IT industry attacks Victorian decision to make NBN opt-in

The information technology industry has attacked comments made by new Victorian premier Ted Baillieu that indicate the state will make the National Broadband Network opt-in only, saying it will delay the construction of the network.

The development also comes as the federal cabinet is understood to have rejected the NBN’s business plan, saying it could harm competition. It is understood this decision was prompted by recommendations from the Australian Competition and Consumer Commission.

Victorian premier Ted Baillieu told The Australian late last week that homes should not be automatically connected to the network and that an “opt-in” model would be best. “It ought to be optional,” Baillieu said.

This comes after former Victorian treasurer John Lenders said the state would choose an “opt-out” policy, but the change in government means that approach will now be abandoned.

But Australian Information and Industry Association chief executive Ian Birks said in a statement such an approach would harm the network.

“The value of high-levels of broadband participation is well-documented around the globe. We are already playing catch up with a number of our Asian neighbours. Now is not the time to introduce additional barriers to community engagement in the digital economy.”

Birks argues that a key value of having universal broadband is critical mass, meaning all communities are connected and using the network. “This in turn, drives momentum, innovation and demand for smart applications that will benefit both communities and the economy”.

“The productivity benefits of a digital economy depend on more than providing optional access to pipes and cables. We have to turn our attention to stimulating use and the development of new applications.”

Birks also points out that a higher participation rate is needed if the government wants to take advantage of all the economic benefits the network can offer.

A spokesperson for communications minister Stephen Conroy also said that Baillieu’s position “is not surprising given the Liberals and Nationals are only interested in delaying and demolishing the NBN”.

“There is no doubt that an opt in initiative would allow for a more efficient rollout of the NBN and the Government would welcome moves by other States and Territories to follow Tasmania’s lead on this.”

“But this is not stopping the rollout – on the mainland there has been strong interest from people in the first release sites with an average of 77% agreeing to have fibre connected to their property.”

A spokesman for the Premier said this morning that the government is making no further comment on the issue yet.

But Telsyte research director Foad Fadaghi says while an opt-in model will make a difference in how many people actually sign up to the network, he argues it won’t be a dramatic difference and points out most people upgrade to better technology anyway.

“Obviously, the decision makes a difference in who gets connected and so on, and that definitely impacts the economics side of that. And that’s a challenge. But I think practically for users, if they want to opt-in, they’re going to do it. It’s not a massive difference.”

“Look at what consumers have done through all other upgrades. They moved from dial-up to DSL, then from DSL to cable, and so on. If they want something, they’ll get it, and if they see other people joining then they will join as well.”

Meanwhile, Fairfax reports the NBN Co. has been ordered by the federal cabinet to rethink its business plan with the current version in danger of jeopardising competition.

This comes after various reports have said the Australian Competition and Consumer Commission have said the current plan proposing 14 POIs may strand existing backhaul infrastructure and make networks owned by Telstra and Optus, among other wholesalers, ultimately useless.

The delay in creating the business plan may push back a promise from the government to deliver its business plan before the end of the month. According to an abridged version of the plan released to satisfy independent senator Nick Xenophon, a final deal is scheduled to be completed with Telstra and the ACCC this month.

ISPs are looking for more POIs to increase competition, but the NBN Co. believes creating more could dilute its financial return.

Meanwhile, NBN Tasmania chief executive Doug Campbell has resigned from his position, citing his intention to retire. He joined the company in July 2009 and oversaw the construction of three test networks in three towns.

A replacement has not yet been named.