Complacent Monopoly Unlikely to Innovate

Opposition communications spokesman Malcolm Turnbull says a monopoly service provider would not push itself to improve its effectiveness and efficiency for customers.

Mr Turnbull responded to a speech on Monday by NBN Co chairman Harrison Young, who said a natural monopoly could serve the entire market at a lower cost than at least two suppliers.

This thesis denied the "dynamic, creative forces" that only competition could deliver in the market, Mr Turnbull said.

"A monopoly is always likely to be complacent - there is nothing to stir it to innovate, to improve its efficiency," he said in his blog on Monday.

Mr Turnbull said the opposition supported all Australians having access to very fast broadband but it preferred the private sector to deliver that aim in a competitive environment rather than by a government-owned monopoly provider.

The coalition has criticised Labor's $37.4 billion national broadband network (NBN) as too slow and too costly.

Under Labor's plan, NBN Co will deliver high-speed fibre-optic cable to 93 per cent of homes, schools and businesses by 2021, with fixed wireless and satellite technology to provide the rest of Australia by 2015.

Mr Turnbull opposes the NBN's plan to roll out fibre to the home in Australia, preferring a mix of technologies including fibre, cable, wireless and copper.

Mr Young said ongoing analysis of NBN's plan was "good".

"We are spending a lot of the public's money," he said in his speech at a Committee for Economic Development of Australia event in Sydney on Monday.

"There ought to be scrutiny of our plans and performance."

He said the potential cost savings of a fibre-to-the-node network would depend on how far ahead planners looked.

The coalition has said it prefers a mix of technologies to provide broadband services as quickly and as cost effectively as possible.

As part of the coalition's policy, fibre-to-the-node (or corner) would underpin a significant part of its plan to provide broadband across Australia.

Mr Young said maintaining the copper that connected the nodes to the premises and coping with inherited information technology systems were both dear.

"The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at," he said.

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Costs 'Could Rise' With NBN Plan Switch - Internet Australia

The chairman of NBN Co, Harrison Young, hopes to broaden the debate about the merits and cost of the government's National Broadband Network in a public speech today.

Mr Young will argue that changing the network design to the Coalition's preferred "mix of technologies" could increase the long-term costs of the network and fail to deliver key policy targets, at a forum about “Australia's Digital Future" and hosted by the Committee for Economic Development of Australia (CEDA) in Sydney.

Mr Young's speech outlines three "interwoven" aspects of the NBN – a super-fast broadband network that will cost about $40 billion to construct - the telecommunications market structure, infrastructure and future applications and benefits of the network, according to a draft copy obtained by Business Day.

While saying he wants to stay out of the debate about whether fibre to the premises is needed when fibre to the node technology exists, Mr Young says that “if you retain Telstra infrastructure as part of the national broadband network, even just the last bit, you will not have accomplished the separation of [Telstra] wholesale from retail that was a major objective of Project NBN”.
A fibre-to-the-premise model runs fibre optic cables all the way from an exchange into households, while fibre-to-the-node only runs fibre cable from the exchange to an air-conditioned street side cabinet – the node - serving dozens of premises but keeping the copper wire between the node and households.

Mr Young also says fibre-to-the-node is more expensive over the long term than NBN Co's current design.

“The apparent cost advantage of fibre to the node decreases as you lengthen the time frame you look at. In the long run, as Keynes famously said, we are all dead. Estimating costs is an engineering problem. Deciding on the relevant time frame is a policy question.”

Opposition communications spokesman Malcolm Turnbull has promised a Coalition government would deliver “very fast broadband sooner, cheaper and more affordably” using a mix of technologies, including fibre-to-the-node.

A future Coalition government would also keep the pay-television and internet cable owned by Telstra and Optus, which is connected to about 1.2 million households in wealthy inner-city areas.

NBN Co has struck commercial deals with Telstra and Optus to buy their cable customers and decommission the cable, a move that is heavily criticised by the Opposition.

But Mr Young will today tell the CEDA audience that since the cable networks were only built in suburbs containing Australia's wealthiest households, forcing NBN Co to keep to cables and not build fibre would create the “ironic situation that the wealthiest suburbs have the lowest-quality broadband in the country”.

NBN Co's super-fast fibre network will start operating at 100 megabits per second, but can be upgraded to 1 gigabit per second and faster speeds in coming years. The existing cable network does not have the same upgrade capacities.

Mr Young, who is a director at the Commonwealth Bank, former director at the Bank of England and former chair of Morgan Stanley Australia, lays out the policy and market reforms the current Labor government wants to achieve and says natural monopolies can be the most most efficient use of society's resources.

Using the example of bridges, he says building two toll bridges right next to each other would halve the flow of traffic on each bridge and push tolls to cover the owner's construction costs higher than a single bridge-owner would have to.

Further, NBN Co will not become another Telstra because it is not allowed to sell services at the retail level, he says.

“The problem with Telstra is not that it is a regulated monopoly supplier of wholesale services but that it has been able to behave like a monopolist in the provision of retail services, which is not a natural monopoly.”

Mr Young will be speaking alongside the chair of Regional Development Australia, Dave Abrahams, managing director of IBM in Australia and New Zealand, Andrew Stevens, head of customer relationship management and Medibank, Dermot Roche and head of telecommunications research at Ovum, David Kennedy.

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Digital Storm On The Horizon

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Copyright Law Review Paper delves Into Cloud

The Australian Law Reform Commission's (ALRC) newly released Copyright Act review consultation paper has raised concerns that Australian copyright laws might be stunting the country's cloud market, directly making reference to the Optus TV Now court case.

In the paper, "Copyright and the Digital Economy", the ALRC is looking at whether new exceptions to the Copyright Act should be added, since we are well and truly into the digital age.

"The questions we are asking in this inquiry go to whether our current copyright laws are properly aiding the development of opportunities for Australian creators and not unduly hindering the development of new business models, while at the same time ensuring appropriate protection for copyright," the ALRC commissioner for the copyright inquiry, professor Jill McKeough, said in a statement. "At the same time, the expectations of a global community to access and use material for a whole range of creative, community, educative and commercial purposes also needs to be considered."

The dynamic tech sector has thrown a few curve balls at Australia's seemingly outdated copyright laws, including how users of cloud computing can infringe on copyrighted materials.

Launched in 2011, Optus TV Now has since been pulled by Optus after it lost a Federal Court battle with the Australian Football League (AFL), the National Rugby League (NRL) and Telstra. Optus is looking to appeal the case to the High Court of Australia.

Optus TV Now allowed customers to record in the cloud and playback free-to-air TV content on their smartphones with minimum delay. This was perceived by the football bodies as being a copyright infringement, especially due to a multimillion-dollar deal that the AFL had signed with Telstra to broadcast AFL games on the telco's mobile network.

