NBN: Harvard backs open access model

James Riley
Sunday, 18 October 2009 15:51

IT Policy - Government Tech Policy

A fundamental requirement for reducing broadband prices and increasing speeds has been the existence of an open access regime, a Harvard University study conducted on behalf of the US regulator has found.

The study found Australia was among the highest-priced country for broadband services in the three categories of low- medium- and high-speed categories it studied. Of the national markets studied by Harvard, only Poland, Hungary and Mexico were more expensive.

The comprehensive study of communications policies and outcomes of OECD nations on behalf of the Federal Communications Commission has profound implications for industry regulation in the US. Its findings are almost the polar opposite of present US competition policy in the telco sector.

Its most significant finding is that 'open access' policies – that is, unbundling, bitstream access, co-location requirements, wholesaling and functional separation – are "almost universally understood" around the world to have played a core role in enabling the transition from first generation communications to true broadband.

"We find that in countries where an engaged regulator enforced open access obligations, competitors that entered using these open access facilities provided an important catalyst for the development of robust competition which, in most cases, contributed to strong broadband performance across a range of metrics," the report, by Harvard's Berkman Centre for Internet and Society, found.

"Today these competitors continue to play, directly or through successor companies, a central role in the competitiveness of the markets they inhabit."

"Incumbents almost always resist this regulation, and the degree to which a regulator is professional, engaged, and effective appears to play a role in the extent to which open access is successfully implemented with positive effects," it said.

In markets where the dominance of the incumbent had prevented an effective open access regime, regulators had pursued functional separation to "eliminate the incentives of the incumbent to discriminate" among its customers.

The Harvard study notes Australia’s legislative reform bill introduced the Parliament on September 15 and notes the Rudd Government’s broadband investment plan as the most ambitious currently being undertaken in the world.

While the Australian market generally scores well in its 3G mobile network market, it is a middle-ranked market for broadband penetration and speed, and among the worst performers on price.

"The lowest prices and highest speeds are almost all offered by firms in markets where, in addition to an incumbent telephone company and a cable company, there are also competitors who entered the market, and built their presence, through use of open access facilities," the report said.

The Harvard study was commissioned by the FCC to inform its own policy review in the US.