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Can Regulatory Reform Create Infrastructure Competition?

Last month the NBN Panel of Experts released a Framing Paper on regulatory issues around the National Broadband Network. They called for submissions, 40 of which are available on the Department of Communications website.

In this week’s CrossTalk podcast Phil Dobbie suggests that most of the responses come from people who assume that NBNCo will continue with its task of providing broadband to every premises in the country. Does it have to be that way?

Economist John de Ridder says the framing paper and the earlier regulatory review ignores the affordability question. He discusses how the network’s cost accounting is creating a time bomb that will make the financial model unworkable.

So, is part of the problem that the NBN is trying to be a commercial entity rather than a social good? We discuss how cross subsidisation, so long as it exists, will make the idea of infrastructure competition unworkable.

Two infrastructure providers offering fixed connections has already been shown to fail, says David Forman, spokesperson for the Competitive Carriers Coalition. Telstra and Optus had massive writedowns on their HFC networks and we’re too far down the track to see the sort of cable v DSL competition present in North America and Europe.

Whatever competition exists only one company should have responsibility for the design and build of a fibre to the node network, according to recommendations of the Communications Alliance. Their CEO John Stanton explains how it’s necessary for the effective deployment of vectoring, the technology that could see VDSL speeds increase by 50 percent.

Perhaps competition could exist, though, if NBN focused purely on regional Australia, with Telstra looking after the rest. We discuss the merits of encouraging Telstra to voluntarily separate with the opportunity to use its copper network to build new broadband products in capital cities and other contestable areas. Or they could choose not to, and somebody else does it instead. Maybe that’s the only way to see effective infrastructure competition – but it’s an approach few are talking about.

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