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Optus and NBN Co agreement makes business sense: Analyst

Optus and NBN Co agreement makes business sense: Analyst

Competition will still be created on the NBN

The $800 million agreement with Optus and NBN Co is a logical consequence of Australia’s telecommunications infrastructure policy, according to independent telco analyst, Paul Budde.

Budde told Computerworld Australia that it made sense for the government to pay compensation to Optus for decommissioning its hybrid fibre coax (HFC) network because the National Broadband Network (NBN) will be the main broadband utility.

“[The government] intervened in the market and they made the changes [to Australia’s infrastructure]. In order to keep these companies [such as Optus and Telstra] on-side in further investments in the Australian telecommunications industry, it does make sense for them to compensate Optus,” he said.

Malcolm Turnbull, shadow minister for communications and broadband, has slammed the ACCC’s decision to hand down a draft determination which will see Optus move some of its customers across to the NBN and decommission some of its HFC network. This migration was originally floated in June last year.

Turnbull stated in a speech to parliament the deal allows NBN Co to eliminate a competitor to the NBN and there is potential for the HFC network to still service a large percentage of Australia.

“It is difficult, therefore, to think of anything more anti-competitive than a new government-owned telco, the NBN [Co], paying Optus $800 million to shut down the HFC network, which is currently offering high-speed broadband services comparable to those that will eventually be offered by the NBN itself,” he said.

However, Budde said Optus long ago abandoned upgrades to its HFC network, with subscribers on the network remaining largely unchanged for the past decade. He also noted that Australia does not have two gas networks or two water pipe systems, so there is no business case for having competing telecommunications infrastructure.

“NBN Co is not competing in the retail market, so they will deliver the basic infrastructure and then the competition will move between who has the biggest [network] to who has the best services over the network. So competition is still secured, but it’s a different level of competition,” Budde said.

The Coalition has said if it won the 2013 election it would expand existing broadband networks instead of delivering the NBN.

However, Budde said it is too late to turn the clock back now. He said the Coalition needs to confirm why it wants improved broadband – technology decisions can then be made about what delivery method is the most appropriate.

“But just stabbing in the dark and then com[ing] up with [an answer of] ‘yes we want wireless’ ... is a bit silly because you have to base that on some sort of a vision and some sort of a strategy of what you want to do with that network,” Budde said.

Follow Stephanie McDonald on Twitter: @stephmcdonald0

Follow Computerworld Australia on Twitter: @ComputerworldAU

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