Don’t let NBN Co become another Telstra, Optus' O'Sullivan warns

Don’t let NBN Co become another Telstra, Optus' O'Sullivan warns

Precautionary steps must be taken to prevent NBN Co becoming another “lumbering monopoly”, according to Paul O’Sullivan.

Important precautionary steps must be taken to ensure the Government-owned company in charge of the National Broadband Network (NBN), NBN Co, does “not become another Telstra”, according to Optus CEO, Paul O’Sullivan.

At the MediaConnect Kickstart 2011 event in the Gold Coast, O’Sullivan spruiked the importance of ensuring the NBN provides a level playing field.

While it is true NBN will give telcos access to a high-speed broadband infrastructure, the company in charge of the network, NBN Co, will still essentially be a monopoly.

“The biggest mistake many people are making today is to believe that just by rolling out the NBN itself will ensure there is real choice to households,” he said.

O’Sullivan warned if no action is taken now, NBN Co will risk becoming another Telstra.

Since the privatisation of Telstra over a decade ago, competing telcos have complained about its unfair market dominance through unreasonable wholesale prices.

The biggest issue has been that Telstra’s wholesale and retail business is vertically integrated, which meant the telco was able to favour its retail arm to give it a competitive edge.

The Optus chief proposed for NBN Co to provide transparency for deals the company makes with other businesses. He is particularly concerned with the $11 billion deal between NBN Co and Telstra.

Under the agreement, NBN Co will pay the telco to gradually decommission its copper network and move residential customers onto the NBN.

O’Sullivan was concerned Telstra may abuse the $11 billion to “distort competition” by investing into buying marketshare as the customers are migrated onto the new NBN infrastructure. Because NBN Co operates solely as a wholesale player, this means Telstra can buy back those customers on the NBN under its own brand.

“Sure, Telstra shareholders should get to see and sign off on the deal but so should all Australians,” O’Sullivan said.

Much akin to what the Shadow Communications Minister, Malcolm Turnbull, has demanded, O’Sullivan also wanted the $11 billion Telstra deal to be subjected to scrutiny by the ACCC.

To guarantee performance of NBN Co, O’Sullivan suggested the operation of the NBN itself should be periodically put up for competitive tender. This way, NBN Co cannot off-load its operational and management failures by increasing wholesale prices which would in turn bump up retail prices for consumers.

Alternatively, the Government should set up an independent body, similar to the Reserve Bank, to keep NBN Co in check and away from political influences, O’Sullivan said.

“Let’s not recreate the sins of the past in the way we create the new NBN Co,” he said.

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Tags Telstranbn coTelecommunicationsoptusNational Broadband Network (NBN)Paul O' SullivaMediaConnect Kickstart 2011

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