Conroy backs ACCC plan for 120 points of interconnect

By Ry Crozier on Dec 20, 2010 4:21 PM
Filed under Networking

ACCC hands up report.

Backhaul providers have won a concession on the number of points of interconnect (PoI) to be built between NBN Co and retail service providers' networks - with Australia's competition regulator recommending NBN Co build 120, rather than the 14 original proposed.

Under the new plan, NBN Co would build around 120 PoIs over 9.5 years (assuming it strikes a deal with Telstra) – more than the 14 aggregation points it originally proposed, but less than the 200-plus sought by sections of the industry.

Communications Minister Stephen Conroy said the Government accepted the Australian Competition and Consumer Commission's advice on how many interconnects NBN Co should build.

He said NBN Co would build 80 interconnect points in the cities and 40 in regional areas.

And he said that the commission would "closely monitor competition on backhaul routes and use new upfront pricing powers to address any market failures, particularly in regional areas".

Internode managing director Simon Hackett raised fears about such market failures earlier today.

Hackett claimed that the ACCC's compromise on numbers would be "bad for everyone".

However, Hackett later said while he was "disappointed", he remained "enthusiastic and committed to making the NBN - and Internode's participation in it - a huge success, regardless of how many points of interconnect there are."

Competition criteria

The ACCC said it would apply "competition criteria" to proposed POI locations before approving them.

The basis of the criteria was ensuring that each POI was serviced by at least two transmission providers, together with "other competitive indicators to ensure the route is sufficiently competitive".

The regulator proposed a further consultation process with NBN Co to vet the competition criteria and then another "relatively quick" public consultation on the actual POI locations.

"The ACCC considers that the final identification of the number and location of initial POIs could be subject to a short period of public confirmation, in order to avoid unintended consequences," the competition watchdog said in its response.

"The ACCC believes that it is important that this process is conducted by an independent party, rather than NBN Co, in order to allow industry stakeholders to submit confidential information regarding the precise location of their transmission assets and their plans for future investment.

"The ACCC would be available to fulfill this role should it be requested to do so."

Conroy backs ACCC plan for 120 points of interconnect

2 comments in this discussion

"It would seem to me that the more connect points there are, the more likely the system will be fail-safe. A major problem in high density areas could conceivably remove many or all connect points ..."

By Pilotyoda

Tags

government, conroy, poi, points, interconnect, isp, location, accc, review, nbnplan

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Comments: 2

umbria

Dec 21, 2010 5:26 PM

This decision is counter-productive. In its 2001 Inquiry into Telecommunications Regulation, the Productivity Commission articulated its ideal vision for the telecoms sector (pp 3-4), arguing that no incumbents should be given concessions at the expense of provision of customer service as a whole.

Two POIs in each capital city will mean that every would-be provider can competitively buy a cheap local link to the NBN from its own network infrastructure in whichever capital it is based.

Adding 106 extra POI facilities for political appeasement merely increases the taxpayer-funded cost by $200 million, increases network complexity and points of failure, and potentially adds latency to regional connections.

Since the fibre backhaul owners (who include Internode/Agile, by the way!) also have revenue streams from big VPN clients and can in any case lease the fibre back to NBNCo, why the hell should taxpayers be forced to foot the bill for $200 million extra?

The ACCC has a duty to customers, not just competition, and has plainly struck the wrong balance in this case.

Pilotyoda

Dec 26, 2010 3:09 PM

It would seem to me that the more connect points there are, the more likely the system will be fail-safe.

A major problem in high density areas could conceivably remove many or all connect points in that metro area. some bigger companies may wish to set up a remote connection as a backup, and, as you say, some backhaul providers may be in a position to provide such services to other businesses to make this possible.

Certainly it would be more competitive to have numerous connection points so as many ISPs, etc that wish to take up the challenge, may do so. Otherwise, we will be in a situation of a handful of big providers with a virtual monopoly over retail services (think supermarket chains, or media control barons)

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