The way forward has to be Fibre-to-the-Home.
Policy Analysis 2008
BuddeComm remains reluctant to accept that we need yet another Expert Group in order to make the necessary headway, but the reality is that this is the inevitable next step. The good part, however, is that the government is talking to the industry and trying to get the process right.
In all the other countries in the developed world it has been concluded that the plan for a national network must be based on the ultimate network architecture of FttH in metro areas, plus a combination of technologies elsewhere – with end-to-end facilities for organisations such as healthcare, education, utilities, media companies and so on.
And this will be the conclusion reached in Australia also.
It is critical for Australia to accept that vision. What we must do then is work our way back from there and fill in the specifics. This will include FttN, wireless, satellite, BPL and so on. But, again, that can be sorted out by our expert telecom engineers in follow-up plans (and most of that work has already been done by Telstra anyway). BuddeComm was very pleased to see the government asking for specialised technical advice in relation to its planned broadband network. Within the industry based FttH SIG a sub group is already looking at possible industry cooperation activities here.
Exhibit 2 – How many Expert Groups?
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BuddeComm asked our researchers to come up with some information on how these processes work in Europe, Asia and North America.
On all counts Australia boasts four to six times the number of government (broadband) reviews and investigations than any other country in the developed world. At the same time we are running at least two years behind in actually doing something about the issue. It would appear that expert groups and investigations have been used by the Australian government to avoid making any hard decisions. |
Missing – regulatory guidance
Based on what has taken place within the FttH SIG, involving over 140 telecoms experts representing 120 organisations, hardly any debate has emerged about the technical nature of the network; there is widespread acceptance on that score.
The universal conclusion, however, is that the policy and regulatory framework to achieve our aims does not exist. If the government were to clarify this we could go straight to an Implementation Group, rather than an Expert Group.
Without very clear guidance the Expert Group will simply waste more time and get us no further.
If the government is serious about getting anything underway in the year 2008, they had better start making some hard decisions.
The two decisions the government must make:
· Functionally separate Telstra;
· Accept an FttH end-vision, with an FttN+ plan to get us there.
We all know we need functional separation – so why don’t we do it?
If the rest of the world – including the European Union (EU) – has come to the conclusion that this is the way to go, why do we need to investigate further? If anything, we should be conferring with others and exploring how best to implement the new regulatory environment, and how to secure the best possible transition from the old to the new for the whole industry (see our latest report on the situation in New Zealand: New Zealand – After functional separation).
With or without Telstra’s participation in any new broadband infrastructure investment plan the government will need to at least functionally separate Telstra’s infrastructure from its retail business. Nobody is going to co-invest with the government in a scheme that would allow Telstra to compete unrestrictedly, in a vertically integrated fashion, with the company building the new infrastructure. Such a scheme would be absolute suicide and the fact that there has not been a lot of overseas interest in the Australian plans clearly demonstrates that no international companies are foolish enough to invest in a market where the government still has not set the rules.
Make the decision and Telstra will change
By making it very clear to Telstra that no matter which way they jump they will be functionally separated the government might also obtain better cooperation from the incumbent, and this would save us wasting time on the less viable alternatives.
In every country where the government has made this decision the incumbent has fallen in line behind. It is patently obvious that Telstra is waiting for the government to make the move before it can go back to its shareholders and tell them that it will now have to operate within the new law. Without such a decision Telstra will not voluntarily give up its monopoly, as that is certainly not in its shareholders’ interest. In the meantime it is clearly in the incumbent’s own interest to delay and frustrate the system for as long as possible. Without sufficient powers being provided to the ACCC Telstra will continue to play games with the regulator.
Do we really need the money?
We won’t be surprised that if the government does make these two simple decisions, we may not even need all of that $4.7 billion. Looking at overseas examples, within a sound regulatory environment most of these investments will be done in a normal commercial way. We would prefer the money to be spent on establishing e-health, tele-education and smart grid applications over the new infrastructure.
Tagged in: Australia, Australia, New Zealand & South Pacific
