ISPs hail National Broadband Network announcement

Broadband customers could see price cuts of up to 40 percent

Internode's Simon Hackett: govt got it right

Internode's Simon Hackett: govt got it right

Australian Internet service providers (ISPs) have lauded the announcement by the federal government that it will establish a new company to build the National Broadband Network (NBN).

The new company, jointly owned by the government and the private sector, will invest up to $43 billion over 8 years to build the NBN.

Macquarie Telecom said the NBN represented the potential to be the most significant change this industry has seen since deregulation in 1997.

“Just as deregulation kick started competition, today’s announcements have the right ingredients to set a solid foundation for a truly competitive 21st century telecommunications industry,” Matt Healy, national executive for regulatory and government at Macquarie Telecom said in a statement.

“At last we will have a National Broadband Network that will be a network regulated for competition like other utilities such as gas or electricity. This means retailers will have equal access to the national network.”

Equitable pricing and access to the network would also lower barriers to entry resulting in more providers able to invest in the local market and stimulate competition, Healy said.

The Competitive Carrier’s Coalition (CCC), representing the non-dominant telecommunications carriers in Australia, said it was pleased that a process was now underway to reform the structure of the market in the short-term together with extending fibre to the front door.

“The reforms are long overdue, as evidenced by the internationally high prices and poor services Australians have suffered for more than a decade,” CCC executive director David Forman said in a statement. “Where ever competitors have been able to gain a foothold in Australia, prices and services have immediately been transformed and consumers have been the winners.”

According to the CCC, consumers and businesses stood to benefit from telco industry reform, with small and medium sized businesses, in particular, expected to receive price cuts of 40 per cent.

Internode managing director, Simon Hackett, said that while it would most likely be 10 years until the NBN project was complete, given the time needed to properly run the request for tender process, having government as the majority owner with intended privatisation five years after building the network was exactly the right idea.

“[The announcement] leaves [the] existing copper network in place, [and] leaves existing ADSL2+ market and competition un-impacted meaning we've got many more years of useful ADSL2+ network building ahead of us in parallel to the emergence of the new network, to which we'll have access too, on an equal footing with everyone else,” he said in a forum post on broadband community Web site Whirlpool.

By avoiding the copper network, the announcement would also avoid regulatory changes, allowing the existing access regime can continue unchanged while the new network is put in, in parallel, Hackett said.

“If they take industry advice and build the new network 'outside in' – fixing blackspots first, installing where ADSL2+ is already running strongly last, then everyone wins,” he said.

“People with no broadband get it, while people who already have broadband can use that ADSL2+ competitive landscape in the meantime, and people who have invested in that landscape can recover that investment before the new network renders it obsolete.

“If they do what they promise, they've actually got it right, and we might just turn into a broadband front-runner country ten years from now... after all.”

Telstra said it welcomed the opportunity to engage the federal government on the broadband roll out.

“We look forward to having constructive discussions with the government at the earliest opportunity,” Telstra Chairman Donald McGauchie said in a statement.

“Telstra supports the government’s objectives of investment in world-leading broadband infrastructure, an innovative telecommunications sector and healthy competition that provides real choice for customers.”

Telstra would work with the government to assist with the implementation of its strategy, but would remain at all times committed to ensuring the best interests of our shareholders, employees and customers, McGauchie said.

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