New NBN plan to deliver more competition, report claims

The National Broadband Network Company has reportedly been forced to amend its business plan and increase the number of points-of-interconnect to be constructed on the network after the competition watchdog slammed an original inferior proposal.

But there are concerns that such a proposal would limit the network’s return on investment, opening the Government to more attacks from the Opposition regarding the network’s financial viability.

As reported by the Australian Financial Review, the NBN Co. has been forced to write a new plan after the Australian Competition and Consumer Commission rejected an original proposal that would use 14 POIs located in capital cities.

Telcos including Telstra and AAPT rejected this original plan, saying that their existing infrastructure would be made redundant with such a limited supply of POIs – the points at which retailers connect to the broadband network.

But the AFR reports this new plan will use about 120 POIs, which while under the 200-400 proposed by the telco industry, still provides more competition than the original plan.

David Kennedy, research director at telecommunications analysis group Ovum, says that if such a plan were to be confirmed and put into action, it would result in a better environment for competition than the previous plan.

“Speaking hypothetically, the effect of this change will be that there will be a competitive market to supply interconnect services across all of those points. So if you’re an ISP that doesn’t want your own infrastructure, you can go to competitive operators that provide you links to these points.”

“The previous concern was that Optus and Telstra, and all of those types of telcos, expressed concern about the small POI number because it would have made their infrastructure redundant.”

The new plan will also allow ISPs to connect their own networks to the NBN in closer proximities to users’ homes. It is understood that this plan could be announced as early as tomorrow, along with an updated version of the NBN business plan – an amended version of which was released late last month.

The ACCC originally rejected the first NBN Co. plan, but Kennedy says the new rumoured proposal would be something more akin to what they are looking for.

“A proposal like this would probably be more what the ACCC would be comfortable with, because at the moment the market is competitive and a plan with 14 POIs would have amounted to a lessening of competition, something the ACCC is never comfortable with.”

The AFR has also reported that the new proposal may affect the network’s commercial return, and could impact the Government’s promise to offer uniform prices for the network across the country.

The Government is reportedly rushing to release the full NBN business plan by the end of the month.