NBN ‘critical’ to resolving State backhaul complaints

Bill Glasson confirmed to iTnews that the state government submissions, ‘particularly [from the] Northern Territory and Western Australia’, were the basis for the findings in this week’s report.

It also appears that the findings were made without correlation or consultation with the major backhaul providers.

“They did not approach Telstra so we have no understanding of how they [the committee] reached their conclusion,” a Telstra spokesperson, Peter Taylor, told iTnews.

The state and territory submissions respectively are said to have expressed concern that access and cost to backhaul capacity is inhibiting the launch of competitive business and consumer services in regional Australia.

Glasson cited examples such as the Mt Isa to Townsville backhaul where the wholesale cost to use it can be as much as seven times higher than for more heavily trafficked metropolitan routes.

“I think the cost is too high when we’re trying to get competition into regional markets,” Glasson said.

“If you take the cost of backhaul out of the equation so everyone pays the same for it, then that’s when you’ll get more competition into those markets.”

“The only way of driving backhaul prices down is by providing open access. The National Broadband Network is critical [in this respect],” Glasson said.

Glasson, however, did concede that the competition argument is as much about backhaul providers ‘overcharging’ for services in regional areas as service providers not wanting to pay the real costs of provision.

“The truth is probably in the middle,” Glasson said.

“Telstra have gone out and done the hard work in making the investments and I accept that. The reality is if they go to the expense of putting it in, they’ve got to get a return.”

Taylor said that distance and traffic volume economics were contributors to backhaul pricing, but also invited other providers to make regional investments where they could see market gaps.

“If there is no investment, it is not because Telstra is stopping competitors investing,” Taylor said.

“They don't want to invest because they cannot make economics work. If they want backhaul, let them build it - not appeal to regulators to direct Telstra and its shareholders to bear the cost of investment.”