Optus warns against NBN mission creep

Optus has called on the federal government to scrap proposed legislation it says would allow NBN to expand its business beyond wholesale telecommunications.

The proposed changes to the legislation regulating the network builder came in response to a wide-ranging review of competition and regulation in the telecommunications sector led by Michael Vertigan and delivered to government in October 2014.

The reforms include relaxing limitations on the lines of business that NBN can get involved in.

Australia's second largest telecommunications provider has told a Senate committee examining the legislation that the proposed changes are excessive and would push the functions of NBN well beyond its original scope, and into areas that are already well served by the market.

In a submission to the committee published yesterday, Optus wrote:

“NBN Co (sic) was established to specifically address a market failure relating to the provisions of last mile access for high speed broadband services; it should remain focused on that purpose. Optus does not believe that sufficient grounds have been advanced to support these proposed amendments.

“We are also concerned that this change is being proposed at a time when NBN Co (sic) is already pushing the boundaries of its remit with reports that it is; seeking ACCC support to develop a POI backhaul service; considering new satellite services; and, is in discussions with airlines about developing inflight communications services”.

Optus said it also harbours concerns about other parts of the proposed legislation that it argued would give Telstra an advantage over it and other rivals.

Under the proposed amendments to legislation, NBN would be freed of non-discrimination obligations when conducting pilots and trials of new products.

The proposed amendment reflected advice from the Vertigan report that the non-discrimination obligations would suffocate innovation at the national broadband network builder.

However, Optus told the committee that the proposed amendment had the potential to give an ISP an unfair edge over rivals.

“Enabling NBN Co to discriminate by limiting participation in pilots or trials could give a single RSP a significant first mover advantage in the market. This could have adverse competition impacts, especially where significant systems, processes or commercial arrangements need to be put in place to bring a product or service to market,” the telco wrote.

Optus was particularly concerned that Telstra would become the main beneficiary of the amendment.

The carrier argued that NBN’s shift to FTTN technology and ramping of its customer migration demands a high degree of cooperation with Telstra. Optus said that could allow Telstra to gain an unfair advantage over rivals, if the government accepted the proposed amendments.

“As the current owner of substantial components of the legacy infrastructure that NBN Co needs to access, Telstra has significant intellectual property that it could leverage to exploit a first mover advantage in this migration period if discrimination is permitted by the proposed amendments,” Optus wrote.

The Senate committee is expected to report its findings to parliament late February.