Retail clause in NBN is a very smart move
The retail clause in the proposed NBN Co legislation is exactly what is needed to guarantee that the NBN can be used to deliver the national social and economic benefits that BuddeComm (along with others) envisaged in the very early days, when they were involved in the strategic plans behind what is now the NBN.
Throughout the debate around the development of the NBN it is crucial to keep the focus on why we are building this infrastructure in the first place, and why we are spending taxpayer dollars on it.
From the outset BuddeComm clearly identified that a trans-sector approach was required. The NBN infrastructure should be used for the delivery of a range of services such as healthcare, education, public safety applications and energy and environmental apps such as smart grids. If the NBN were to be built for commercial services, like high-speed Internet, delivery would cost an exorbitant $200 plus per month per user. So, from an economic point of view also, it is essential that we ensure the infrastructure is used trans-sectorally.
The OECD had identified the delivery of health, energy and transport services over high-speed networks as key benefits to support the accelerated deployment of high-speed broadband networks by governments. This concept is now receiving such widespread support that I am currently working with the UN to move this trans-sector concept up into international telecoms policies.
The Australian government has been an international leader here; from the beginning it clearly stated that the NBN should be used for non-commercial applications. At the same time we also know that if the NBN is not made available to these sectors on a utilities basis the costs of using the NBN for such purposes will be too high. This would result in a continuation of the private networks that are currently used within these sectors and the opportunity for an important revenue stream for NBN would be lost.
So we have to make sure that the NBN plans realise the opportunity for the delivery of trans-sector services in an effective and efficient (affordable) way.
The scant international evidence we have indicates that incumbents are the entities most likely to be effective at value-adding a basic access offering to an NBN such that high quality and functional business and government services are delivered.
The competition advantages that will flow from an NBN constructed to as basic a formula as possible are fine for commercial purposes. However, these commercial advantages stand in stark contrast to the difficulty that will arise due to the fact that very few trans-sectoral services can afford to run over an NBN that would potentially force these sectors to use services that can only be provided by one national wholesale player. We certainly need to ask the question: what gets priority here – competition policy subtleties or the national interest? I would like to stress that the issue here is the creation of an infrastructure such that competition may be maximised at the services level.
This concern seems to be addressed in the proposed NBN Co legislation, which will give the government the possibility of allowing sectors to buy infrastructure capacity directly from NBN Co. This doesn’t mean that NBN Co will, for example, become the healthcare retail operator. Others in the ICT industry will still have to build the systems and services on top of that network. NBN Co will not be involved in any of that and if necessary that may need to be enshrined in the legislation as well.
This does not mean that these sectors will have to use the ‘retail clause’. The clause in itself could be enough for the wholesale operators to ensure that they provide their services to these sectors at an affordable price.
Paul Budde
See also:
- Australia – National Broadband Network – Competition and Regulations
- Australia – National Broadband Network – Deployment Strategies
- Australia – National Broadband Network – Early Projects
- Australia – National Broadband Network – Government’s Trans-Sector Conference
- Australia – National Broadband Network – Industry at crossroads
- Australia – National Broadband Network – NBN Co and Infrastructure
- Australia – National Broadband Network – Overview and Analysis
- Australia – National Broadband Network – Telstra
- Australia – National Broadband Network based on Trans-sector model
- Australia – National Broadband Network Municipal Networks
- Australia – National Broadband Network Trans-sector projects
The retail clause in the proposed NBN Co legislation is exactly what is needed to guarantee that the NBN can be used to deliver the national social and economic benefits that BuddeComm (along with others) envisaged in the very early days, when they were involved in the strategic plans behind what is now the NBN.
Throughout the debate around the development of the NBN it is crucial to keep the focus on why we are building this infrastructure in the first place, and why we are spending taxpayer dollars on it.
From the outset BuddeComm clearly identified that a trans-sector approach was required. The NBN infrastructure should be used for the delivery of a range of services such as healthcare, education, public safety applications and energy and environmental apps such as smart grids. If the NBN were to be built for commercial services, like high-speed Internet, delivery would cost an exorbitant $200 plus per month per user. So, from an economic point of view also, it is essential that we ensure the infrastructure is used trans-sectorally.
The OECD had identified the delivery of health, energy and transport services over high-speed networks as key benefits to support the accelerated deployment of high-speed broadband networks by governments. This concept is now receiving such widespread support that I am currently working with the UN to move this trans-sector concept up into international telecoms policies.
The Australian government has been an international leader here; from the beginning it clearly stated that the NBN should be used for non-commercial applications. At the same time we also know that if the NBN is not made available to these sectors on a utilities basis the costs of using the NBN for such purposes will be too high. This would result in a continuation of the private networks that are currently used within these sectors and the opportunity for an important revenue stream for NBN would be lost.
