NBN: How core is self-interest to the debate?

There appeared to have been a growing public consensus in Australia's telecommunications industry over the past 18 months since Labor unveiled its NBN policy that fibre to the home was necessary to take the country forward

One of the signatories to a national broadband proposal unveiled at the eleventh hour to rival Labor's own long-running NBN project has accused vendors and telcos of stirring up hype for a fibre-optic cable future in line with a view to serving their own interests in generating massive contracts and gaining operating certainty.

There appeared to have been a growing public consensus in Australia's telecommunications industry over the past 18 months since Labor unveiled its NBN policy that fibre to the home was necessary to take the country forward, especially when it came to growing a strong technology sector.

However, the issue has increasingly been questioned over the election period, with the Coalition unveiling a much more minimalist policy, and a group of telcos this week breaking with the industry to push their own "NBN 3.0" policy which shares many similarities with the Coalition's wireless- and backhaul-based plan.

Vendors like Ericsson and Alcatel-Lucent have discussed the issue in the public over the past several years, including the benefits that high-speed broadband can bring. And so have top-tier telco executives such as Internode's Simon Hackett.

"I don't want to offend anyone, but I would suggest there is probably some vested interests at play in the NBN," said BigAir chief executive Jason Ashton this week, when asked why the industry consensus has lasted so long.

Ashton, along with counterparts from telcos like AAPT, Pipe Networks and others, is part of the NBN 3.0 group, which has dubbed itself the Alliance for Affordable Broadband.

Ashton said it wasn't surprising that vendors would be pro-NBN, given the potential for NBN Co to dole out "incredible contracts, the likes of which this country has never seen in terms of a technology contract". "You'll get a lot of people supporting the project, simply because the scale and the numbers are so unbelievable in that sense," he said.

French giant Alcatel-Lucent has already become a beneficiary of the NBN project, inking a deal in June to supply NBN Co with up to $1.5 billion worth of optical and ethernet aggregation equipment.

But according to Ashton, the claimed self-interest also extended to some of BigAir's fellow telcos. "Perhaps one of the reasons for ISPs supporting NBN Co is that it's de-risking their business," he said.

Normally, according to Ashton, it was telcos themselves who would take on market risk by investing in infrastructure and certain technologies. However, in the NBN paradigm, that onus would shift to the government.

"NBN Co's saying: 'Don't worry, we'll do it for you'," he said. "Effectively you're doing all the heavy lifting for a lot of these telcos ... In a way, they're kind of benefiting from the government's largesse."

Infrastructure-based competition The Coalition's own policy -- which features a focus on market competition to provide better services -- has been attacked by various sections of the telco and IT industry, as well as executives from other sectors such as retail and banking.

But Ashton said from his point of view, it was infrastructure-based competition rather than service-based competition that drove better outcomes in the market.

"I think the current paradigm where you have competing fixed networks actually delivers the best long-term competition outcomes. And I guess that's one of the tenants of our philosophy here in that you need competing infrastructure, not just retail providers, to deliver long-term competition benefits."

"If NBN Co rolls out its 100Mb or gigabit, what's going to drive them to go beyond that? I'll tell you what's going to drive them -- it's going to be other infrastructure providers."

The comments echo the Australian Competition and Consumer Commission's mantra during the previous Howard Government that infrastructure-based competition would drive outcomes in the telecommunciations market -- a mantra that the regulator has since said would not be easy to push with the next generation of services.

Ashton described the ACCC's modified stance as being "incredibly hypocritical". But he said the regulator might have had another motivation for welcoming Labor's NBN.

"The ACCC is probably sick to death of beating up Telstra," he said.

Blowback The NBN 3.0 group has already, however, been accused of suffering from the exact same self-interest that Ashton has accused other sections of the industry of.

"I respect them. I think they're good businessmen," IDC telecommunications analyst David Cannon told ZDNet.com.au this week, "but I do not believe that they're doing it in the interests of the nation." Several of the rebel alliance are wireless or backhaul players. Cannon argued they would not stand to benefit from the NBN -- as players like iiNet or Internode would.

And an executive at another wireless player -- vividwireless' David Havyatt -- also criticised the proposal on his personal blog this week in a post entitled "we believe in fairies at the bottom of the garden".

"Their beliefs include that infrastructure-based competition has worked -- despite the fact that the bulk of broadband competition takes place over Telstra's copper network asset. ADSL is not, and has never been, infrastructure based competition," he said.

"Where there has been infrastructure based competition has been in HFC -- a failed model as both builds stopped after 3 million households were passed by two networks and the rest were passed by none."

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Renai LeMay

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