Telco veterans call on independent MPs to back NBN cost-benefit analysis

A group of telco veterans including AAPT chief Paul Broad and Pipe Networks founder Bevan Slattery have called on the independent members of parliament to support new legislation calling for the Productivity Commission to conduct a cost benefit analysts of the National Broadband Network.

The call comes as telco analyst Paul Budde has warned that the NBN Co. should work together with telcos to figure out an acceptable plan for building the controversial points-of-interconnect.

The letter from the telco veterans, who call themselves the “Alliance for Affordable Broadband”, calls on Greens MP Adam Bandt, independent MPs Bob Katter, Rob Oakeshott, Andrew Wilkie and Tony Windows, along with Nationals MP Tony Crook, to support the cost-benefit analysts.

The letter comes after opposition communications spokesperson Malcolm Turnbull led the second reading of his proposed Telecommunications Legislation Amendment (Competition and Consumer Safeguards) bill in Parliament yesterday.

“Mistakes we make in the design and/or policy settings for the proposed NBN, particularly in the areas of structure, affordability and accessibility, will not be easily fixed down the track and could be disastrous for our international competitiveness,” the letter warns.

“The Productivity Commission is experienced in doing this kind of analysis. It is well respected and credible because it is independent and rigorous and conducts its reviews transparently. It will approach the question independently and dispassionately, and present the facts. Facts are what is missing from this debate”

That sentiment echoes Turnbull’s own words in Parliament yesterday, when he said that, “This proposal needs to be carefully analysed and…and we have recommended…a cost-benefit analysis of it undertaken by the Productivity Commission”.

Members of the AAB include Allegro Networks chief David Waldie, BigAir chief Jason Ashton, EFTel chief John Lane, Ipera Communications chief Chris Deere, Polfone chief Paul Wallace and HaleNET managing director Tim McCullagh.

The letter recommends a list of outcomes for the Productivity Commission to consider:

• The importance of affordability and accessibility.
• Whether the structure of the NBN will be in the long-term interests of consumers.
• Guidance and recommendations to ensure future structure and products are clearly defined.
• Detailed research on productivity benefits.
• A comparative analysis of the NBN to other countries.
• The future technology requirements of mass market consumers.
• Placing a value on the cost of losses in innovation and competition as a result of the NBN.

Vocus chief executive James Spenceley, who is also a member of the alliance, says the issue here is making sure the network will be able to run a profit.

“I think a project of this size needs to have a cost-benefit analysis undertaken. The scary thing we’ve seen is that there seems to be a panic to get it done, rather than any formal process. That’s just as scary if it’s one million dollars, let alone $43 billion.”

“I think we need to come back and say, hey, is this network sustainable? Are the take-up levels as expected? If it can’t operate profitably there is a massive risk that it will be sold off to the private sector, and we end up with another monopoly.”

Spenceley also warns that network upgrades are often incremental and constructing a long-term solution could be counter-productive to competition.

“I think with any type of competitive infrastructure, you need to look at whether this is in the best interests of the country long-term. I think fibre to the home is fantastic, but what we forgoing if we just create another monopoly?

The letter also comes after the Alliance for Affordable Broadband released its own proposal for a future telecommunications network during the federal election campaign, suggesting rural areas could be upgraded alongside the construction of new wireless networks.

Meanwhile, telecommunications analyst Paul Budde has warned on Business Spectator that the NBN Co. made a mistake during the process of discussing proposed points of interconnect, the technology used to connect retailers to the network.

An ACCC proposal puts forth that only 14 POIs be constructed, but this drew criticism from both Optus and AAPT, (whose chief executive, Paul Broad, is part of the Alliance for Affordable Broadband).

These companies warned that the ACCC’s plan would leave their backhaul networks deserted, and as a result, they would be owed millions in compensation.

Budde warns that the ACCC has missed out on a key opportunity here to work together with the telco industry.

“It doesn’t make strategic sense to now force that issue with a plan that most players don’t agree with. If there were only one or two players it could perhaps be side-stepped, but this is no longer possible.”

“If NBN Co does see good grounds for its plan it should have sat down with these players with the aim of establishing a mutually acceptable outcome. It is very disappointing that NBN Co did not use the industry forums that are available to them to discuss the plan before releasing it. Getting everybody offside and then having to back-pedal is not the best way to advance the NBN.”

Budde says that over the past few years there has been “excellent cooperation” between the Government and industry, but questions if this is an “early sign of a renewal of monopolistic behaviour, or is it just a mistake?”