Analysis: Five afterthoughts for the NBN debate

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Analysis: Five afterthoughts for the NBN debate

Telstra or the courts are likely to have the final say on how quickly the NBN moves and how much market opportunity is left for the winner to exploit, a panel of experts has said.

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In what was billed as the ‘Great Debate' at the Comms Day Summit in Sydney, five panelists brought together two days of discussion in a wide-ranging and hotly contested debate.

So iTnews thought it only fair to present the top five outstanding challenges for the Government, regulators and industry to deal with once the winner is announced.

1. We're going to the Courts. Again.
Telstra's GMD of public policy and communications, David Quilty, was left to defend the incumbent amid suggestions by Optus and others that the NBN is headed for "legal quagmire".

"[Whether or not it ends up in the Courts] is fair and square in the hands of Telstra," said Maha Krishnapillai, director of government and corporate affairs at Optus.

It would not be without precedent, Krishnapillai said. He cited figures from the ACCC that "over 50 per cent of the regulator's court cases deal with Telstra".

Quilty wouldn't rule out the possibility of legal action if it came to defending Telstra and its shareholder's rights, but said it wasn't Telstra's focus.

"There's no great benefit for anyone in having a legal-first strategy," he said.

"We want to focus on growing our company, building networks and serving customers.

"Obviously Telstra has the fiduciary right to protect its assets where it sees the value of those assets and investor holdings being adversely impacted or attacked. We can't be blamed for that, but it's not our focus."

Quilty continued: "The primary thing we ask for is that we can compete [with it] on a level playing field.

"The critical thing we ask from this process is that no one is restricted or prohibited from building competing networks to deliver broadband services to customers."

The suggestion drew rebukes from several panelists.

"David is saying he wants a level playing field. If you want one, wait in a queue to get a rack into a TEBA [Telstra exchange], or get your rack rejected because you used the wrong type of screws," said PIPE Networks' chief Bevan Slattery.

End thought: Will litigation delay the NBN build?

2. Pricing wholesale access - to the courts...
Just who will set wholesale access pricing to the NBN was a source of fierce debate.

The inference of the panel was that access regimes need to be overhauled to prevent a repeat of issues that have dogged the incumbent Telstra in relation to the way access to its wholesale network is priced.

Krishnapillai said that under Optus' proposal, the ACCC - rather than the network ‘owner' - would control access to pricing on the NBN.

"We've always said Optus will only be a minority holder in the NBN organisation [if we win]," Krishnapillai said.

"Investors certainly want to know how access pricing is calculated but the option was never there for investors to set that pricing."

Krishnapillai accused Telstra of "always having the ability to pillage pricing" to its wholesale network.

Quilty disagreed, believing the cost of accessing Telstra's Wholesale network has been underpriced for some time.

Telstra is involved in a long-running dispute with the ACCC over whose wholesale pricing model to use to cost out access to the Telstra network. Both organisations have developed separate models. The ACCC's model is currently out for consultation.

"The fundamental dispute [over pricing] isn't between us and access seekers, it's between us and the ACCC," Quilty said.

"Today I can undertake to submit our access cost model to the world's leading independent network modelers for the most thorough assessment and I'd ask the ACCC to submit their model for the same level of assessment.

"I'm quite happy to live with the results of the independent assessment comes out with as long as the people selected have credibility as independent experts.

"The ACCC cannot be independent of its own cost model."

But the undertaking was immediately canned by Slattery.

"It's not up to the ACCC to bend to a third party. You can pass it to an independent expert but the party that really matters is the Federal Court. Let's just go to Court and decide who's right and wrong."

Quilty responded, saying Telstra "had been doing that for 12 years" and that he wasn't sure it was the right strategy. He declined repeated requests from Slattery to reveal who had won in the most recent instance of the long-running dispute.

Krishnapillai intervened: "Before we start doing models at 50 paces, I think David is genuine in the offer [to independently assess Telstra's model] but historically for the last decade Telstra has done everything in its power not to listen to the umpire and has appealed every decision.

"We've had 12 years of slog to get resolution of these issues. [Litigation] is clearly part of Telstra's strategy. Otherwise we've seen opportunities for Telstra to resolve this many years ago."

Krishnapillai's statement drew a concession of conditional support from Slattery.

"If Telstra is offering a new consultative strategy, then I'm happy. Just understand there are people here [today] that have fought Telstra on this issue for the past 12 years."

End thought: Wait until next week. And then let the arguments for access pricing begin...

Read on to page two to see how the NBN could punish the industry.

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