| CEDA says competition not NBN is key to broadband success |
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| by Stan Beer | |
| Wednesday, 03 December 2008 | |
  
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Infrastructure-based competition and diverse solutions rather than a single, national solution is the way to promote real competition across the four infrastructure 'doors' - copper telephone lines, wireless, coaxial cable and fibre - allowing rivals to differentiate their services and compete more vigorously along their supply chains, according to the CEDA report. In the opening chapter, Dr Michael Porter, Director, CEDA Research, argues that Australia’s information policy must be modified to achieve real competition across the 'four digital doors' of telecommunications infrastructure. Dr Porter maintains the current policy debate should be about much more than the FTTN rollout, since existing cable and evolving mobile platforms also present fast and competitive platforms. "Yet we seem to be bogged down in a technologically exclusive debate about a 98 per cent rollout of FTTN rather than how to deliver the best information services to customers in differing situations." Dr Porter makes it clear that the only two serious competitors for the NBN are Telstra and Optus and suggests a way to keep the playing field level regardless of who wins the tender. Structural separation of Telstra is undesirable as there are distinct investment coordination advantages and other vertical synergies from owning a network and retail telecommunications business. In order to achieve horizontal competition in telecommunications and particularly broadband, Dr Porter argues in favour of the successful bidder for the tender being required to divest all its shares in its coaxial cable systems. Broadly speaking, the authors of the of other five chapters concur with Dr Porter's views, including Professor Martin Cave, Director of the Centre for Management under Regulation, Warwick Business School, Professor Joshua Gans, Professor of Economics, Melbourne Business School, Dr Henry Ergas and Dr Eric Ralph of Concept Economics, Dr Jeffrey Eisenach, Chairman of Empiris LLC, Washington DC, and Jim Holmes, Director of Incyte Consulting. The CEDA report has been welcomed by the Federal Opposition, which is now using its findings to beat the Government about the ears. “This follows yesterday’s tabling of the Senate Select Committee’s interim report on the NBN, which contains a range of compelling evidence which exposes Labor’s broadband policy as little more than a glib one-liner, presented to the Australian people and designed simply to get it through the election,” Shadow Communications Minister Senator Nick Minchin said. Senator Minchin said the report concludes that Labor’s prescriptive promise of fibre to the node to 98 per cent of homes and businesses is not economically justified. “Rather, it might well be preferable to address the deficiencies of the current regulatory arrangements and then allow commercial investment to guide the deployment of new networks. “Such an approach would avoid the need for government to ‘pick winners’, and preserve the option value inherent in allowing technologies to be adopted, and only when, market circumstances create a compelling case for that to occur,” the report states. Senator Minchin said that the CEDA report and yesterday’s tabling of the Senate Select Committee’s interim report on the NBN place further pressure on the Communications Minister Stephen Conroy to urgently revisit his deeply troubled process and adopt a more sophisticated approach before it is too late. “As many have said, the rules are being made up as the Government goes along and almost everybody who has appeared before the committee said the Government should have determined the regulatory arrangements before calling for bids,” Senator Minchin said. “There has also been enormous criticism about the lack of detail about who the Government plans to include in the 98 per cent and of greater concern to rural and regional communities such as those in my state of South Australia, who will be part of the 2 per cent that misses out?” A summary of the CEDA report can be accessed here. |
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