Analysts have considered the court decision to be detrimental to the growth of cloud computing in Australia. It could place a new legal burden on cloud service providers, since it could mean that they are responsible for the data stored on their cloud infrastructure by their customers. This may deter cloud-computing providers from entering the Australian market.

"The Federal Court case in 2012 concerning the Optus TV Now service highlights the potential for new and emerging cloud-computing services to infringe copyright, or enable their customers to infringe copyright," according to the consultation paper.

The ALRC is keen to hear from the public about whether Australia's copyright law is impeding cloud-computing services, and whether changes should be made to accommodate for this burgeoning technology sector.

"Cloud services, such as digital lockers, may also be used to store and share copyright material acquired illegally," the paper said. "New or amended exceptions presumably should not permit such activity."

Whether cloud service providers should qualify for safe harbour schemes, such as the ones available for carriage service providers, is beyond the scope of the review.

The consultation paper also addressed a number of other topics related to copyright and Australia's digital landscape, one of which concerns caching and indexing online content.

There are currently no exceptions granted to internet service providers (ISPs), search engines and other internet "middle men" to cache content, some of which may be copyrighted content, for indexing and operational efficiency.

"Caching improves the internet's performance, allowing search engines to quickly retrieve cached copies on its server, rather than having to repeatedly retrieve copies from remote servers," the paper noted.

But in doing so, search engines may be infringing copyright. There's also the sticky situation when search engines display links to websites that do contain pirated content. Australian copyright laws cannot determine whether companies such as Google are liable, and there is room to broaden exceptions to the Copyright Act to accommodate for caching and indexing content.

The rise of social networks has propagated a culture of sharing copyrighted content with friends. This user-generated content is also not covered under local copyright laws. While exceptions to the Act can be made for user-generated copyright content for non-commercial use, the parameters need to be defined.

Tying into the growth of social networks is the topic of data and text mining. This could be for analytics and research purposes, with data, text and images collected being stored in databases and repositories.

For commercial companies, this data can prove to be extremely valuable. Yet, there is currently no specific exception in the Copyright Act for data mining that may involve copyrighted content being copied without permission.

Individuals or organisations interested in making a submission in response to the copyright law review can do so here.

Submissions close on 16 November, and a report is due in 2013.

Australia - Broadband Market - Overview, Statistics and Forecasts - 2012

(http://www.researchandmarkets.com/research/nf2r64/australia_broadb) has announced the addition of the "Australia - Broadband Market - Overview, Statistics and Forecasts" report to their offering.

In this report we provide an overview and analysis of the fixed and mobile broadband market including infrastructure statistics, major internet service provider statistics and information on the key providers. BuddeComm's 2012 Australia Broadband Market - Overview and Statistics annual publication profiles key sectors in Australia's broadband market.

This report also provides a statistical overview of the broadband market in Australia and includes an overview of the major network operators, wholesalers and retail service providers. The report also examines the developments in HFC networks, while the statistical sections of the report provide historical data as well as forecasts relating to fixed and mobile broadband usage, internet service providers and the business broadband market/sector.

Market highlights:

- The internet-connected home is nearly ubiquitous across Australia, with over 80% penetration rate predicted by end-2012;
- Total value of the broadband markets is now more than $4 billion;
- Cloud-based usage by business increasing as backups and shared data come from faster connections;
- Online businesses are sustaining higher financial returns into 2012;
- Data usage by users increases by 80% year-on-year in 2011 and is set to double as more broadband-enabled devices are used;
- Connected or smartTVs will see a very rapid uptake over the 2013-2015 period;
- An overview of new trends and existing technologies is provided;
- Penetration rate of HFC broadband subscribers is under 10% of the total broadband market in Australia;
- Key usage trends for the fixed broadband market.
 
Key Topics Covered:

1. Statistical Overview
2. The National Broadband Network (brief overview)
3. Business Market Statistics
4. Residential Market Statistics
5. DSL Market, Overview, Statistics and Providers
6. HFC Cable Networks
7. Mobile Broadband - Statistical Overview and Forecasts
8. Market Forecasts

For more information visit http://www.researchandmarkets.com/research/nf2r64/australia_broadb

 

Read more at http://www.virtual-strategy.com/2012/07/23/research-and-markets-australia-broadband-market-overview-statistics-and-forecasts-2012#a1ypdAv9u40lv7gH.99

Anonymous Steals 40GB User Data From ISP in Australia

Notorious hacker group Anonymous has claimed to have stolen 40GB worth of user data from an Australian internet service provider and is threatening to publish it online.

The group hacking into the systems of AAPT, comes as the second stage of a campaign, protesting against proposed changes to privacy laws that would force ISPs (internet service providers) to store user data and make it available to intelligence agencies for up to two years.


Anonymous Australia claimed the attacks aimed to show how we should not trust ISPs to store personal information.

"You want to trust these ISPs with your data? When they can't even keep it secured?! If I were you, I wouldn't trust anyone but myself with my data," News.com.au quoted the Anonymous, as saying.
Anonymous claimed that it plans to release a sample of the data later today, but will deliberately censor private details, because "the people were not their target".

"We don't want to publish personal innocent personal details like some of the other Anons have in other operations which have lost the public's support. Our target is the (Federal) Government who think they can get away with doing something like this," the hackers said.

The threat comes just days after Australian arm of the group claimed responsibility for bringing down 10 government websites and warned that it will continue the attacks on ".gov.au" sites until plans to force ISPs to store user data and make it further available to security services are shelved.
AAPT remained unavailable for comment.

Movie Studios Fail in Appeal Against Internet Service Providers

In a recent unanimous decision,(1) the High Court ruled that an internet service provider (ISP), iiNet, was not liable for authorising the copyright infringements committed by users who downloaded movies on its network. The ruling brings to a conclusion the copyright battle commenced by the movie studios in 2008.


Facts

The important legal issue in these proceedings was whether iiNet had authorised the infringing acts of its customers who had downloaded unauthorised copies of movies using iiNet's network. The movie studios had argued that iiNet authorised its customers' infringements under Section 101(1) of the Copyright Act 1968 (Cth) through:

• its provision of unfettered internet access to customers;
• its knowledge that some customers were infringing copyright (as a result of infringement notices being issued on behalf of the movie studios); and
• its refusal to warn infringing customers or terminate their accounts.

Decision

In a relatively brief decision, the High Court found that iiNet's conduct did not amount to authorisation. The court noted that Section 101(1A) of the act specifies three criteria that had to be taken into account when determining whether iiNet had authorised the infringing acts:

• the extent of iiNet's power to prevent customers from committing the primary infringements of copyright;
• the nature of the relationship between iiNet and its customers; and
• whether iiNet took any other reasonable steps to prevent customers from committing the infringing acts.

