Telcos’ broadband battle: Why Telstra and Optus are going after the NBN

Telstra must not be allowed to buy the NBN, #BetterBroadband campaigner Laurie Patton says.

Telstra must not be allowed to buy the NBN, #BetterBroadband campaigner Laurie Patton says.

Optus has hit out at the government’s management of the NBN as speculation swirls about Telstra’s ambitions to take over the publicly owned broadband network.

Optus boss Kelly Bayer Rosmarin this week publicly voiced concerns that the policy settings for the NBN – combined with service issues, changes to mobile and internet usage, and the need for telcos to spend big on infrastructure – are making it difficult for retail service providers to turn a profit.

Although the pandemic has highlighted the vital importance of good telecommunications infrastructure, the sector is being stripped of profitability, Ms Bayer Rosmarin warned.

“The current investment climate is not sustainable and risks holding back the future growth of our nation,” she said.

Ms Bayer Rosmarin blamed both the NBN, and the growing mobile virtual network market – smaller providers who piggyback off existing telecommunications infrastructure but contribute little to its maintenance and upgrades.

She then criticised the NBN for inconsistent service levels that have resulted in a high volume of customer complaints, which telcos are often left to deal with.

She also identified the throttling of customer bandwidth via the NBN Co’s extra bandwidth (CVC) charges as a growing issue, exacerbated by the popularity of streaming platforms such as Netflix, which consume large amounts of data.

Optus is calling for CVC charges to be scrapped, and for NBN Co to lift its game when it comes to connecting consumers to the network to reduce the number of customer complaints.

Telstra’s NBN ownership ambitions

Optus’s NBN criticisms follow preparations by Telstra to make a future bid for the publicly owned network.

Last month, Telstra revealed a major corporate restructure that includes the creation of three separate legal entities that could one day be sold.

These entities include ‘InfraCo Fixed’, which Telstra chief executive Andy Penn touted as a company that could take foreseeably take over the NBN.

Rival telcos, including Optus, immediately condemned the plan.

#BetterBroadband campaigner and former Internet Australia boss Laurie Patton said the government should not privatise the NBN, and if it does, it should not be sold to Telstra or its subsidiaries.

Both sides of politics share blame for Telstra’s outsized influence on telecommunications in Australia, Mr Patton said.

“Going back into the 1990s, Labor talked about but then in the end failed to structurally separate Telstra into a wholesale business and a retail business,” he explained.

“Then fast-forward to the privatisation meant that this monopoly monolith just became bigger and bigger and bigger.”

When the Rudd Labor government decided to build the NBN in 2007 Telstra “refused to play ball and put in a ridiculous bid that didn’t meet the criteria, and so Labor went ahead and built an NBN of its own”, Mr Patton said.

The Coalition government took power in 2013 and scrapped Labor’s original plan for a 93 per cent fibre-to-the-premises network in favour of a multi-technology-mix using Telstra’s copper and HFC network.

“The Abbott-Turnbull model decided to reuse the old copper wires. And that’s where Telstra took the government to the cleaners,” Mr Patton said.

Telstra gets paid at least $1 billion a year for NBN to access its worn-out copper wires.

“So Telstra is already streets ahead [of its competition].”

Now that the NBN rollout is mostly complete, the federal government must either inject more money into it or offload it, Mr Patton said.

“The only organisation in my view that has both the financial resources and the technical ability to really leverage it is Telstra”, he said.

“But if we let that happen, we are back where we started from with this huge, privately-owned monolith with the absolute dominant position.”

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