Pipe Networks seeks exemption from cherry-pick rules

Questions why LTE operators would be exempt.

Pipe Networks has sought to exempt itself from planned NBN cherry-picking rules, claiming its business is a "fundamentally different beast from networks such as the NBN."

The national backhaul operator proposed [pdf] the exemptions as part of a series of amendments to the legislation that it said would "go some way to mitigating unnecessary harm to the fixed-line telecommunications industry".

But should TPG-owned Pipe be unsuccessful in being granted an exemption, the company sought instead to have the scope of the cherry-picking rules widened to scoop up next-generation wireless operators in the net.

Pipe echoed calls from others in the industry – such as Internode and HaleNET - that the anti cherry-picking provisions be dumped, but proposed its own alternatives rather than accept amendments already on the table from Opposition communications spokesman Malcolm Turnbull.

Pipe said that a "pessimistic reading" of the current wording could oblige network owners to open their entire networks to competitors on an equivalent basis – not just parts of the network that were upgraded or constructed after 25 November 2010.

"[We] submit that the drafting of section 141 should be amended to clarify the extent to which it applies to post-25 November 2010 extensions of existing superfast networks," Pipe said.

Moreover, Pipe urged that backhaul operators be exempted the rules.

In part, Pipe argued that forcing it to open its network on an equivalent basis would "allow third parties to obtain L2 bitstream services for backhaul purposes, probably at prices which would be below the network operator's cost to supply those services."

Noting the importance of transmission in the NBN picture – connecting NBN Co points of interconnect and ISP networks – Pipe strongly urged that no laws be enacted that could put future backhaul investments at risk.

"The importance of maintaining competition and investment in backhaul and transmission services cannot be understated," Pipe said.

Similarly, it argued that its national dark fibre network – and those owned by other operators – should also be exempted because they did not "seek to offer ubiquitous access to all premises" as NBN Co did, and therefore could not be considered competitors.

Forcing those networks to play by open-access rules would "have a chilling effect on further network expansion", Pipe warned.

"If other service providers could in future compel Pipe to supply them with wholesale NBN-style products at NBN-level pricing across Pipe's very different and much more expensive infrastructure, it would allow competitors of Pipe to free-ride on Pipe's substantial investment in building and expanding its network [and] would not offer Pipe an acceptable level of certainty of recouping its investment in expansions of its network," the company stated.

"It would also likely cause an increase in the cost of services to end-users as Pipe could not subsidise its installation costs with the ongoing revenue which the infrastructure would otherwise produce over time."

Wireless "unregulated"

Part of Pipe's beef with the current wording of the Access Bill - which contained the cherry-picker provisions - was that it treated fixed-line operators differently to those who provided wireless transmission services.

Pipe argued that "emerging wireless technologies" like 3GPP Long Term Evolution (LTE) could operate at a level that qualified them as "superfast" – and therefore should be treated no differently.

"Although opinions vary as to the substitutability of high-speed wireless data services for fixed-line services, it is certainly possible that competition from wireless services could 'cherry-pick' metropolitan areas," Pipe said.

"Yet this market is inexplicably not proposed to be regulated."

Correction: The article previously stated that Pipe was a member of the Alliance for Affordable Broadband (AAB). AAB's policies may have been endorsed by Pipe founder Bevan Slattery but that was done in an individual capacity and not on behalf of Pipe. Slattery is no longer connected to Pipe Networks.