The Business Centre

Telstra's recent submission for the National Broadband Network (NBN) has provoked a mix of concerns from other non-bidders in the tender process about the regulatory framework of the new network.

Australian internet service provider (ISP) Internode has joined the chorus of concern. Internode claims consumers may end up paying higher prices for broadband services they already obtain should the Federal Government consider Telstra's regulatory framework. The telco believes its framework needed to meet the vision of Senator Stephen Conroy, the minister for broadband, of an open, competitive high-speed national broadband network.

Internode's managing director, Simon Hackett, expressed concern when Telstra asked the Federal Government not to force the NBN operator to "accommodate old and new technologies, which are not compatible".

Hackett said Telstra's "incompatibility" claim was not based on technical data. "The truth is that there is no technical barrier to coexistence", Hackett said. "With appropriate software configuration settings, ADSL2+ can coexist in the new node-based VDSL2 environment. To claim they are not compatible is a Telstra excuse that is driven by its target profit level rather than consumer outcomes." Experts in Netherlands and Australia back Hackett's view that an ADSL2+ and VDSL2 hybrid model can work.

Dr Paul Brooks from telecommunications strategy company Layer10 concluded in a 2007 study that "there was no need to cut the copper" to protect VDSL2 services at a node from non-VDSL2 services at the exchange.

In his own submission to the Department of Broadband, Communications and the Digital Economy, NBN Regulatory tender Hackett states that the ADSL2+ services from many ISPs should continue to be available to consumers in parallel to an NBN deployment, for a minimum transition period of at least five years: "It's OK if someone wants to pay more for a higher speed than they can obtain now, but its not OK if the NBN just drives up the costs for services at the speeds that are already available."

In Hackett's view, a hybrid model would preserve competitive tension and provide consumers with insurance against a variety of possible NBN challenges and failures, including escalation in price and reduction in available technical services.

"The hybrid approach is the most pro-consumer approach to building the NBN", said Hackett. "This isn't about handing anyone a monopoly on a plate: it is about maximising consumer outcomes and choice as a priority."