Retail service providers an endangered species

By Renai LeMay
Friday, 30 July 2010 15:45

IT Policy - Government Tech Policy

opinion Shortly after former Alcatel-Lucent executive Mike Quigley stepped on board as the first employee and leader of the National Broadband Network Company in mid-2009, a new term entered the lexicon of Australia’s telecommunications sector: ‘Retail service provider’ or RSP.

It quickly became apparent why Quigley was so fond of using the word to describe Australia’s cohort of internet service providers.

A key plank of Labor’s NBN policy has always been that the company tasked with building and operating the national fibre network would not sell services directly to consumers. Instead (the Government’s legislative flirtation with the retail option notwithstanding), the role of NBN Co was cast broadly as an alternative to Telstra’s dominance of the wholesale market.

Where government regulation of the telecommunications sector went wrong over the past decade — so the thinking went — was to allow Telstra to play in both the retail and wholesale markets. Labor would not make that mistake again with NBN Co.

Thus Quigley’s use of the term retail service provider. The label has allowed NBN Co to constantly remind the sector that it will not be competing with existing players, and sharply define its customer base as those who sell services directly in the end user market.

It’s a subtle but powerful distinction that Quigley made – and the term was quickly adopted by the entire sector. I view it as just one of the gentle but powerful ways in which Quigley has shaped the entire sector’s view of the NBN since taking the reins of the project. I don’t know whether there is an ancient Chinese parable which can better express this idea, but certainly it’s a central tenet of many business philosophies that if you frame the boundaries and set the terms of a debate, you may well also influence its outcome.

But there’s one problem with this framework that Quigley has cast over Australia’s internet industry.

The incessant consolidation amongst ISP ranks over the past year has created a situation where NBN Co will increasingly only provide services to a tiny number of companies.

Going back five years, Australia’s broadband industry was filled with a myriad of players in sharp competition with each other.