National Broadband Network: the questions that should have been asked

Stuart Corner
Tuesday, 09 September 2008 15:57

Opinion and Analysis

Meek concludes his foreword by saying: "Ultimately, deployment costs are just one of the many factors that need to be considered when making investment decisions. Nevertheless, we hope that this clear and detailed analysis of these costs and how they are shaped will help to ensure a more informed public debate on the important policy and regulatory decisions that lie ahead."

The Caio Review was announced in February 2008. It will be led by former Cable & Wireless CEO, Francesco Caio, working with other relevant government departments and will report its findings to the Secretary of State for Business, Enterprise and Regulatory Reform and to the Chancellor of the Exchequer. Its job is:

- To consider the possible barriers to any new models of investment, involving collaboration between telecommunications suppliers and between suppliers and content providers and identify potential solutions;
- To examine whether there are opportunities to minimise the cost of private sector investment, including whether there is a public sector role in this respect, for example related to civil works;
- To examine the framework within which investment will take place to promote a more certain investment environment;
- To clarify the treatment of new infrastructure options within the non-domestic rating system
- To examine whether the EU and UK statutory framework has given Ofcom the necessary powers to establish a regulatory regime which would provide regulatory certainty for investors and sufficiently incentivise new investment in high speed access;

Announcing that review, Baroness Shriti Vadera, parliamentary under secretary of state for business and competitiveness, said: "The United Kingdom telecoms market has shown in the past that it can deliver high levels of investment in long term assets and the market will remain central to delivering next generation broadband. Nevertheless, with the market for next generation access in its early stages, this seems an appropriate time for the Government to examine whether markets are functioning correctly to deliver the future digital infrastructure, whether there are barriers to investment and where adjustments to regulatory conditions that might be required and to consider whether and how the Government could intervene to facilitate developments in the market." (my italics)

In the past three years while Telstra was pushing for a holiday from regulation to rollout its FTTN network and while its competitors formed the G8 (now Terria) as a counter to this initiative, the former Coalition Government should have been asking exactly those questions that The Caio review was set up to address. It failed to do so and into that vacuum leapt the Labor Party with its simplistic solution: throw $4.7b at the problem. Now in Government it is trying to adjust regulatory conditions simultaneous with its intervention to facilitate developments and without every having examined seriously whether there are barriers to investment or whether markets are functioning correctly.

There are many differences between Australia and the UK, but hopefully the members of the Government's expert panel charged with assessing and advising on the NBN proposals will read and take what they can from the BSG's body of research.