No NBN cherry-picking – another step in the right direction

No NBN cherry-picking – another step in the right direction

It was good to hear in February 2014 that the Minister for Communication has finally clarified his position on earlier comments, when he said that he was in favour of fixed infrastructure developments in competition with NBN Co.

Of course, as with so many statements made while in Opposition, it is very easy to come up with one-liners, but those involved in the telecoms industry know that to actually achieve this is not as easy. Despite 20 years of deregulation, something like 40 Inquiries, and truckloads of legislation and regulation it has been impossible to create a competitive fixed telecoms infrastructure environment in Australia. And that period covered both Liberal and Labor periods of government.

During that time Optus rolled out a competing broadband network; half a dozen of electricity utilities started to build competing infrastructure, as did some of the construction companies; and overseas telcos also got into the action. All to no avail. Twenty years later Telstra remained the fixed infrastructure monopolist and over $10 billion of investments in competing infrastructure had been written off.

In the USA, the most competitive country in the world, there is hardly any fixed telecoms infrastructure competition. At best there are some duopolistic markets. See also: The seriously flawed American telecoms market.

The issue hotted up last year when TPG indicated that it would build an FttH network to 500,000 apartments. One only has to look at countries such as Singapore, Hong Kong, Japan, China and South Korea to see that it is far easier (and far more profitable) to bring such networks to apartments than it is to roll out a national network. Most governments nowadays agree that in order to achieve the social and economic benefits it is essential to create a ubiquitous network, providing high-speed access to all, cost sharing is essential in creating such a national infrastructure.

The previous government recognised that and included clauses in its legislation that would prevent cherry-picking as that would make it totally impossible to built an economic viable model to deliver such services to all.

It looks as though, following the statements of the Minister during the election campaign, TPG saw an opening for cherry-picking and, in the absence of any comments to the contrary from the government saw its share price jumping. However, the Minister has finally commented on such cherry picking activities, indicating that that TPG’s networking plans may be at odds with existing legislation that prevents private industry competing with NBN Co in the provision of wholesale broadband services.

This is another subtle backflip in the right direction. As we have pointed out, ever since Malcolm Turnbull became Shadow Minister and then Minister for Communications there have been retractions from prior comments made that would have led to the unravelling of the NBN. While the battle is far from over developments so far are steps in the right direction. It appears that, while the political rhetoric continues unabated, the Minister is making decisions with the national interest in mind, based on common sense.

Let’s hope we continue to progress along those lines.

Paul Budde

See also:

Australia – National Broadband Network – Analyses early 2014

Australia – National Broadband Network – Policies and Regulations

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