The High Court held that iiNet's power to prevent infringements was limited. The court held that iiNet had limited technical ability to prevent infringements, for the following reasons:

• It did not host infringing content.
• It had no involvement with or control over the BitTorrent peer-to-peer file sharing system used by its customers.
• It did not assist users in finding infringing content.
• It could not actually remove infringing content from customers' computers.

Furthermore, it was noted that even if it could take such actions, iiNet could not prevent customers from using another ISP's services. This left iiNet with only the power to terminate the contractual relationship with its customers, which the court considered an indirect and limited power.

When considering whether iiNet had taken reasonable steps to prevent infringing acts, the court held that the information provided in the infringement notices on behalf of the movie studios did not give iiNet a reasonable basis on which to warn alleged infringing customers or, if necessary, to suspend or terminate their accounts if the infringements continued.

The court noted that the notices provided limited evidence of the infringements. Furthermore, it was impractical and costly for iiNet to verify the allegations contained in the infringement notices without it infringing the movie studios' copyright itself. Finally, the court considered that iiNet's unwillingness to act on the notices was based simply on its assessment of the risks of taking action on such limited information. The High Court concluded that iiNet's failure to act on the infringement notices did not amount to authorisation of copyright infringement by its customers.

Comment

This case deals a severe blow to movie studios in their attempts to hold an ISP liable for authorising the infringing acts of its customers. Importantly, this decision goes further than the 2011 decision of the Full Federal Court. In that case, the court had held that iiNet had not authorised the infringements due to the fact that the infringement notices were inadequate.

Nonetheless, it had hinted that had the infringement notices provided "unequivocal and cogent evidence" of infringement and had the movie studios provided contractual protection to the ISP against costs and liabilities to customers for wrongful termination of accounts, iiNet's failure to act might have been unreasonable and therefore amounted to authorisation.

In this decision, the High Court also referred to the lack of information provided in the infringement notices. However, the High Court also found that iiNet had only an indirect contractual power to prevent the infringing activities of its customers.

The High Court noted that even if iiNet had terminated a customer's account, this did not ensure prevention of the infringing activity. The emphasis of the High Court on iiNet's limited indirect power means that it will not be enough for movie studios simply to address the inadequacies in notices provided to ISPs.

On a final note, three of the High Court judges expressly noted that:

"the concept and the principles of the statutory tort of authorisation of copyright infringement are not readily suited to enforcing the rights of copyright owners in respect of widespread infringements occasioned by peer-to-peer file sharing."

This is a signal that other alternative approaches (eg, a voluntary industry code) will be needed by movie studios and other copyright owners when dealing with widespread copyright infringements through peer-to-peer file sharing. The outcome of this case has likely increased the bargaining power of ISPs generally in Australia in any negotiations towards an industry code.

The one hope for copyright owners may be found in the High Court's analysis of the degree of control held by ISPs over copyright infringements. On this sort of analysis, other intermediaries - such as social networking platforms or search engines - may be held to have a greater degree of power to control and prevent the infringement of copyright using their services. Accordingly, claims against those intermediaries for authorisation of infringing activities using their services may find greater success.

Roxon Questions Plan To Track Users Web History

''THE case has yet to be made'' for a controversial plan to force internet providers to store the web history of all Australians for up to two years, according to Attorney-General Nicola Roxon, who has acknowledged the financial and privacy costs of such a scheme.

Ms Roxon expressed her reservations in an interview with Fairfax Media, publisher of this article, in what may be a sign the government does not have the appetite for forcing through Parliament the most controversial proposal among a package of more than 40 national security measures.

The proposals, if passed, would be the most significant expansion of the Australian national security community's powers since the Howard-era reforms of the early 2000s.

Regarding data retention, Ms Roxon said she had some sympathy for the view of the national security community but said: ''I am not yet convinced that the cost and the return - the cost both to industry and the [civil liberties] cost to individuals - that we've made the case for what it is that people use in a way that benefits our national security. I think there is a genuine question to be tested, which is why it's such a big part of the proposal.''

That is a view that will be greeted with some apprehension by one of the main advocates for such a regime - Neil Gaughan, who heads the federal police's High Tech Crime Centre.

''If we don't have a data-retention regime in place [in the future], we will not be able to commence an investigation in the first place,'' he said. ''And it's already getting increasingly difficult.''

Opposition to such laws in Germany - the government has declared them invasions of privacy and forbidden them - had left German federal police agency the Bundeskriminalamt (BKA) a laughing stock, Assistant Commissioner Gaughan said. ''No one can work with them internationally; if I go to Germany with an inquiry about who called who, when and why, they can't tell us,'' he said.

''It's causing the BKA all sorts of problems.'' However, Andrew Lewman, the executive director of Tor, which makes software that disguises a person's location when surfing the web, said data retention actually impeded the effectiveness of law enforcement.

''It sounds good and something sexy that politicians should get behind,'' he said.

''However, it doesn't stop crime, it builds a massive dossier on everyone at millisecond resolution and creates more work and challenges for law enforcement to catch actual criminals.

''The problem isn't too little data, the problem is there is already too much data.''

He said while its collection may be innocent today, it could cause problems in the future.

''It will also help future witch-hunts for people doing acceptable things today but at some point in the future these activities might seem suspect,'' he said.

The debate about the proposed legislative changes is already shaping up to be significant, with political activist outfit GetUp! and online rights group Electronic Frontiers Australia joining forces to start an online campaign to petition Ms Roxon about the proposals.

The committee with the job of inquiring into the proposals has already reacted to comments that the four weeks offered to the public to provide submissions was not long enough, yesterday announcing it was extending the deadline by a fortnight.

Buy Australian: Online Orders Surge As Retailers Lag - Online Shopping Australia

The number of online orders to Australian businesses increased by almost a third during the 2010-11 financial year.

The Australian Bureau of Statistics research released on Tuesday showed that local businesses received online orders worth $189 billion in the 12 months to June 30, 2011, an increase of $46 billion, or 32 per cent, on the previous corresponding period.

However, the data also showed that only 28 per cent of business said they had received orders via the internet, a mere 13 per cent increase on the previous year.

In contrast, more than half of businesses in Australia, 51 per cent, reported placing orders for goods and services on the internet in last financial year, up nine per cent in the previous year, ABS data showed.

In another troubling sign, just below 40 per cent of business reported ‘‘some form of innovative activity’’ in 2010-11, the ABS said, with 66 per cent of large businesses reporting activities to boost efficiency and lower costs. Only 30 per cent of companies with four employees or less reported the same, the ABS said.

