Conroy sets out ALP's solution to broadband

By Stuart Corner
Wednesday, 08 March 2006 10:29

Regulation

In his speech to the Australian Telecommunications Users Group (ATUG) conference, shadow communications minister, Stephen Conroy has detailed an ALP plan to break the deadlock that is preventing the rollout of new fibre broadband access networks in Australia.

Conroy struck the right note when he identified broadband as a key component of national infrastructure and as such one in need of national policy oversight as much as roads, railway, ports and airports.

"We... need to ensure that Australia's ICT infrastructure is world class. Labor's focus in this regard is Australia's broadband infrastructure...broadband infrastructure is of central importance to the Australian economy and will be talked about at the highest levels of a Labor government. When you hear Labor talking about infrastructure bottlenecks holding back the Australian economy, we're not just talking about roads and ports; we're also talking about access to broadband."

Conroy acknowledged that "the relationship between infrastructure investment incentives and competition is a complex one," and said that the challenge for government was "to develop a solution that recognises the need for investment certainty for all players, as well as the need for rigorous competition in the market."

The ALP is proposing a legislative framework that would provide regulatory certainty for joint venture companies intending to roll out optical fibre access infrastructure in a pro-competitive manner.

"Under this option, wholesale only, open access, joint venture companies would be able to obtain prospective certainty of the terms of access that would apply to new true broadband infrastructure investment," Conroy said.

"These terms of access would provide for compensation for the joint venture partners for the commercial risk they take on and allow for adequate returns on capital. This would significantly improve incentives for infrastructure investment compared to the status quo."

He also indicated that a Labor Government might invest in such a venture. " Such a proposal would also be flexible enough to allow government to become a partner in the joint-venture itself and inject capital to increase the pace or extent of the roll out."
He claimed that such a proposal would "even the playing field for telecommunications competition by dramatically altering the structure of the industry".

"Creating a separate joint venture company to sell wholesale access to true broadband infrastructure would create a form of structural separation that would destroy incentives for anti-competitive discrimination. The transparency provided by such a structure would also reduce the need for continuing heavy handed government intervention to ensure competition in the sector."

Labor envisages that such a joint venture would be limited only to the natural monopoly infrastructure bottlenecks of a telecommunications network, such as fibre links from the exchange to the nodes and to the end customers. Competitors would be able to access the exchange to install equipment and use the network for differentiated and competing  services. Conroy said.

He invited industry to join with Labor to further explore and develop the idea.