So we have to make sure that the NBN plans realise the opportunity for the delivery of trans-sector services in an effective and efficient (affordable) way.
The scant international evidence we have indicates that incumbents are the entities most likely to be effective at value-adding a basic access offering to an NBN such that high quality and functional business and government services are delivered.
The competition advantages that will flow from an NBN constructed to as basic a formula as possible are fine for commercial purposes. However, these commercial advantages stand in stark contrast to the difficulty that will arise due to the fact that very few trans-sectoral services can afford to run over an NBN that would potentially force these sectors to use services that can only be provided by one national wholesale player. We certainly need to ask the question: what gets priority here – competition policy subtleties or the national interest? I would like to stress that the issue here is the creation of an infrastructure such that competition may be maximised at the services level.
This concern seems to be addressed in the proposed NBN Co legislation, which will give the government the possibility of allowing sectors to buy infrastructure capacity directly from NBN Co. This doesn’t mean that NBN Co will, for example, become the healthcare retail operator. Others in the ICT industry will still have to build the systems and services on top of that network. NBN Co will not be involved in any of that and if necessary that may need to be enshrined in the legislation as well.
This does not mean that these sectors will have to use the ‘retail clause’. The clause in itself could be enough for the wholesale operators to ensure that they provide their services to these sectors at an affordable price.
Tagged in: Australia, National Broadband Network, NBN
March 1st, 2010 at 4:12 pm
This is a follow up from the ebove.
Retail clause #2
I realise that – at least if one follows the media – it might look like that I am one of the few people who support the retail clause in the proposed NBN Co legislation. But I am convinced that the media, who have been spreading the stories that the government will start supporting retail sales on the NBN, have got it wrong.
I can fully understand that without an integral knowledge of the situation it is very difficult for anybody on the outside to understand what is going on.
Very few telcos have shown any great opposition to the clause. And if they thought that this would undermine the competitive environment, believe me they would have jumped up and down. They might have some concerns but those can be addressed in the submissions the government has asked for.
Of course the government is partly to blame for the poor press, as it has failed to properly explain the matter, and is now leaving it to people like me to do that work for them. The could have emphasised more that this clause was there for ‘special circumstances’ only and that such an exemption it would be overseen by both the ACCC and the Parliament..
I would like to repeat what I said in my first analysis (see above). Why are we building the NBN and why are we spending billions of taxpayers’ dollars on it? Is it simply to create a better competitive environment so that lots of companies can make lots of money? I don’t subscribe to that. The NBN most certainly will deliver that environment as well, but that is not the main reason for such a massive government investment.
We will develop this infrastructure so that on top of it we can build a whole range of other services. I call this the trans-sector approach. Other sectors like healthcare, education, energy and public safety can use this utility broadband infrastructure to build their own services, such as the monitoring of patients and aged people living at home, tele-diagnoses and health checks from home, e-learning, the installation of home automation networks for energy management, the use of renewable energy and the use of electric vehicles.
The social and economic benefits of this are publically supported by the United Nations, the OECD, the Obama Administration, governments in Europe and our neighbours in New Zealand. And the country that initiated this global trans-sector strategic direction – and the country that is leading it – is Australia.
So we must be doing something right here!
That’s why the ‘retail clause’ is in the proposed legislation. We must ensure that a trans-sector use on the broadband infrastructure is possible (this means that this broadband infrastructure can be used at the lowest possible price in order to deliver those social and economic benefits).
I am convinced that there is no intention whatsoever on the part of the government to use this clause for any services other than those that are in the national interest.
Could this have been done in another way? Yes, certainly, but NBN Co is adamant that it wants to deliver as basic an infrastructure service as possible and that view is shared by the government, and by the industry. However this approach could lead to a network being built that is so basic that these other sectors cannot use it, and then they would potentially have to rely on the services of one national wholesale provider for the network services they need in order to be able to use the NBN.
To put this differently, if NBN Co delivers such a basic infrastructure it is easy to understand that building a national retail network on top of that very basic structure would be an expensive business. We see this in other countries where there is often only one national retail player the simple reason for that is that no one else can afford to built a national retail layer on top of the basic infrastructure. All the trans-sector services mentioned above require a national approach, so all of these sectors would potentially have to rely on one wholesale player to establish their national networks for the delivery of their services (healthcare, etc).
Based on the strong views that NBN Co hold in relation to basic infrastructure the ‘retail clause’ is a neat solution – as I explained above, it is a way to ensure that the network can be used for these trans-sector services.
It is a very difficult concept and I would be more than happy to explain this further. Feel free to send me an email or grab the phone.
Paul Budde