Internode calls for NBN compensation

The cost of DSLAM obsolescence.

Internode has put a price tag of up to $200,000 an exchange on the DSLAM investment it will lose in the transition to the National Broadband Network.

The ISP is seeking to be compensated for the assets in the same way that Optus and Telstra are being paid by NBN Co to decommission networks.

Regulatory affairs manager John Lindsay told a parliamentary committee that NBN Co's $9 billion deal with Telstra and $800 million deal with Optus are inconsistent with negotiations with the rest of the internet industry.

"NBN Co's sorry but we're basically out of luck because there's no compensation being paid for loss of DSLAM equipment," he said.

Internode has spent between $100,000 and $200,000 deploying DSLAM infrastructure in 197 Telstra exchanges nationally over several years.

The company has pushed ahead with continued DSLAM investment nationally in recent years, launching a $10 million infrastructure investment program to expand its direct reach to customers at Telstra exchanges just two months after the initial announcement of the NBN in 2009.

In addition to active DSLAMs, it has a further 11 exchanges in build or in planning, primarily in regional areas reached by the Federal Government's regional blackspot program.

According to industry sources, return on investment expectations for a single DSLAM investment often ranges between six and 18 months depending on the cost of backhaul to the exchange and critical mass in the area but one source said this could be as short as three months.

Telstra's competitors, according to Lindsay, potentially faced more fees for removing or leaving DSLAM infrastructure in the incumbent's exchanges.

Regional pressures

Lindsay warned that competition in regional areas could be constrained by backhaul to the 40 long-term points of interconnect outside capital cities and NBN's "arbitrary" $20 a megabit connectivity virtual charge.

"There's a huge amount of uncertainty around what it will actually cost us in those regional areas," he said.

"We may yet not actually offer existing subscribers service in those areas is the overhead of connecting there is too high."

Though Internode has released its NBN pricing for trial customers, the company is yet to guarantee it will maintain those prices or cross-subsidise regional customers once all 121 points of interconnect have been implemented.