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Wednesday, 07 September 2011 16:01

The NBN Co Optus 'gag' in perspective

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The latest anti-NBN report from the Murdoch press - not known as the number one fan of the project - has revealed that "an $800 million deal with Optus [for the closure of its HFC network] includes an 'anti-disparagement' provision," but it's no big deal and no different to conditions applying to Telstra.

News Limited's revelations once again put NBN Co CEO Mike Quigley on the defensive, when he was asked about the 'gag' after addressing the Australian Communications Consumers Action Network (ACCAN) annual conference.

The purpose of this 'gag' is not so that Optus can hang on to customers of its HFC network, which will be progressively shut down as the NBN rolls out, but to prevent it promoting wireless broadband as a direct competitor to NBN, by slagging off the NBN.

A similar provision applies to Telstra, as detailed in NBN Co's submission to the ACCC on Telstra's structural separation undertaking. As I pointed out earlier in a comment piece on the document, this provision strives to achieve the difficult balancing act of stopping Telstra from promoting wireless against the NBN, but to leave it free to promote wireless per se.

The net effect is that, as the NBN Co submission concluded, "The provisions against Telstra promoting wireless services as substitutable for fibre services will have no effect on competition for wireless broadband services."

So it's reasonable to assume that the same conclusion would apply to Optus, contrary to News Limited's assertion that this 'gag' order on Optus "raises new warnings the $36 billion project will stifle competition," which it also claims "is also likely to affect the 504,000 Optus customers who would be migrated to the NBN."

Affect in what way? Only that Optus will be prohibited from going to them and saying words to the effect: "Look your Optus HFC broadband service is being shut down and you are being transferred to the NBN's FTTH network, but really it's a dog, and it's expensive. You'd be better off with our wireless broadband service."

And this is exactly what Quigley said in reply to his questioner at the ACCAN conference.

"The aim of these clauses was to try and make sure we protect the Australian taxpayer whose money we are spending by making sure we get traffic onto the network and that there was nothing said by the people we are doing the deal with that sledges the NBN."

And he added: "But of course we expect competition from wireless services. We have no intention in any way of reducing that competition. We see wireless as complementary and so do Optus and Telstra. "There is no problem them saying what wireless can do. But we wanted to make sure any comments made by the two companies were fair and reasonable and represented the pros and cons of the technologies."

The reality is that Optus will be free to promote wireless broadband on its merits, just as Telstra will. And Telstra CEO David Thodey does not see the restrictions as a big deal. He was quoted by NBN Co in its submission saying "The only constraint we have is to directly promote wireless instead of the NBN fixed broadband'¦So I don't think it's an issue at all."

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