[AusNOG] $300 NBN Connection Fee for FTTP?

[Paul Brooks]

On 19/03/2018 9:59 PM, Mark Delany wrote:
> On 19Mar18, George Fong allegedly wrote:
>> So embarrassment. I should have known about this. Thanks for the responses ppl.
> A point that may not be obvious is that this newish fee is part of the
> policy change that came with Turnbull's MTM. The goal is to offload
> costs onto consumers to reduce the apparent cost of the NBN.
>
>
Actually no - that might be one outcome, but that isn't the goal of this.

This fee was brought in after intense lobbying by the other greenfields housing estate
providers (Opticomm, Pivit, Comverge, etc), who argued that NBN was competing in a
contestable market (cabling up greenfields estates) that they all charge the
developers a fee per property to install their FTTP network. By having NBN connect
them for free, the government was breaking the rules about Government Business
Enterprises needing to have Competitive Neutrality and having an unfair advantage over
other private competitors.

This lobbying started way before the MTM, was intense during Conroy's time who brought
in the "Fibre in Greenfields Estates" Policy.

Originally the line for greenfield housing estates, enshrined in the Telco Act, was
that the developers had to provide 'fibre ready infrastructure' before they could sell
a block of land, and that they could go out to market to any suitable provider. The
backstop was that if no commercial provider would step up, then NBNCo would be "the
infrastructure provider of last resort" and that they would do it for free. The "do it
for free" bit of course meant NBNCo became the provider-of-first-resort distorting the
market, developers didn't bother looking for an alternative, and all the commercial
greenfield estate providers would go bust.

The Greenfields Fibre Operators of Australia argued this was anticompetitive, and
suggested the going market rate was $450 per lot, which NBNCo should charge as well.

So the government introduced the NBN greenfields connection fee, so that the other
greenfields network providers could stand a competitive chance in winning greenfields
housing estates, arguing that the fee to the developer was so small compared to the
overall cost of the purchasor buying the house-and-land-package from the developer
(which might or might not include the fee), it wouldn't be much of an issue, while
leaving the brownfields connection fee at zero.

So if you want to trace this to a source,  look over to Opticomm and the Greenfields
Fibre Operators of Australia group
(https://www.communications.gov.au/sites/g/files/net301/f/submissions/GFOA_Submission_Combined.pdf)

Paul.


>
>
> Similarly, another cost that has been offloaded onto consumers as part
> of the MTM is the cost of the NTD, more usually now a VDSL modem.
>
> There is no reason why the MTM version of NBNCo could not have
> continued direct funding of the NTD by providing a
> standard/managed/suported VDSL modem for FTTN/FTTC technology... just
> as it provides a fibre NTD for FTTP. But shuffling costs from NBNCo to
> consumers has political benefits.
>
>
> Between the modems, the RSP support implications and the new
> development fee, the MTM strategy has probably shuffled $2-3billion of
> indirect costs into direct costs on consumers and RSPs. A tidy sum
> when your goal is to make the apparent NBN cost appear lower, albeit
> at the expense of making the total cost higher.
>
>
> So George, make sure that fee gets paid as it makes the NBN look $300
> cheaper than it actually is.
>
>
> Mark.
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