Australian Government To Prohibit Infrastructure Competition for National Broadband Network

A document tabled by Stephen Conroy, Australian Minister for Broadband, Communications and the Digital Economy today shows that the Australian Government is considering crippling infrastructure competition in an attempt to make its National Broadband Network (NBN) viable.

The “Assessment of Proposals, National Broadband Network Process” document compiled for the Government’s NBN Expert Panel by the Australian Competition and Consumer Commission (ACCC) recommends that parts of the Trade Practices Act, the primary law in Australia regarding competition, be amended to allow for “an express statutory prohibition against overbuild in the roll-out and cut-over period.” That is, that no private provider could lay FTTN cable in Australia that competes with the NBN during the 8-15 years it will take for the NBN to be built.

The report notes that the requirement to prohibit competition is necessary so as to assure that the AU$42 billion NBN is commercially viable. Page 111:

However, if access seekers in metropolitan areas have no other option but to purchase access services from the NBN operator — that is, if there is no possibility that the NBN will be bypassed — averaged access charges may be sustainable.

Ironically perhaps, the report argues that prohibiting infrastructure competition by creating a universal wholesale monopoly of next-generation internet access should be coupled with new regulations to encourage retail competition. Pg 245:

One of the Commonwealth’s objectives for the National Broadband Network (NBN) is that it:
Facilitates competition through open access arrangements that ensure equivalence of price and non-price terms and conditions, and provide scope for access seekers to differentiate their product offerings.

The concept of Government owned infrastructure combined with multiple retail suppliers isn’t unprecedented in Australia, for example in some states consumers have a choice of retail suppliers for water and power. The difference though is simple: the deregulation of those markets occurred with the infrastructure already being owned by the Government, infrastructure that was not already subject to competition.

The formerly Government owned telco Telstra is often labeled the monopoly wholesale provider, and to many homes that remains true. But the telecommunications industry in Australia has been deregulated for years, and already some markets offer competition away from Telstra’s copper to the home network. Anything from Optus Cable through to smaller scale cable rollouts in places like Geelong on Canberra. It’s not just Telstra who is unable to compete with the NBN, it’s anyone with a cable in the ground who wants to upgrade it over the next 10-15 years, on the grounds that forcing everyone onto the NBN is the only way to make it viable.

What the report does overlook though in its consideration of forcing NBN uptake is that it presumes that the only delivery method is a competing FTTN network. As noted many times previously, technology is already starting to turn existing infrastructure into high speed alternatives, such as the next generation of ADSL tech. As much as cutting out competition in FTTN infrastructure may seem harsh, it may be irrelevant in the years ahead as technology bypasses the Australian Government’s attempts to force everyone onto the heavily censored NBN.