The gap between businesses receiving orders online and those placing them highlighted the demand for changes by local industries and the constraints that many businesses in Australia work under. The slow pace of innovation in Australia has held back the nation’s overall productivity, an area of concern for the central bank and economists.

RBA forecasts of economic growth routinely factor in improvements in productivity to achieve the expansion, yet productivity in Australia has lagged in recent years.

RBA governor Glenn Stevens recently urged politicians to follow the suggestions of the productivity commission in order to boost the the efficiencies and lower the cost in the economy.

Australia’s economy, while expanding by 1.3 per cent in the first quarter, has been riven by disparities in performance between mining and non-mining states and industries.

Macquarie senior economist Brian Radican said that internet usage in Australia is lower than in the comparable economies of the US or UK.

Yet, the distances in Australia suggest that the internet usage for commerce could have a larger benefit locally.

“A deeper embrace of its use by Australian business could arguably have a bigger benefit here than it would in other regions,” he said.

Across all sectors 40 to 43 per cent of businesses had a website.
But while 97 per cent of large business had a website, only a third of small businesses reported having one.

“If firms can drive some of the costs out of businesses, they can produce more for less,” he said.
However, Mr Radican cautioned that Australia’s weaker productivity was also driven by industrial relations challenges and other factors.

Google: Government Requests to Censor Content 'Alarming'

Google has received more than 1000 requests from authorities to take down content from its search results or YouTube video in the last six months of 2011, the company said on Monday, denouncing what it said was an alarming trend.

In its twice-yearly Transparency Report, the world's largest web search engine said the requests were aimed at having some 12,000 items overall removed, about a quarter more than during the first half of last year.

"Unfortunately, what we've seen over the past couple years has been troubling, and today is no different," Dorothy Chou, the search engine's senior policy analyst, said in a blogpost. "We hoped this was an aberration. But now we know it's not."

Many of those requests targeted political speech, keeping up a trend Google said it has noticed since it started releasing its Transparency Report in 2010.

"It's alarming not only because free expression is at risk, but because some of these requests come from countries you might not suspect — Western democracies not typically associated with censorship," said Chou. (http://googlepublicpolicy.blogspot.co.uk/2012/06/more-transparency-into-government.html)

In the second half of last year, Google complied with around 65 per cent of court orders and 47 per cent of informal requests to remove content, it said.

The censorship report offers an overview of which officials have asked Google to delete content and why.

In one case, Spanish regulators asked Google to remove 270 links to blogs and newspaper articles criticising public figures, including mayors and public prosecutors.

So far Google has not complied. In March, Spain's highest court asked the European Court of Justice to examine whether requests by citizens to have content removed were lawful.

In some countries, Google says it has no choice but to submit to these requests, because certain types of political speech are unlawful.

In Germany, the company removes videos from YouTube with Nazi references because these are banned.

Chou said that in Thailand videos featuring the monarch with a seat over his head have been removed for insulting the monarchy. The country has some of the world's toughest "lese- majeste" laws.

In Canada, Google was asked by officials to get rid of a YouTube video showing a citizen urinating on his passport and flushing it down the toilet. But in that instance the company refused.

Google and many other online providers maintain that they cannot lawfully remove any content for which they are merely the host and not the producer, a principle enshrined in EU law on eCommerce since 2000.

In January 2012 the European Union's executive Commission announced it would introduce clearer guidelines on handling such requests, outlining under which circumstances it would be legal to have content removed from the Web and when it would curb free speech and fundamental rights.

The Commission has launched a public consultation called "a clean and open internet" and has asked companies how many requests they get to take down content, from whom and for what reason.

Among examples of material that should be taken down EU regulators cite racist content, child abuse or spam. The rules are expected to be announced before the end of the year.

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Australia Bans Chinese Company from Web Network

Australia has banned Chinese technology giant Huawei from bidding to help build a nationwide high-speed Internet network due to concern about cyber attacks traced to China.

Australian Prime Minister Julia Gillard said Monday the move was among "prudent decisions" to ensure the planned network functions properly.

The ban highlights concern about Beijing's cyber warfare efforts, a spate of hacking attempts aimed at Western companies and the role of Chinese equipment providers, which are expanding abroad.

Huawei Technologies Ltd. is one of the world's biggest producers of switching equipment that forms the heart of phone and data networks. The company rejected suggestions it might be a security risk and said it has won the trust of global telecoms carriers.

Beijing's relations with Western governments have been strained by complaints about hacking traced to China and aimed at oil, technology and other companies. A U.S. congressional panel has said it will investigate whether allowing Huawei and other Chinese makers of telecoms gear to expand in the United States might aid Chinese spying.

The Australian attorney general's office told Huawei late last year it would be barred from bidding for work on the 36 billion Australian dollar ($38 billion) network, according to The Australian Financial Review newspaper. It said that decision was prompted by Australian intelligence officials who cited hacking attacks traced to China.

A spokesman for the attorney general's office said it could not comment on individual companies but a Huawei official confirmed the newspaper's account. He spoke to The Associated Press on condition of anonymity because he was not authorized to disclose conversations between Huawei and the government.
Huawei expressed disappointment about the decision. It has operated in Australia since 2004 and said it already works with the country's major telecoms carriers.

"Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology," said a company statement.

 China is Australia's biggest trading partner and Chinese demand for iron ore and other minerals has driven an Australian economic boom. But Canberra is uneasy about Beijing's rising military spending and growing assertiveness in Asia.

The United States and Australia announced plans in September to include cyber security in their 61-year-old defense alliance, the first time Washington has done that with a partner outside NATO.

President Barack Obama announced plans in November to send U.S. military aircraft and up to 2,500 Marines to Australia's north for a training hub to help allies and protect American interests across Asia.
Plans approved by Australian lawmakers in 2010 call for building a fiber-optic network to provide high-speed Internet access to 90 percent of the country's homes.

Huawei said it is building similar networks in Britain, New Zealand, Singapore, Malaysia and other countries.
"You don't get to that level of success unless you have customers that trust your company, your staff and your technology," the statement said.

Gillard, who was at a security conference in Seoul, said the planned Australian network is a crucial national project.

"You would expect, as a government, we would make all of the prudent decisions to make sure that that infrastructure project does what we want it to do, and we've taken one of those decisions," she said, when asked about Huawei.

Gillard gave no details of the reason for the decision.

Huawei was founded in 1987 by a former Chinese military engineer but says it has no connection to the military. The company says it is employee-owned but has released few details about who controls it, which has fueled questions abroad.

Huawei had been endorsed as a bidder on the Australian project by the technical department of the government-owned National Broadband Network Co., the Financial Review said. It said the attorney general blocked that after intelligence officials objected.

