The head of a medium-sized telecommunications firm says competition in the sector has been hit for six by the decision to have as many as 121 points of interconnect for the national broadband network.
Damian Kay, chief executive of Inabox, told iTWire in response to queries that only the big four telcos - Telstra, Optus, TPG and Vocus - could afford to build into so many points of interconnect and this effectively created another tier in the industry.
A POI is a physical location where a retail service provider links their existing network to the NBN. It constitutes a meeting place between the NBN and the people who complete the circuits concerned, end to end, to create something functional that a customer can buy.
Kay said about $250,000 was required for each build and this was prohibitively expensive for smaller providers.
{loadposition sam08}"It is to do with the physical number of POIs that a provider is required to build into (estimated at about $250K per build) plus the cost of backhaul from all 121 POIs," Kay said. "If it was only 8 POIs then smaller providers could afford to build into them."
He said that while it was possible for the smaller providers like his own company to buy access from the NBN directly, only the big four could afford to build into the points of interconnect.
Smaller companies like Macquarie Telecom, Inabox Group and MyNetFone/Symbio could afford to only built into a small number of POIs; this meant they had to pay the big four for access and this meant costs to the consumer would increase.
Kay said in many cases, the systems of the big four were not the best, being poorly designed. This led to errors, both upstream and at the level of the smaller provider.
Additionally, this inability of the providers like Inabox to build into POIs led to the creation of an additional level of bureaucracy and any communications with NBN had to pass through an additional layer. The consumer suffered as a result.
Australia had more than 400 RSPs who wanted access to the NBN and the big four were not equipped to handle this number, Kay said. This meant outfits like his had to step in and the margins became too much to bear.
The degree of congestion on the network was also increasing due to this shutting out of everyone but the big four, Kay claimed, adding that he had seen people with 100/40 connections getting just 1.5Mbps throughput due to CVC congestion.
If over-the-top services like IP voice/hosted voice, cloud back-up/storage or cloud compute were put onto congested networks, this made an already bad situation even worse.
Kay said one solution was to have the NBN provide wholesale access. This would allow other companies to be in charge of their own destiny, it would remove one layer of bureaucracy and allow smaller companies to build into the NBN directly and not into the systems of others that were sub-standard.