ACCC green-lights Optus NBN deal

By James Hutchinson on May 28, 2012 1:23 PM
Filed under Communications

Revised business plan cleared.

The competition watchdog has conditionally approved the $800 million customer migration deal between NBN Co and Optus, paving the way for the National Broadband Network builder to submit a revised corporate plan to Government this week.

The deal, one of two negotiated by NBN Co to remove potential competition to the fibre network, would see the country's second largest telco migrate approximately 500,000 customers - including 430,000 broadband subscribers - off its cable network onto the NBN from 2014.

It would decommission the infrastructure where it is not used to service the company's mobile or business customers.

The $800 million deal includes NBN Co progressively paying Optus as user migrations occur. A full transition is expected to take four years.

The Australian Competition and Consumer Commission approved the deal on the basis of avoiding duplicate operating costs between Optus' cable network and the NBN, while lowering the potential cost of migrating customers between the two networks.

The deal would effectively see an end to Optus' cable network, first rolled out in Sydney, Melbourne and Brisbane in 1995 and upgraded in 2010 to match the same 100 Mbps downstream speeds offered over the NBN.

According to the watchdog, cable assets include 21,000 kilometres of steel wire supporting 7000 kilometres of fibre and 25,000 kilometres of coaxial cable strung across 550,000 poles.

Though able to service approximately 1.4 million homes, network growth has remained stagnant while Optus retained a price premium on the plans.

"With ACCC approval, Optus will be able to redirect resources away from having to maintain its existing HFC network towards offering a greater depth and breadth of services to retail customers on a single national platform," said Paul O'Sullivan, Optus' chief country officer and SingTel head of consumer.

"ACCC approval will pave the way for a genuine win-win deal, freeing up resources that can be used more effectively to open up retail competition on a single advanced network that covers the country."

The cable network's limited reach, Optus' unwillingness to further upgrade it and economic factors in maintaining the network weighed on the watchdog's decision to approve the deal.

Optus and Telstra have indicated on multiple occasions that introducing wholesale competition on their respective cable networks would be difficult technically and financially. Only one such open access cable network currently exists in Australia.

"Locking carriers into smaller-scale wholesale competition with the NBN founded on existing network platforms would never offer such nationwide benefits because existing HFC networks only cover certain regions," O'Sullivan said.

An NBN Co spokeswoman said the company was pleased with the decision.

"It reinforces our view that the agreement with Optus supports the overall reforms to the structure of the telecommunications industry," the spokeswoman said.

The watchdog said the NBN rollout would likely "proceed in a substantially similar manner irrespective of its decision in response to the authorisation applications".

However, the deal's approval comes just in time for NBN Co's first revised corporate plan since 2010.

NBN Co's board is expected to meet today on the issue, before submitting the corporate plan - including updated finances and rollout forecasts - to Government this week.

Communications minister Stephen Conroy said he would release the plan to the public, but would not say when.

 
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