Huawei, based in the southern Chinese city of Shenzhen, near Hong Kong, reported revenues for the first half of last year of 98.3 billion yuan ($15.8 billion) and says its equipment is used in 140 countries.

In 2010, it was blocked from taking part in upgrading a U.S. phone carrier's network and last year was forced to unwind its acquisition of an American computer company after a security panel rejected the deal.
The U.S. House of Representatives intelligence committee said in November it would investigate whether allowing Chinese companies to expand in the United States might aid Chinese electronic spying.

It cited Huawei and rival ZTE Corp., another telecom equipment supplier, as being among the companies to be examined.

The panel said it will look into the role Chinese companies play in supplying components for U.S. telecoms systems and whether access to those systems might allow foreign governments to gather information.

NBN Rolls Out Labor's 'Map for Re-Election'

THE rollout of Labor's $36 billion National Broadband Network in Brisbane is largely focused on Labor-held seats, with Coalition electorates in the area all but ignored by the Gillard government's telecommunications flagship. 

Rollout maps published on the NBN Co's website covering the next three years show intense activity in Labor seats such as Lilley, Griffith and Rankin, with little building in Coalition electorates, sparking opposition claims the government is using the rollout to protect its own seats in next year's federal election.

The latest opinion polling and the landslide results of the Queensland state election suggest Labor would lose all but a handful of federal seats in the state if an election were held today. Even senior government members such as Wayne Swan and Trade Minister Craig Emerson, whose seats are in Brisbane, are not considered safe.

The NBN Co maps reveal that by the time the next election is due late next year, the rollout would have started across most of the Treasurer's electorate of Lilley. The rollout is expected to start across most of Dr Emerson's electorate within three years, with the seats of Kevin Rudd (Griffith) and Bernie Ripoll (Oxley) also lined up for early stages of the NBN while neighbouring Coalition seats will see almost no activity for at least three years.

Communications Minister Stephen Conroy yesterday denied political pork-barrelling, saying the focus on Labor seats in Brisbane was caused by the fact that the rollout had to begin at main exchanges - or points of interconnect (POIs) - and that in Brisbane most of these were in Labor seats.
He said that outside of Brisbane POIs were located in Coalition-held seats also featuring heavy NBN rollout work.

However, Liberal MP Andrew Laming, whose seat of Bowman will see little NBN activity, said Labor was servicing its own seats, particularly those of ministers, while ignoring neighbouring Coalition electorates.

"The cold, hard reality in Brisbane is that households in Labor seats are eight times more likely to get the NBN than those in Coalition seats," Dr Laming said. "Worse, the odds are around 50 per cent better if your Labor MP is a minister. "This is a save-the-political-furniture strategy. They are not targeting marginal seats here. They are just trying to survive."

Senator Conroy said the pattern of the rollout was designed to begin at POIs and then fan out so the network could be progressively switched on as work was completed. "The rollout of the NBN is determined by the NBN Co and is based on a range of engineering and geographical criteria," he said. "The POI sites in Brisbane mirror the pattern shown on the NBN Co maps."

The Brisbane POIs were located in Ipswich, Woolloongabba, Goodna, Aspley, Bundamba, Camp Hill, Petrie, Slacks Creek, Salisbury, Eight Mile Plains and Chermside.

"It's simply laughable for the opposition to be complaining about the NBN rollout schedule given their plans to demolish it if they are elected," Senator Conroy said. "The message cannot be more clear: under Labor, Australians will have access to world-class technology under the NBN; under the Coalition the NBN will be demolished and Australians will be stuck with their current inferior broadband that will hold this nation back."

Brisbane businessman Trent Bruce, who runs Brisbane North Raine & Horne Commercial real estate agency, said he was concerned about the rollout. The NBN map shows homes and businesses at the northern end of Webster Road in Mr Swan's electorate of Lilley should be able to connect within three years, while those at the southern end in the Liberal-held seat of Brisbane, including Mr Bruce, will probably miss out on connection within three years.

"I think every single business would want it," Mr Trent told The Australian. "We want to be at the top of our game across the board. It is the way of the future and if we're not at the top we'll lose people."

But Mr Bruce said he would not comment on any political link for the NBN rollout. "I don't want to get political," he said.

Just 6km north of Raine & Horne in Aspley, Peter Thompson's business, Queensland Computer Station, can expect the NBN within one to three years.

"We've just started getting into application development for Apple products, so it'll definitely be an advantage to download information from Apple faster," Mr Thompson said.

Opposition communications spokesman Malcolm Turnbull said the Queensland rollout was fast becoming "the largest pork barrel" in Australian political history. "Maps released last month reveal an eerie concordance with federal electoral boundaries in the Brisbane metropolitan area," Mr Turnbull said.

When The Australian asked the NBN Co for comment, a spokeswoman pointed to remarks by chief executive Mike Quigley last month in which he named eight factors affecting planning, including: the government's demand for equity between regional and metropolitan areas; availability of infrastructure from Telstra; priority to growth corridors likely to contain high numbers of greenfields sites; efficient sequencing; construction effects on communities; and serving of universities.

Telstra split clears way for the NBN

FULL-SCALE rollout of the national broadband network will start within months, as telcos are already advertising prices from $30 a month for basic services and up to $165 for super-fast connections.

The final piece of the NBN's regulatory puzzle fell into place yesterday, after the government secured a decision from the competition regulator designed to curb Telstra's dominance of fixed telecommunications. It is also the final hurdle to Telstra signing a deal with NBN Co.

By approving Telstra's plan to split its fixed wholesale and retail arms, the Australian Competition and Consumer Commission has cleared the way for NBN Co and Telstra to finalise an infrastructure-sharing agreement within weeks.

Under the deal, Telstra will gradually shut down its copper wire network as it transfers customers to the NBN. It stands to receive about $11 billion, at today's values, from NBN Co over 30 years.

Any move by the Coalition to shut down or substantially alter the NBN would now involve negotiating a new deal with Telstra and unwinding the complex regulatory process that finished yesterday.

The separation means Telstra will no longer own the infrastructure that it also uses to compete against other telcos at a retail level.

Broadband Minister Stephen Conroy said splitting Telstra was the ''holy grail'' of telecommunications reforms. Structural separation, as the reform is known, would finally ensure a ''level playing field'' and address a long-standing policy failure. ''This is a mistake that was made 20 years ago,'' he said, referring to the Howard government's initial decision not to split Telstra when privatising it.

He said scrapping the NBN - as promised by the opposition - would hold back competition because Telstra would no longer have to structurally separate.

