We need direct NBN services: utilities

The Energy industry has rejected calls from Optus, Telstra and the Federal Opposition for the National Broadband Network Company (NBN Co) to be prevented from supplying retail services to utilities, saying that receiving retail services would over-complicate energy networks.

In submissions to the Senate committee examining NBN legislation — National Broadband Network Companies Bill 2010 and Telecommunications Legislation Amendment (National Broadband Network Measures — Access Arrangements) Bill 2011 — Telstra and Optus had argued that NBN Co would be engaged in "mission creep" if it offered services to utilities such as electricity companies. A provision in the legislation allows this to happen.

Tanya Barden, director for the Energy Networks Association (a body which represents 26 gas and electricity companies), told the Senate committee hearing on Friday that the energy sector was concerned by the submissions and the calls from the Federal Opposition to amend the legislation to remove this clause.

"This is likely to increase the cost of delivering network services in instances where the NBN's direct access would have otherwise been a cost-effective and feasible solution," Barden told the inquiry.

Barden said that should NBN Co be prevented from offering retail services to utilities, energy companies would have no option but to:

• Buy services from retail service providers at a higher cost, bringing up the total cost for running energy networks;
• Use wireless services that "have been unable to provide the level of reliability required" in the past during disasters such as Tropical Cyclone Yasi; or
• Deploy their own infrastructure, leading to network duplication with the NBN.

Andrew Deme, group manager for telecommunications at Ergon Energy, argued that NBN Co would not be in competition with retail providers in offering such services because energy suppliers required a basic access to the NBN grid and did not require "value-add" options such as internet access or Voice over Internet Protocol that retail service providers would include.

The value-add would only serve to make it much more difficult for utilities to use NBN services, he said. For example, two transformers on the grid would need to be in instantaneous contact with each other without going through a retail service provider's point of presence (POP).

"The reason for this is that utility service level requirements are higher than those of a retail customer. Evidence has shown that utilities need a high degree of control over communication services in order to attain the necessary service levels," Barden added.

"Once a retailer takes an NBN Co service and integrates this with their own network or adds their own electronic equipment, then this introduces a range of complexities and unknowns that add risk for the reliable operation of energy networks."

Liberal Senator Mary Jo Fisher questioned why utilities should receive "special" treatment from NBN Co when hospitals and schools were not able to directly receive services from NBN Co. Barden said energy was such a critical service that hospitals would be unable to operate without it.

"As we have indicated, resilient communications are necessary for the electricity industry to get up and running after major disasters, and that is intrinsic to delivering so many other essential services to the community," she said.

Shadow Communications Minister Malcolm Turnbull's attempts to amend the legislation in the lower house of parliament were unsuccessful. The legislation has been passed in the lower house, but still has to go through the Senate.