National broadband provider Internode has published a strongly worded argument in favour of NBN Co’s existing model for connecting internet service providers to its future fibre network, backing the incumbent minimalist structure which would see just 14 so-called Points of Interconnect located around the nation, and describing rival proposals as “insane”.
A number of other telcos — such as Telstra and Optus, for example — have argued strongly against the 14 PoI model, with Telstra stating NBN Co should be required to provide interconnection at any technical and operationally feasible location requested, while Optus has claimed the model will kill competition and open NBN Co up to compensation claims.
However, in a blog post published over the weekend, Internode managing director Simon Hackett said the larger telcos’ arguments that there should be several hundreds PoIs was “self-serving”.
“The clear choice of NBNCo (and smaller RSPs) is for there to be a small number of POI’s (circa 14) located in capital cities,” he wrote. “A small number of PoI’s in capital city locations means dramatically lower economic and technical barriers to entry and participation for all RSPs. It will lead to a larger number of more diverse service providers (and services) on the network.”
“The opposite view is held by the very largest RSP’s (Telstra and Optus especially), who have been lobbying for there to be a much larger number of PoI’s (circa 200). This is not surprising, as these are the players who own their own extensive fibre backbone networks that will let them plug into 200 POI’s without significant investment.”
If NBN Co provided a larger number of PoIs, Hackett wrote, smaller telcos would need to buy network access from companies like Telstra and Optus to connect to NBN Co’s network.
“The self-serving benefit of this for those larger players is obvious,” he added.
The Points of Interconnect debate is one issue likely to be raised today as the Federal Government releases NBN Co’s corporate plan. Communications Minister Stephen Conroy has called a press conference at midday to take questions about the document, and to make it available to the public.
Hackett noted he suspected the ongoing debate would result in a likely compromise announcement from the competition regulator and the government on the issue.
“This would represent a decision that can only be framed as being politically motivated — and the classic mistake in politics of choosing the average between two opposing views, instead of being brave enough to make an appropriate decision,” Hackett wrote. “It would ‘half fix’ the commercial drivers of the big guys, while ‘half hurting’ everyone else. Permanently. And in a way that may be impossible to fix later on.”
“It’s quite insane in my view for the NBNCo to spend $43 billion (or whatever it does cost) on the network, to bring it 99 percent of the way to where all the retail service providers are generally located (in capital cities), and to leave that last piece of fibre backhaul expenditure out there to have to be contended for in parallel by every retail service provider.”