Opposition communications spokesman Malcolm Turnbull said the Coalition supported Telstra's structural separation and upgrading broadband across Australia. But the Coalition would not release policy details until closer to the election.

Separation will not be complete until NBN Co finishes building its fibre-optic cable to replace Telstra's copper, which will be decommissioned except in rural and remote areas. Construction is expected to take 10 years and cost $36 billion plus the payments to Telstra.

ACCC chairman Rod Sims said the separation was a ''significant milestone in the structural reform'' of the telco industry. ''More effective competition in telecommunications markets will result in improved service offerings to consumers.''

The go-ahead from the regulator came a day after Telstra unveiled prices it plans to charge people for access to the new network.

Its initial offerings appear significantly more expensive than those of rivals. For example, Telstra's cheapest monthly phone and internet plan will be $80, compared with Optus' entry level $65 and Exetel's $35.
Telstra is also relatively expensive at the premium end, charging $150 for 500Gb of data delivered at the high speed of 100Mbps. iiNet, by contrast, will charge $110 for twice as much data delivered at the same speed. iiNet's price, however, does not include a modem, for which it will charge an extra $10 monthly.

Read more: http://www.theage.com.au/opinion/political-news/telstra-split-clears-way-for-the-nbn-20120228-1u0y5.html#ixzz1nqIhDFFd

Telstra Releases NBN Pricing Plans

The move comes after the nation's largest telco signed a wholesale service agreement with NBN Co, the government-funded company charged with building and running the national broadband network, at the weekend.

The plans, announced on Monday, have the same pricing and download allowance for specific download speeds as Telstra's ADSL or cable internet plans.

Telstra executive director of customer service Peter Jamieson said the decision to offer a uniform suite of broadband products was designed to make things simpler for customers.

"Whilst having options is good, too many options becomes confusing," Mr Jamieson said.

Entry level NBN plans starts at $49.95 a month for 50 gigabytes (GB) of data delivered with a download speed of 25 megabits per second (Mbps), rising to $89.95 for 500 GB.

For those who wish to have a download speed of 100Mbps, plans start from $59.95 a month for 50 GB of data, to $99.95 for 500 GB.

The release of Telstra's NBN plans also coincided with an update of the telco's broadband retail offering more generally, with new bundled plans featuring more generous download allowances and inclusions.

Telstra chief customer officer Gordon Ballantyne said a dedicated call centre had been set up to manage customer inquiries, while 5,000 technicians were on standby to help customers connect to the new service.

The NBN plans will be available to those living in the five Australian mainland first release NBN sites - Armidale and Kiama Downs (NSW), Townsville (Queensland), Brunswick (Victoria) and Willunga (South Australia).

Other internet service providers currently offering NBN retail internet plans included Optus and iinet.

While it was possible to deliver voice services over parts of the NBN, Mr Jamieson said customers would continue to receive their home phone service over Telstra's copper network.

"As the technology changes occur over the next 12 to 18 months, we will make that transition to a fibre service for their voice," Mr Jamieson said.

NBN Co planned to roll out fibre-optic cable to deliver high-speed broadband services to 93 per cent of Australia's 13 million homes, schools and businesses by 2021.

Telstra closed down three cents at $3.23.

Telstra Internet Outage Affects Millions

Millions of Telstra customers across Australia were left without internet access for 40 minutes this afternoon due to an internet outage.

A spokesman for the telco told ninemsn the outage, which began at 1:50pm (AEST) and ended at 2:30pm (AEST), had affected Telstra customers nationally for mobile and fixed broadband.

"We do not know the cause, we are investigating that now," the spokesman Craig Middleton said.

Hundreds of customers turned to Twitter to vent their frustration over the outage.

"Nice work blowing the internet there Telstra," one user, switch_mullet, wrote.

"Hey #Telstra, have you tried turning it off and back on again?" another angry customer tweeted.

Telstra has three million Big Pond customers nationally.

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.melbourne, .sydney and .victoria are go, .nsw a maybe

The NSW and Victorian governments have selected ARI Registry Services to prepare their application for new top-level domains (TLDs): .melbourne, .sydney and .victoria.

The two state governments released a joint tender in October, seeking a registry operator to manage the application to the Internet Corporation for Assigned Names and Numbers (ICANN), which governs the granting of new TLDs.

The NSW government is still determining whether it will apply for a .nsw domain, which has raised as a possibility in the original tender. ARI Registry Services CEO, Adrian Kinderis, said that ICANN's rules governing the new generic TLDs (gTLDs) mean that the state government may not be guaranteed to be granted .nsw.

"We're working through some of those issues so it's certainly not ruled out," Kinderis said. "We'd love to have it in the mix obviously from a registry perspective, but that is yet to be ratified. So we're working through that issue at the moment to make sure the money is spent wisely if indeed they do go for the application and that they're giving themselves a good chance of securing it."

Kinderis said he was disappointed that other Australian cities and governments had not taken advantage of ICANN's opening up of new gTLDs. "I don't believe anyone else is coming forward. it's really disappointing because this is an amazing opportunity and for places the Gold Coast and Brisbane which really work hard on promoting themselves internationally as destinations, we would have thought this would have been a no-brainer."

Kinderis said that it's not too late for other governments to apply for gTLDs despite the 12 April deadline for filing applications with ICANN. "I don't think it's too late [but] the message needs to be 'mobilise now'."

ICANN is committed to opening up a second round of gTLD registrations, but Kinderis said he didn't anticipate this would be for another three years at least.

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NBN Broadband Satellites Please Farmers

The federal government's plan to buy two satellites to provide high-speed broadband services to the nation's most remote areas has pleased farmers, but the opposition says it's too costly.

Labor on Wednesday announced a $620 million deal between NBN Co, the government-owned enterprise rolling out the national broadband network (NBN), and US firm Loral Space and Communications to make the Ka-band satellites.

When they are launched in 2015, around 200,000 homes and businesses in the remotest regions will have access to internet download speeds similar to those currently available in urban centres.

"We won't be leaving those Australians who live in the remotest parts of the nation behind," Prime Minister Julia Gillard told reporters in Canberra.

Under the $35.9 billion NBN project, fibre-optic cable delivering high-speed broadband services will be rolled out to 93 per cent of Australia's 13 million homes, schools and businesses by 2021.

Fixed wireless technology will provide high-speed internet to four per cent of premises, and the remaining three per cent will be supplied by the two satellites to remote areas.

Communications Minister Stephen Conroy said the satellites would give users affordable world-class broadband connections to be paid for by cross-subsidies built into the NBN plan.

"It ensures remote families and business pay the same entry-level wholesale price for services in the city," the senator said.

"Using these satellites, rural businesses can make it easier to expand in national and international markets."

