Tuesday, 03 November 2020 11:28

NBN Co behaving much as Telstra did during its monopoly days: Budde Featured

Paul Budde: "The government is adamant that it will need to recoup its money and is now trying to use the monopolistic position of the NBN Co to make that happen." Paul Budde: "The government is adamant that it will need to recoup its money and is now trying to use the monopolistic position of the NBN Co to make that happen." Supplied

The situation with the national broadband network at the present moment is similar to the time when Telstra was a monopoly and dictated terms to the rest of the market, well-known telecommunications analyst Paul Budde claims.

In a blog post, Budde said the the NBN Co, backed by government money, was flexing its muscles and getting the retail service providers to dance to its tune.

"The NBN Co is a government-backed wholesale monopoly and all the RSPs are at its mercy for access to the national fixed broadband infrastructure," he said.

"A monopoly is, of course, an ideal way to print money as the RSPs have no alternative whatsoever and there is no punishment for mistakes. The country suffered for more than 25 years due to the misuse of the telecommunications monopoly Telstra had for all those years."

Budde said the government was now trying to muscle the Australian Competition and Consumer Commission into changing price regulations and allowing the high costs that the NBN Co had racked up.

"A week later, NBN Co announced that it would stop providing the extra capacity that it had been providing to the RSPs to pass that on to the users during the COVID-19 crisis," he said.

"They will now start turning the broadband tap down. This will result in further deterioration of the service. By doing so, they have tried to force people towards the higher-priced broadband services."

During the coronavirus pandemic, the NBN Co made extra CVC available at no cost to RSPs, due to the increased demand for bandwidth as a result of so many people being forced to work from home.

Budde said the NBN Co's moves had little to do with market-based policies. "If there was competition, the market would set the prices, based on the quality of the service and on what customers are willing to pay. In a monopoly, the RSPs and the users do not have a choice," he pointed out.

Another characteristic of monopolistic behaviour was complexity, Budde said. In other words, everything was made so difficult to understand that nobody could comprehend how the system worked.

"At the height of the Telstra monopoly, it had over 2500 different price plans with different terms and conditions," he said. "On average, something like 20% of plans changed monthly.

"There were only a very few people in the industry who could unravel that complexity and, for them, keeping track of this was a full-time job."

Budde sarcastically commented that it looked as though the people running the NBN Co had got hold of a copy of the handbook used by Telstra during the period when it enjoyed monopoly status.

"[NBN Co] have already developed the most complex pricing structure in the industry," he claimed. "They are going to make this even more convoluted. And by putting lipstick on the pig, they have tried to make it more palatable.

"Rather than addressing this issue where those higher prices hurt most — the bottom and middle end of the market — they are going to provide a rebate system for the top end of the market. While it is great for those people, those who can afford the current 100Mbps services do not need to be provided with a rebate system."

He said, in this move, the NBN Co had the government's full support. "In the end, the government is the owner of the network. It is up to them to tell NBN Co what its [government’s] NBN policy is so that NBN Co can base its plans on those policies.

"Is the core of the policy to maximise profits or maximise the social and economic benefits? The government is getting itself into even bigger knots as it has admitted that the NBN needs further upgrades – which obviously will cost more money.

"Under their current policy, this would make the NBN even more expensive for its users. For as long as the government fails to bite the bullet and address these problems structurally, we will keep muddling on."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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