Technology | Innovation

NBN Discussion Paper: Putting the regulatory cart before the structural horse

The Government’s proposed NBN reforms won’t correct fundamental structural problems within Australia’s broadband and telecommunications industry, according to Dr Michael Porter, Director of CEDA Research. [Research and Policy article]

In a submission to the federal government's discussion paper, National Broadband Network: Regulatory Reform for 21st Century Broadband, Dr Porter argues that the number one priority for the Government is to make the structure as pro-competitive as possible and then to implement a suitable regulatory framework to manage any remaining monopoly related competition issues.

"In a sense, the Government's Discussion Paper is putting the regulatory cart before the structural horse," Dr Porter said.

The submission comments on:

  • the telecommunications competitive framework
  • the separation arrangements for Telstra
  • spectrum allocation and frequency auctions
  • the bigger picture issues of rapid technological change and maintaining regulatory relevance.

The submission proposes a strategy based around:

  • competitive use of existing infrastructure
  • new access to frequencies resulting from the closure of analogue TV
  • emerging technologies
  • the facilitation of a sound private investment structure within a competitive and less regulated framework.

Dr Porter suggests that the competitive tension would be created through the separation of copper and fibre optic networks form HFC cable assets.

Telstra and other carriers, in exchange for equity, would be invited to fold copper and fibre assets into a new integrated Australian network.

This network could be partly funded through Government loans and incentives to meet backhaul and black spots demands.

This company would then compete with end user suppliers such as the newly created independent cable corporation and existing wireless providers.

"What Australia needs now is not an expensive public sector rollout and regulatory expansion, but the facilitation of the potential that literally lurks beneath the surface and in the skies," Dr Porter said.

"To spend up to $43 billion of community resources on an NBN defies sound economics in an era as challenging as the once faced in 2009. The Government should not improve its economics by limiting competition; particularly in view of its plan to sell the NBN back to the private sector in five years time."

The alternative structural model outlined in the submission would create a more secure wholesale environment and increased competition among end-user providers, resulting in better service and choice for Australian consumers.

To read the full submission click here.