The new satellites would be launched separately, the first one by March 2015 and the second one six months later.

The National Farmers' Federation said the plan was a "very positive" development for rural communications.

"We're looking forward to the day when all Australians have equal access to telecommunications - and we will work with government to ensure that the commitment made today is upheld and delivered," NFF president Jock Laurie said in a statement.

But opposition communications spokesman Malcolm Turnbull described the plan as expensive, comparing it to buying a top-of-the-line luxury car when it wasn't needed.

"Don't buy yourself a Camry, a Falcon - buy yourself a Rolls-Royce, a Bentley," he told reporters.

"Nothing but the best will do, nothing but the most expensive will do."

Mr Turnbull said the telecommunications industry had told him there was enough capacity on existing and scheduled-to-be-launched satellites to provide broadband services to rural and remote Australia.

He also queried why the existing interim satellite service could not be upgraded to a permanent one.

Senator Conroy dismissed reports an Australian company had missed out on the contract, saying no local company had the capacity to build the satellites, which will be made in the US.

The hardware will deliver initial peak speeds of 12 megabytes per second downloading and one megabyte a second uploading.

"It will be possible for retail service providers to offer services to homes and businesses in the satellite footprint that are as good or better than the services many city people currently experience," NBN Co chief Mike Quigley said.

The satellite contract is part of a total investment of about $2 billion over 15 years required to deliver the NBN long-term satellite service.

The opposition is opposed to the existing NBN plan and prefers a mix of technologies to achieve its own version.

But Mr Turnbull acknowledged contracts such as the satellite deal could be hard to cancel if the coalition wins the next election in 2013.

"They are putting contracts in place and we may have to live with it," Mr Turnbull said.

The NBN is due to be completed by 2021.

Peak provider aspiring to grow iiNet's reach

CLIMBING a wall of ice is one way of getting a break from the stress of running Australia's fastest-growing internet service provider, iiNet chief executive Michael Malone says.

"When you are halfway up an ice wall, suspended by crampons and axes, you are not thinking too much about work," he says.

Correction: NBN prices will not be higher - National Broadband Network

Analysis In several radio interviews this week, Shadow Communications Minister Malcolm Turnbull stated that the National Broadband Network project would cause consumer broadband prices to rise higher than those currently on the market. However, unfortunately this statement was factually incorrect.
To illustrate why, firstly, let’s go through what Turnbull said. According to transcripts available on Turnbull’s website, Turnbull said the following on 2GB in an interview with Ben Fordham on Wednesday:

” … Australians are waking up to how much this is going to cost them – not just as taxpayers but also it’s going to be more expensive as a consumer. You see this is the penny that hasn’t quite dropped. I think most people recognise that this is a very, very expensive project. But what they haven’t quite – the penny hasn’t quite fully dropped that this is going to be expensive in terms of the usage charges.”

“Now what’s going to happen here is because there is no competition, because this is a government monopoly and because they are spending so much money so they’re overcapitalising it, inevitably prices are going to be high.”

In a separate interview on the same day with 2UE’s Paul Murray, Turnbull said the following: “What we do know is that it’s going to cost a bomb, and it’s not going to make broadband access any cheaper. It’s going to make it more expensive.”

The Coalition has publicly stated its opinion that broadband prices will be higher under the NBN than the current ADSL-dominated broadband market repeatedly over the past six months. In September, Liberal MP Paul Fletcher stated that new NBN pricing released by iiNet at the time was higher than existing ADSL prices. And several months earlier, Turnbull stated that early pricing released by Internode for services on the NBN demonstrated the project would drive consumer broadband prices higher.

However, unfortunately the Coalition’s statements on this matter have been factually incorrect.

Almost all of Australia’s major ISPs released their first tranche of NBN pricing over the closing months of 2011, and in almost all cases, the prices are directly comparable to current pricing available over Telstra’s copper network (ADSL) or the HFC cable networks operated by Telstra and Optus.

To illustrate this fact, let’s examine the NBN prices of Optus, and compare them with the telco’s existing ADSL broadband prices. In naked DSL, Optus currently offers three plans, at $59.99, $69.99 and $79.99 monthly price points, and with 120GB, 150GB and 500GB of data quota included. And in naked NBN, Optus offers exactly the same price points and download quotas.

In bundled DSL, Optus currently offers five plans, at $79, $99, $109, $129 and $149 price points, and with 120GB, 500GB and terabyte download quotas, with varying amounts of call charges included — usually unlimited ‘standard’ local and national telephone calls within Australia, to both landlines and mobile phones.

And in bundled NBN, Optus offers many of the same price points and quotas — except sometimes they’re cheaper. The company’s $79 plan with 120 GB of data has morphed into a $64.94 plan (with, admittedly slightly lesser calling value). The $109 bundled plan with 500GB of data and unlimited calls has been copied straight across, and so has the $129 plan with a terabyte of data and unlimited calls.

It should be clear that virtually every single aspect of Optus’ NBN pricing plans represents better value than the telco’s current ADSL plans — and for exactly the same price. Optus doesn’t currently actively promote its HFC cable offering, so it’s tough to get an idea of what its prices are there. But if you compare its ADSL broadband plans to its NBN broadband plans, it seems clear that the plans are virtually identical.
It’s a similar case with Australia’s second-largest provider of ADSL broadband services, iiNet.

If you sign up for a naked DSL broadband plan through iiNet on its own network, (which comes with a bundled Internet telephony phone line), you’ll get a total of 100GB of quota (50GB on- and 50GB off-peak) for $69.95 per month. A similar plan with a bundled traditional telephone line and 100GB of on- and off-peak quota will cost you a total of $79.90 per month. If you’re not using iiNet’s DSLAM infrastructure in exchanges, you’ll pay a bit more — or the same, but with less download quota.

iiNet has two NBN plans which are comparable to this. The first comes with speeds of 12Mbps and 100GB of on- and off-peak quota, for $69.90 a month with an included Internet telephony line. Then iiNet has a 25Mbps plan with the same quota and telephone line for $74.90 a month. In short, like Optus, iiNet’s NBN plans are almost exactly the same as its ADSL plans. However, the NBN fibre technology is more reliable, has better guaranteed speeds and lower latency (responsiveness) than the current copper network.

Still not convinced? Let’s look at a another major provider, Internode, which was recently bought by iiNet, but whose prices so far remain independent. Internode currently offers a 300GB ADSL plan with a bundled telephone line for $99.90 a month. The top speeds possible on this plan are limited to 24Mbps, due to the limitations of the copper network, and most people will be getting less than 16Mbps. But for $94.95 a month, on Internode’s NBN plans, you can get a 100Mbps connection with the same 300GB monthly download quota, plus a bundled internet telephony line. Yup. A broadband plan four times faster, using more reliable technology, for $5 a month cheaper. That’s the NBN.

