HFC networks should be sacrificed for universal wholesale pricing, say DBCDE and NBN Co

Stuart Corner
Wednesday, 24 August 2011 09:19

IT Policy - Regulation

The CEO of NBN Co and the secretary of the Department of Broadband, Communications and the Digital Economy have written a joint letter to the ACCC urging it to accept Telstra's proposal to cease delivering broadband services over its HFC network - as negotiated with the government.

The letter, sent under DBCDE letterhead and signed by NBN Co CEO Mike Quigley and DBCDE secretary, Peter Harris, states: "The HFC network clearly offers the ability to 'cherry pick' high value customers, thereby potentially inhibiting NBN Co's ability to cross subsidise to deliver uniform national wholesale pricing."

They argue that "Decommissioning the customer access network, including the HFC component, will deliver structural separation of Telstra and provide competitively neutral access to all retail providers." And they say that the idea of reducing infrastructure competition by prohibiting use of the HFC networks - expect for pay TV services - should not be seen in isolation.

"We believe the Definitive Agreements, together with the additional policy reforms agreed between Telstra and the Government, should be seen as package where a small number of measures, which in isolation might be perceived to reduce scope for infrastructure-based competition, contribute to an overall outcome which delivers a competitively-neutral network nationally, encouraging unprecedented telecommunications reforms and long term economic benefits."

In support of structural separation the covering letter also makes a damning assessment of the past 20 years of the telecommunications regime which attempted to transition from a Telstra monopoly to a 'level playing field' competitive environment using a model of functional separation of Telstra's wholesale and retail arms. It depicts the two decades since Telstra became subject to competition, as "a 20 year period of attempted infrastructure-based competition which, in relation to the fixed-line access network at least, has failed to meet public and industry expectations."

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