Broadband: Another Telco Monopoly Would Be A Disaster

If the Expert Taskforce into broadband infrastructure was supposed to delay scrutiny of the government’s broadband policy until after the election, then it isn’t working.

The Taskforce was formed to evaluate proposals for broadband infrastructure roll-out, and assess the regulatory or legislative changes that that may require.

Debate over telecommunications regulation hardly needs its fire stoked. But, oddly, the loudest agitator over the last week has been the communications minister herself.

Helen Coonan has spent the last few days apologising for speculating that the taskforce could recommend the structural separation of Telstra.

And yesterday in the Australian Financial Review she raised the possibility that the government could help pay for a proposal that delivered fibre-optic broadband all the way to the home. This too was quickly retracted. The Minister, a spokesman claimed, was speaking “hypothetically”.

Conspicuously, one option which has been not withdrawn is the potential that the winning broadband proposal will be granted a monopoly over broadband infrastructure. Coonan periodically refers to this possibility in her public addresses and it goes unchallenged. But granting an infrastructure monopoly would stifle competition in the telecommunications industry far more than it is already.

While the Taskforce prepares to receive the first broadband proposals, almost any regulatory change is on the table. But the one thing that the taskforce cannot yield on is the most important and controversial – the requirement that any new network be open to access by competitors at a “non-discriminatory” rate. The taskforce’s job is to devise some regulatory conditions under which a firm would both build the fibre network and share it with competitors.

But it is this sort of mandatory access regulation that has drawn the telecommunications sector into its current regulatory quagmire. Access regulation encourages firms to piggyback on existing infrastructure, rather than competitively build infrastructure themselves.

And fibre-to-the-node will hardly be the last broadband infrastructure Australia ever needs. When the next upgrade inevitably appears on the horizon, mandatory access regulation will still be hampering investment.

Coonan let this cat out of the bag when she raised the possibility of government subsidies for a future, higher-speed network – a tacit admission that she does not believe that the telecommunications industry can manage and fund its own investment while the existing regulatory framework remains.

The Taskforce’s requirement that the new network be open for access by competitors merely demonstrates that the government has learnt little from the failures of telecommunications regulation. To appropriate the Minister’s artless phrase – whatever the Taskforce concludes in February next year, telecommunications regulation will still not be “future-proofed”.