Now there are some anomalies in NBN pricing so far which may give the Coalition some basis for its pricing claims. For example, cut-rate ISP Exetel has priced its NBN plans significantly higher than its ADSL plans. In another example, when you get to really high-end plans — 100Mbps plans with a terabyte of download quota — pricing can shoot up in some cases.

However, these cases are not the rule.

Further analysis reveals that Exetel is still offering low-end NBN plans starting at $34.50, and its prices don’t start to get expensive compared with its ADSL pricing until you start to get to the point where you’re downloading more than 100GB of data per month. Exetel has acknowledged it’s not targeting big-downloading customers, so we’re not really surprised by its lack of competitiveness at the top end.

There is also the fact that Exetel has a miniscule share of Australia’s broadband market compared with Optus and iiNet, which are the second and third-largest providers of broadband in Australia. The prices offered by Optus, iiNet (and its subsidiary Internode) are, by definition, mainstream price points which the majority of Australians will be buying services at. And those prices are even more mundane and normal when you look at the mid-range plans (between $50 and $70 a month) bought by most Australians.

Two other major Australian broadband providers, Telstra and TPG, are yet to release NBN pricing. If both exhibit radically different pricing structures from Optus and iiNet, I will be more than happy to revisit this topic at that future date. However, I would not expect Telstra’s NBN pricing to be radically different from its current broadband pricing, which is already at the pricey end of the market. TPG’s pricing has historically been at the discount end of the market, and I would expect this trend to continue.

Lastly there is one other important fact which needs to be taken into account.

NBN Co has lodged a document with the Australian Competition and Consumer Commission called a ‘Special Access Undertaking’. This document, among many other commitments, states that NBN Co will maintain prices for its key wholesale prices at the current levels for five years. In addition, the company will limit future increases to be less than the rate of inflation for 30 years. In short, in real terms, NBN Co’s wholesale prices will remain fairly stable for the next 30 years.

Taking this binding commitment into account alongside the fact that current mainstream NBN prices are directly comparable, often for a better service or even slightly cheaper, than current ADSL pricing, it is factually incorrect for the Coalition to state that consumer NBN prices will be higher than current broadband prices. And if prices were to increase, given the fact that NBN Co’s prices will remain the same, that price increase is not the NBN’s fault. That blame could be laid at the door of the retail ISPs.

With all this in mind, I would hope that the Coalition would refrain from making this claim in public in future. Or, if it does make this claim, I would hope that it would provide some evidence to make its case. This debate is not a matter of opinion. This debate is about objective fact.

Telstra Warns Price for Using NBN May Blow Out

TELSTRA has undermined central pillars of Labor's promises on the benefits of the National Broadband Network by warning that prices for superfast internet could be unnecessarily high under the NBN Co pricing strategy. 
 
The nation's biggest telecommunications provider is urging the competition watchdog to consider whether NBN Co should adopt an alternative pricing model to its controversial two-tariff pricing plan, under which internet service providers are charged a baseline connection fee and usage-based fees for the amount of data carried through the network. Telstra says a different model could be better for consumers.

Under the two-tariff pricing model, Telstra says, the usage charge that an internet service provider pays to NBN Co for each of its customers on the basic 12-megabit a second service could rise from $1 a month to $50 by 2025. It is expected usage charges, which form a part of a wholesale customer's monthly bill, will be passed on to retail customers.
Taking a hard line against several aspects of NBN Co's pricing strategy in a submission to the Australian Competition and Consumer Commission, Telstra also declares that, over the long term, the government's return would likely exceed the cost of its investment, that NBN Co would more than recover its costs and that wholesale prices would be "unnecessarily high".

Higher wholesale costs could result in fewer incentives for internet service providers to compete through investment, innovation and service development, Telstra says.

The warnings undermine some of Labor's main arguments for the $36 billion project. Communications Minister Stephen Conroy has insisted that the creation of the NBN as a wholesale broadband backbone would unleash new competition between retail service providers and bring on pricing pressures that would benefit consumers.
NBN Co insisted it was "confident that as a wholesale-only open access network, we're opening up competition in retail telecommunications in Australia".

Telstra's critique of NBN Co's "special-access undertaking" that outlines its price and non-price terms is all the more surprising because Telstra is set to reap $11bn under a deal with NBN Co and the government that will mean it becomes NBN Co's biggest customer, not its rival.

NBN Co has promised to freeze wholesale prices for the next five years, then increase them at only half the rate of inflation - making internet access cheaper in real terms.

Under NBN Co's plans, the maximum monthly usage charge would remain at $20 per megabit per second until mid-2017, rising to $24/Mbps by 2033.

Telstra argues that while these price increases may appear small, they will be much more acutely felt on a per-customer basis.

This is because NBN Co's business plan assumes that usage per customer will grow massively as consumers purchase higher-quality services such as internet-based television.

On that basis, the monthly usage cost a wholesale customer would pay for each "service in operation" could increase from $1 to $50 monthly by 2025. The government's corporate adviser, Greenhill Caliburn, has already warned that a consumer backlash against the usage-based pricing model is one of the key risks to NBN Co's revenue assumptions.

Internode founder Simon Hackett last night blasted Telstra as "the pot calling the kettle black", saying that it was imposing "massively more expensive" usage charges for rivals providing internet access over its copper telephone lines.

"It would seem disingenuous at best for Telstra to be arguing for NBN Co to modify their charging regime when Telstra itself are so flagrantly overcharging the industry today using the very same pricing mechanism," Mr Hackett said.

In the submission to the ACCC, Telstra bases its warning that prices could be unnecessarily high on NBN Co's claim that its weighted average costs of capital - a key influence on NBN Co's profitability and prices - should be about 8.6 per cent over the long term. This level is akin to what a private sector company would seek.

"Government has changed legislation and policy to reduce the risk faced by NBN Co, presumably including systematic or non-diversifiable risks - the same risks that continue to be faced by private firms such as Telstra," Telstra states.

It concludes that a private sector-style rate of return would be more appropriate when NBN Co is privatised.
NBN Co spokesman Andrew Sholl said last night its special-access undertaking "strikes the appropriate balance between the interests of NBN Co and its customers".

He said an independent consultant's report had backed NBN Co's approach and found that it was reasonable to set a figure that included a margin over the the long-term government bond rate.
Late yesterday, opposition communications spokesman Malcolm Turnbull said that NBN Co's undertaking "lacks the necessary concrete commitments on price or standards of service".

He called on Senator Conroy "to immediately ensure that NBN Co does not . . . avoid the scrutiny of the ACCC".

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