What essentially Internode are complaining about is that the ACCC decision to move from 14 POIs (Points of Interconnect) – the NBN’s preferred position –- to 121 POIs, they believe was not the best decision. They didn’t actually put in a submission to the ACCC’s inquiry on this very matter, but as you would be aware there were many companies who argued the exact opposite to what Internode are arguing.”
However, the fact is that Internode did indeed make multiple submissions regarding this matter, at the appropriate times, into the ACCC process concerned!
A key submission on this issue (dated 8th November 2010) may be freely downloaded from the public ACCC website at http://www.accc.gov.au/content/index.phtml/itemId/961575.
In that seven-page submission, Internode warned about the anti-competitive impact of the NBN requiring companies to interconnect with the NBN at a large number of locations nationally. “This model becomes worse if each access seeker or service provider must provide their own connection to the distant town,” the submission stated. “There is no economy of scale to be enjoyed and small service providers must either abandon the attempt to service subscribers or acquire a wholesale managed service from a POI more conveniently located.
“The biggest risk to the industry is to entrench a duopoly of retail price competitive service providers and a long tail of uncompetitive providers who slowly, or in fact quickly, implode. The inevitable result would be a rapid increase in retail prices to whatever the market will bear at the lowest access speed the network can provide which would entirely negate the purpose of the NBN.”
A further submission from Internode on the same topic has also been published on the ACCC website: http://www.accc.gov.au/content/index.phtml/itemId/974480
Further followup on the topic is also available right here: http://blog.internode.on.net/2010/12/19/nbn-points-of-interconnect-and-the-future-of-competition/
Internode has been providing public submissions on this and related topics at every step along the process concerned, and it remains of deep concern to us that those warnings are apparently being ignored.
Having this compounded with false statements about our participation in the correct processes concerned really does raise questions regarding the extent to which Government studies the submissions that it requests (both directly and indirectly via the ACCC) about its policies.
Substantial efforts, energy, and time go into these submissions from industry and individuals alike, and the one thing that those submitting these materials wish for, in return, is for their submissions to be seriously and carefully considered.
These false claims about Internode (non) participation in the processes concerned has caused significant distress, and these false claims have received wide coverage in the IT media in the last few days. This coverage has also served to divert attention away from the issues at hand. Thats unfortunate, because the issues are the key here, not the messenger.
Internode customers were amongst the first ever connected to the NBN and we are highly engaged with the technical processes for all upcoming deployment stages of the network. We intend to continue that close engagement. Indeed, it is this close engagement that has served to highlight, to us, the critical nature of the flaws we see in the current pricing model for the network. Those flaws include the ACCC POI decision that is at issue here, and a related set of underlying imbalances in the fixed and variable components of the NBNCo wholesale model (as highlighted in the re-balancing proposal).