Then and now – such different perspectives on telecommunications infrastructure investment

Soon after this [August 2010] edition of TJA appears online, the 2010 Australian federal election (on 21 August) will have been decided, and we will know if the outgoing government’s $43bn National Broadband Network is to continue to be rolled out over Australia, or whether it will be ingloriously ‘scrapped’.

In an election in which the major political parties have adopted me-too policies on most issues likely to influence swinging voters in the marginal seats, it is conspicuous that one of the few areas of major differentiation between their policies lies in telecommunications. On 10 August the Opposition Coalition parties finally revealed their policy on what they plan to do in replacing the NBN they have long proposed to scrap. Their policy is amazingly inadequate and backward looking.

It is inadequate not just in infrastructure terms, where it will replace a 30-year future-proof national optical fibre access network (to 93% of premises) with a patchwork of largely fixed wireless access networks which will provide only second-rate Internet access speeds – even by our current, internationally uncompetitive standards – to regional and outer-metropolitan premises only.

But structurally worse than that, while proclaiming that ‘competition is better than monopoly’, their policy would directly subvert competition with the dominant carrier. Telstra would retain its monopoly ownership of the current fixed access network, and would no longer be structurally separated into arms-length wholesale and retail network businesses as per the agreement Telstra signed with the Government in June – to the relief of virtually the whole telecommunications industry.  By not addressing Telstra’s access monopoly, the Coalition’s policy would push the industry back to the previous regulatory era, in which a ten-year ‘capital strike’ on competitive broadband infrastructure investment was the direct consequence of a regime that allowed the vertically integrated Telstra to leverage its wholesale fixed network to significantly inhibit competition at the retail service level.

The Internet Industry Association, representing Australia’s Internet Service Providers, strongly advocates

‘bipartisan support for an open access, wholesale only, fibre-to-the-premises network with equivalent access for all access seekers, extended to provide ubiquitous super fast broadband access to all homes and businesses with wireless and satellite technologies’ (IIA, July 2010, ’Principles for a Digital Economy’)

In other words, the Association advocates infrastructure equivalent to the NBN.

Read more here.

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