Internode tells Conroy: you got it wrong

Internet service provider, Internode, has reiterated to the Federal Government its repeated warnings about the anti-competitive impact of the proposed structure of the National Broadband Network (NBN).

Last week, Internode managing director Simon Hackett described the NBN’s pricing model as “insane” for small Internet service providers.

Hackett said the NBN’s pricing model would only be feasible for ISPs with more than 250,000 customers – specifically Telstra, Optus, TPG, iiNet and Internode itself.

After last week’s presentation at the CommsDay Summit in Sydney, Hackett published a proposal to re-balance the NBN Wholesale pricing model to offset some of the problems he has already highlighted.

That re-balancing proposal is available here.

Since then, Federal Minister for Broadband, Communications and the Digital Economy, Senator Stephen Conroy, has repeatedly claimed that Internode should have raised this “important contribution” earlier.

“The complaint being made by Internode is a very important contribution, and it would've been really fantastic for Internode to have made that argument to the ACCC,” said Senator Conroy in an interview on ABC TV.

“What essentially Internode are complaining about is that the ACCC decision to move from 14 POIs (Points of Interconnect) – the NBN's preferred position – to 121 POIs, they believe was not the best decision. They didn't actually put in a submission to the ACCC's inquiry on this very matter, but as you would be aware there were many companies who argued the exact opposite to what Internode are arguing.”

This is wrong, according to Internode, which has offered to provide Conroy with a copy of its submission to last year’s ACCC inquiry on the matter. This is available for download from the ACCC website here.

On November 8, 2010, Internode’s general manager for regulatory and corporate affairs, John Lindsay, submitted that document to the ACCC as Internode’s response to the ACCC Discussion Paper on Points of Interconnect to the National Broadband Network.

In the seven-page submission, Internode warned about the anti-competitive impact of the NBN requiring companies to interconnect with the NBN at a large number of locations nationally.

“This model becomes worse if each access seeker or service provider must provide their own connection to the distant town,” the submission stated.

“There is no economy of scale to be enjoyed and small service providers must either abandon the attempt to service subscribers or acquire a wholesale managed service from a POI more conveniently located.

“The biggest risk to the industry is to entrench a duopoly of retail price competitive service providers and a long tail of uncompetitive providers who slowly, or in fact quickly, implode. The inevitable result would be a rapid increase in retail prices to whatever the market will bear at the lowest access speed the network can provide which would entirely negate the purpose of the NBN.”

A further submission from Internode on the same topic can also be found on the ACCC website.

Hackett hopes Conroy will focus on this issue which he claims is critical for the competitiveness of the Australian telecommunications industry for decades to come.

“Internode absolutely has been ringing this bell early and often,” he said in a statement.

“Our submissions to the ACCC are on the public record on the ACCC website, so it is rather curious that the Senator is perpetuating this erroneous claim about our conduct in this context.

“We seek to correct the record and point out that Internode has been providing public submissions on this and related topics at every step along the process concerned, and it remains of deep concern to us that those warnings are being ignored - not only by the ACCC, but by the Minister being so convinced that this is a new issue that he has not actually bothered to look for evidence of our participation before making his erroneous claims.

“Internode participates very closely in these processes. Internode customers are amongst the first ever connected to the NBN and we are highly engaged with the technical processes for all upcoming deployment stages of the network. Indeed, it is this close participation that has served to highlight to us the critical nature of the flaws in the current pricing model for the network.”

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