Australian regulators simply handed down a huge financial windfall to SingTel Optus in green lighting the telco's $800-million deal with NBN Co, which will soon lead to the progressive retirement of Optus' hybrid fibre-coaxial (HFC) network in Brisbane, Melbourne and Sydney.
According to shadow Communications Minister Malcolm Turnbull, the agreement means Optus gets to collect hundreds of millions from NBN Co, which in turn will be funded by taxpayers' money.
"It is Optus that has the jackpot. $800 million in cash," Mr Turnbull said in a blog post on Friday, stressing that what transpired was clearly a lopsided transaction that benefitted only Optus.
He also raised questions on whether Optus' decision to hand over its some 400,000 subscribers to NBN Co would create a healthy business environment for consumers and the industry.
Nonetheless, the Australian Competition and Consumer Commission (ACCC) said yesterday that it "remains of the view that the public benefits, which are clear and quantifiable, on balance outweigh the likely detriment," on its approval of the deal.
According to ACCC chair Rod Sims, deciding otherwise on the deal would "unlikely to endure in the long term due to the pervasive and enduring economies of scale associated with the NBN."
The watchdog was clearly alluding to the mandate of the $36-billion national broadband network (NBN), which the federal government said will deliver high-speed Internet access to 93 per cent of Australian households via fixed fibre-optic or wireless networks.
Citing long-term considerations, Mr Sims said that the ACCC has weighed in critical factors in coming up with its conclusion, which he described as "finely balanced."
It could be that with the Optus HFC network out of the way, "a potentially significant fixed line competitor to the NBN," was neutralised but the regulator argued on its decision that it was unlikely for Optus expand beyond its present reach of about 1.4 million households.
Besides, the economic scale of maintaining an expensive network catering to a limited audience will be lost, the ACCC said, once the NBN communication infrastructure becomes fully operational in 10 years time.
In a statement, NBN Co Chief Executive Mike Quigley welcomed ACCC's nod, stressing that the "migration of Optus' cable customers supports the NBN's business case and confirms the network as the cornerstone of Australia's digital communications future."
"This marks a shift from the past where a number of companies used their resources to duplicate network access infrastructure," Mr Quigley was reported by The Register as saying on Friday.
Unconvinced, Mr Turnbull wrote in his blog today that the deal represented "a black day indeed for the ACCC and competition in Australia."
He added that Optus can actually compete with NBN Co even if the latter emerges later as the dominant telecommunication provider in Australia as equal set ups were also in place in progressive economies like the United States, Singapore and South Korea.
The Liberal frontbencher echoed his previous contention that ACCC's reasoning in approving the deal, which was first aired in the agency's draft decision released in May, was "unbelievably confused and contradictory."
"If you accept the ACCC's reasoning, then the people running the NBN Co are commercial morons," The Register quoted Mr Turnbull as saying in an earlier observation.
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