NBN Co's line in the sand

NBN Buzz is a weekly wrap up of everything that's going on with Australia's largest infrastructure project. For previous editions visit our NBN Buzz page.

NBN Co boss Mike Quigley has a message for the local telcos and internet service providers: put down your guns because the war is over. That message came in tow with the official release of the wholesale broadband agreement (WBA) that will allow the telcos to formally sign on to the network. You would think that after five rounds of consultation every possible complication would have been ironed out by now but prospective customers still seem reticent. The official WBA seemingly ticks all the boxes but as far as the telcos are concerned there is still that issue of a special access undertaking (SAU)  that the Australian Competition and Consumer Commission (ACCC) needs to sign off on.

In October, Optus, Vodafone, Macquarie Telecom and iPrimus wrote to the regulator voicing their concerns that NBN Co was trying to weasel its way out of stringent regulatory oversights by shoving the WBA down their throats in an attempt to sideline the ACCC. That consequently set in motion the fifth round of consultation which has led to the final form of the WBA, which NBN Co believes addresses the concerns raised by the telcos. The initial term of the WBA has been reduced from five years to 12 months and there is the provision to align the WBA and the SAU once it has been accepted by the ACCC. NBN CO said in the official WBA agreement yesterday:

NBN Co has included a provision in its SAU that is designed to address the concerns of industry regarding recourse to the ACCC, while still maintaining the certainty of our contractual arrangements. Where commercial agreement cannot be reached on non-price terms not covered in the SAU, or where NBN Co introduces new prices after the SAU commences, the ACCC can be called upon to settle an outcome. Once the ACCC has made its decision, NBN Co will make the outcome available to all our customers.”

That SAU will be assessed by the ACCC over the coming months, but The Australian reports that some of the nation's largest ISPs are yet to be appeased and are still refusing to sign formal contracts with NBN Co, because the short-term WBA put forward is still independent of regulatory oversight. Optus, Macquarie Telecom and iiNet have told the paper that the WBA in its current form still seeks to limit the role of the ACCC and is therefore unacceptable. There was a hint of apprehension among telcos and ISPs when the final draft of the WBA was released a couple of weeks ago, with Internode boss Simon Hackett saying that the final draft from NBN Co still had some areas which lacked detail but the overall sentiment was positive.

What’s surprising is the discontent coming from iiNet, which told The Australian that it can't sign the agreement “when there's no reciprocal risk to the NBN Co if it fails to deliver a service to us or is negligent".  It wasn’t that long ago that iiNet’s boss Michael Malone told The Australian Financial Review that he was keen to sign the document as quickly as possible and rather than wasting time on the “rats and mice” issues it was better if telcos just get down to “selling this stuff”.

That’s exactly what Quigley has told the telcos in an interview with The Australian, urging them to quit their bellyaching and get on with the job of providing their customers with the services they deserve.

There is no denying that given NBN Co’s role as a monopoly provider it should be subject to stringent regulatory scrutiny, but after five attempts one has to wonder just what is going on during the consultations between NBN Co and the telcos. Listening to the telcos it would seem that NBN Co is not really listening to them but it could also be argued that the telcos themselves are being a bit churlish and possibly trying to squeeze in every drop of gain they can from the network.

Telstra split deadline inches closer

Staying with the ACCC, ruling on the SAU from NBN Co will be a major priority but there is another pressing concern on the regulator’s lap. That concern is the structural separation undertaking (SSU) put forward by Telstra. The telco has put forward an improved version of the SSU with the changes are now under review, but the key concern shared by Telstra’s rivals is that with the December 20 deadline now inching ever closer, the regulator may be under pressure to make a hasty ruling on the issue. If the ACCC is satisfied with Telstra’s changes to the SSU document, then there will be further discussions again with Telstra's rivals. However, if the SSU fails to get the tick by December 20, then the $11 billion deal with NBN Co will be cancelled and kick start a new negotiation process .

The government and NBN Co will certainly want to avoid that and while the ACCC and Telstra have maintained that the issues raised by the original SSU are “not insurmountable” the jury is still out on whether the matter will be resolved before Christmas. Telstra is presumably happy to push back the December 20 deadline and now telco executives are reportedly urging NBN Co to negotiate a deadline extension for the deal so that the ACCC is not under any pressure.

AAPT boss David Yuile raised the issue with the AFR, telling the paper that he and a lot of his peers at the Coalition of Competitive Carriers were worried that the ACCC was being pressured to deliver a verdict by the end of the year even if there were outstanding issues. Yuile reckons an extension is the right way to go because it will give the ACCC the time it needs. It's worth keeping in mind that we still don’t know what the ACCC thinks about Telstra’s amended SSU. If the competition watchdog isn’t suitably pleased with Telstra’s latest efforts then the deadline becomes a moot point.  With 20 days to go I have a feeling that a favourable decision may be afoot, with any further concerns from Telstra’s rivals to be sorted out in the ensuing consultation period.

The NBN magical mystery tour

Leaving the regulatory rigmaroles behind, the NBN magical mystery tour is underway and its coming to a suburb near you, well actually its chugging through Tasmania right now but is on its way to all the areas where rollout is currently under way. The truck, which is fitted with high-definition screens, cameras and audio equipment, was launched last week with much fanfare in Melbourne by communications minister Stephen Conroy as part of NBN Co’s new operations and demonstrations facilities.

The unveiling of the mobile information platform, which in Conroy’s own words is a bit like the Tardis on wheels, and the $32.5m operations centre in Melbourne's Docklands certainly represent a new phase in the NBN story as far as the government is concerned. With the rollout of the network gathering pace Conroy and NBN Co boss Mike Quigley are not only keen to get things going on the operational side of things but also take the broadband message straight to the public.

The operations centre will serve as a the nerve centre for the NBN, managing the day-to-day operations of the service and enable telcos and ISPs to test their products and equipment, while the accompanying demonstration centre and the truck will let Australians see for themselves how the NBN will work. The facility has taken more than a year to complete and will create more than 900 jobs in Victoria by the end of 2012. Victorian Minister for Technology Gordon Rich-Phillips was certainly all smiles about that at the launch last week. Tony Abbott and Malcolm Turnbull may not be fans of the NBN but the state Liberal government is quick to extol its virtues.  

Apart from the political capital gained by the government by giving everyday Australians a firsthand glimpse of the NBN future, another reason for the Gillard government to take the NBN story to the next level is the fact that there is a tangible interest coming from councils and regional areas. As Paul Budde has pointed out numerous times, the NBN has the potential to revitalise the bush once politics is removed from the equation. It’s a game changer for regional Australia and from the Illawara to Gladstone people are recognising that potential and asking for more information.

An added incentive has also come in the form of some strong words from the Joint NBN Committee which said in its second report on the rollout that NBN Co needed to get its act together with regards to a cohesive policy for expanded consultation with regional communities. The NBN truck and the impending launch of a concerted media campaign by NBN Co are a step in the right direction on that front. The NBN will unveil its full three-year rollout plans early next year.