Internode warns of NBN backhaul cartel

Compromise will be "bad for everyone".

The Federal Government has been accused of putting Telstra and Optus' interests ahead of its ambition for the NBN to create a "level playing field",as debate raged on points of interconnection (POI) to the next-generation network.

Points of interconnect are the places where NBN Co will hand over traffic carried on its network to an access seeker's [ISP] network.

NBN Co has proposed 14 aggregation POIs in the capital cities. The proposal was met with concerns from the competition watchdog and backhaul providers, who said it could isolate their fibre assets.

But the managing director of ISP Internode Simon Hackett spoke out in support of the 14 POI model overnight.

He criticised rumoured attempts by the Government to "average" the different extremes being touted by NBN Co and industry critics, arguing it would be "akin to the classic mistake in politics of choosing the average between two opposing views instead of being brave enough to make an appropriate decision."

Hackett said that a mandated compromise between 14 and 200 POIs "would suit neither opposing POI camp.

"The outcome would be bad for everyone," Hackett said.

"It would 'half fix' the commercial drivers of the big guys, while 'half hurting' everyone else. Permanently. And in a way that may be impossible to fix later on."

Hackett argued that the "many POI" model would concentrate power in the hands of Telstra and Optus, potentially leading to "cartel" behaviour and prices.

"They [Telstra and Optus] will permanently have their fingers in the value chain of everyone else in the industry - something the NBN was intended to avoid - by charging all the other RSPs [retail service providers] to reach the NBN POIs via their fibre backbones," Hackett said.

"Because there will be very few of the big players, the access pricing to access the NBN POIs will tend toward cartel behaviour  - a high price with no economic driver toward reducing it over time.

"The commercial interests of Telstra and Optus appear, disturbingly, to be more important to the government than keeping the NBN playing field level."