Optus breaks silence on NBN Co's enterprise behaviour

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Optus breaks silence on NBN Co's enterprise behaviour

Warns future is at risk for some existing providers.

Optus has broken its silence on NBN Co’s behaviour in the enterprise market, asking the government to stop NBN Co from “overbuilding competitive infrastructure” and to refocus efforts and investment on underserved areas.

The telco added its voice to industry-wide criticism of NBN Co’s approach to the enterprise and government (E&G) market in a submission to a parliamentary inquiry, which was first reported by CommsDay.

Optus said on one hand it was benefiting from NBN Co’s presence in the E&G market, using NBN Co’s national reach and pricing to win accounts that otherwise would have been “locked” to Telstra.

However, Optus also warned that NBN still operated in the enterprise market with “little guidance”.

NBN Co is treating a recent formal warning from the Australian Competition and Consumer Commission (ACCC) as guardrails for its approach to the E&G market, though it remains unclear exactly how NBN Co's approach has changed.

Optus’ concerns centre on NBN Co running fibre into CBD buildings that are already served by fibre from multiple providers, in particular “challengers” like Optus, TPG and Vocus.

Optus suggests the ideal model is one “where business retail service providers [RSPs] like Optus can utilise their CBD-focused fibre networks and the national fibre reach of the NBN to provide competitive services to all enterprises across the country.”

But NBN Co is preferencing its own CBD fibre in deals, before RSPs are able to provide any input on configuration, Optus alleged.

“We have seen examples where the NBN Co industry engagement team appears to have actively discouraged the use of competitive infrastructure by enterprise end-users in favour of NBN fibre access, even where they were serviced by existing fibre networks and the mixed use of NBN plus other fibre networks may have resulted in lower costs and prices,” Optus said.

“For example, following an agreement signed directly with NBN Co, we understand one enterprise customer mandated 100 percent NBN FTTP [fibre-to-the-premises] solution for all its national sites. 

“However, Optus could have utilised its own fibre network for around a third of those sites with the remaining sites utilising NBN FTTP lines. 

“The mixed network solution would have resulted in prices substantially cheaper to the end-user. 

“However, due to the direct engagement between NBN Co and the end-user, the end-user had ruled out the possibility of using the mix network solution.”

Part of Optus’ complaint about NBN Co relates to the operating model, where it performs direct outreach to large enterprise accounts.

To be clear, no RSPs are in favour of NBN Co’s direct contact with end users, given the network builder is meant to have a wholesale-only remit.

“The use of a direct engagement model is unlikely to result in NBN Co maximising the benefit of its entry into the enterprise market,” Optus said.

“The benefits of NBN Co’s entry – to NBN Co, RSPs, and enterprise end-users – are maximised where RSPs are able to determine the appropriate mix of on-net and off-net fibre links.”

Optus warned of an uncertain future if it - together with TPG, Vocus and other smaller private network operators for E&G - continued to have their infrastructure excluded from NBN deals.

It said that “some ... challenger networks may not survive longer-term”, which would ultimately also impact NBN Co, which simultaneously relies on these companies.

“NBN Co needs a vibrant and successful cohort of challenger enterprise RPSs in order to grow its own enterprise revenue,” Optus said.

“The main challenger companies (Optus, TPG and Vocus) are likely to become the largest customers of NBN Co enterprise services. 

“Supporting these challenger RPSs would deliver tangible long-term benefits for NBN Co.”

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