[LINK] iiNet refuse NBN Agreement

[stephen at melbpc.org.au]

Telstra and Optus could dominate NBN, as iiNet snubs key NBN Co agreement

Monday, 20 January 2014. By MYRIAM ROBIN
<http://www.smartcompany.com.au/technology/information-technology/35226-
telstra-and-optus-could-dominate-nbn-as-iinet-snubs-key-nbn-co-
agreement.html#>


The nation’s largest supplier of national broadband network services and 
third-largest broadband provider, iiNet, has refused to sign NBN Co’s 
Wholesale Broadband Agreement.

Telecommunications analysts say the whole rollout is under a cloud of 
confusion, and a new agreement may be on the way regardless.

On Friday, iiNet’s chief regulatory officer, Steve Dalby, told The 
Australian that given iiNet would be liable for customer compensation if 
NBN Co does not connect users on time, and NBN had delivered less than 80% 
of services on time, his company was not willing to take the risk of the 
agreement.

“There is a real commercial risk for us around these lax customer service 
guarantees, which suggest that if a customer is not connected on time to 
the NBN or there are faults with the service, then we will be financially 
liable to compensate them,” Dalby told the newspaper.

“Considering that the NBN Co does not meet customer appointments and has 
continually failed to meet its rollout targets means this is just too risky 
for us to sign on.”

“If NBN Co's performance to date is anything to go by, they won't want to 
bind themselves to guarantees that could result in regulatory penalties. 
It's quite a rational approach by them, but it's ludicrous that we retail 
service providers have to foot the bill for their poor work, and I can't 
believe it is government policy.”

In the abscense of signing the new wholesale agreement, iiNet will keep 
operating on its current interim agreement, and so will continue to offer 
NBN services to its customers.

For a company that’s built its brand offering around customer service, 
missed appointments are a significant concern, says Telsyte communications 
analyst Chris Coughlan.

But it could have dire effects for consumers. 

Telecommunications expert Paul Wallbank says the broadband company’s 
refusal to sign the agreement could see the entire broadband market 
“dominated by two players, which wasn’t what was supposed to happen”.

However, he says he can understand iiNet’s reluctance to sign the 
agreement, as the telco does not have the market power of Optus and 
Telstra, and thus would be unable to bring as much clout to renegotiating 
the agreement should problems arise.

“Obviously Telstra and Optus are in a position where they can negotiate 
these disputes from a far more powerful position – they own the 
infrastructure.

“The big question for the telecommunications industry is that the 
government are changing the scope of the project. So it’s very hard to see 
why you would be signing a wholesale agreement when you don’t know what the 
wholesale arrangements are going to be. Frankly, it’s hard to see how 
anyone can be signing an agreement when no one knows what the physical 
network is going look like.

“And that’s the mess we now find ourselves in with broadband policy. That’s 
an indictment on both sides of politics in Canberra.”

NBN Co’s record of delivery so far is so dire they cannot be trusted to 
deliver on their side of the bargain, Wallbank says. “Their commercial 
performance to date has been utterly abysmal. So iiNet are completely 
within their rights to do what they’ve done.”

It’s an assessment Coughlan agrees with.

“Everybody I know that’s had NBN Co connected has had a nightmare of an 
experience over it,” he says.

Asked to speculate on what is likely to happen now that iiNet has refused 
to sign, Wallbank says things will likely remain in limbo until NBN Co 
brings out new, revised agreements when the scope of the project under the 
new government is known.

“The government has come out with its policy, but we don’t know what the 
scope of the NBN project is. Before now, it was 93% fibre. Now we don’t 
know. It’s like trying to remodel your kitchen and not knowing whether 
you’ll be using gas or electricity.

“Commercially, it’s too risky to deal with NBN Co on these terms.

“And while all that’s getting worked out, Australia is going to slip 
dramatically in its broadband coverage, and that’s a
problem.”

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