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With the NBN, deregulation begins now

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The National Broadband Network has been heralded as a groundbreaking advance but has also raised concerns that it will create just another monopoly. In this first of two parts, Tony Simmons argues that the NBN can at last bring to Australian telecommunications a genuine opportunity for competition and growth… provided we learn from past.

In the early 1990s, Australians were largely optimistic about the future of the telecommunications sector and believed that deregulation would foster an era of real competition. For most people, that optimism has long been eroded and replaced by cynicism and an almost reluctant acceptance of the status quo.

The reality is that for the vast majority of Australian Businesses, there is, and there has only ever been, one service provider in town. Telstra has always owned and vigorously defended access to what might be described as the ‘golden goose’ of Australian telecommunications: the copper network that all networks have historically depended on and rent from Telstra.

However, true competition and innovation in Australian telecommunications requires a leveling of the playing field. With Telstra holding all of the aces (namely the copper network), competition has been, at best, superficial.

The open market that wasn’t

From 2004 onwards, Australia could have, and should have, started taking lessons from the UK in how to effectively split the “monopoly” player and use the regulator to govern competition policy. However, Telstra clearly understood its options and an aggressive company, led by Sol Trujillo, took on the Australian Government.

Telstra sought to protect the declining revenues of its fixed line network in what appeared to be an ugly, public and futile battle.

In actual fact, Telstra’s stubbornness (or astute lobbying, depending on how you see it) was rewarded and the company secured its ongoing stewardship of the copper network, successfully protecting its dominant position. Telstra staved off attacks, protecting its core revenues exceedingly well, and continued to squeeze competitors, its own assets, the regulators and the Federal Government in order to provide greater value for its shareholders (the primary function of a publicly listed company).

The public interest position at the time, at least on paper, mimicked that of the UK: foster greater competition through structural separation. And Senator Coonan, if reelected, would have, in my opinion, continued to work towards this eventuality.

However, Telstra’s gamble paid off.

The Howard Government was not returned and the Trujillo years of “shareholder returns” cemented Telstra’s ongoing market dominance.

A seismic shift

And so it begins. With the NBN, change is imminent and an opportunity for real deregulation, for real competition, for real choice seems once again at reach.

The opportunities that the NBN will provide, on both sides of the telecommunications divide, are already vast. Most opportunities are currently unimaginable. The pricing benefits to Australia and Australians are going to be incredible, as is the ability to be creative and flexible at all levels of the value chain.

With a ubiquitous network, carriers will be free to differentiate themselves by levels of customer satisfaction and by the value that they add to their customers. Telco’s will have the ability to focus on business solutions rather than the management and maintenance of a network. This is a seismic shift and the possibilities are genuinely exciting.

The Australian Government, the NBN and the telecommunications carriers have an opportunity to make real change for the benefit of Australia. They have a responsibility to safeguard this opportunity and make sure that lessons are learnt from past mistakes, and model the best parts of the NBN on the success of others.

We cannot afford one monopolistic player to replace another and we should not gloss over existing shortcomings. The world is moving rapidly, and we have the chance to lead from a position of strength. If we seek only to create a faster version of the current landscape, a golden opportunity for a generation of wealth creation will be lost.

Where to look next

With these goals firmly in mind, it is nevertheless worth asking: is the NBN the complete solution for real telecommunications competition?

After all, let’s face it: we love to hate the Telcos. Whatever levels our loathing, we take for granted a dial tone every time we pick up a phone, we take for granted high-speed wireless access and we take for granted ubiquitous coverage in telecommunications.

Yet, however enamored we are with the network we are frustrated with poor customer service, inaccurate and inert billing, and inadequate service levels; we accept that pricing is simply impossible to explain, understand and compare.

It is clear that Australia’s “competitive” telecommunications environment is responsible for all of these things, good and bad. So will the NBN fix our issues and build for the future, or can pure policy fill any gaps?

I maintain that a National Broadband Network, however branded, is essential to secure Australia’s future economic prosperity. Accordingly, we need an effective framework of competition policy to ensure real benefits and foster real innovation.

Next week, I will put forward my proposal for such a framework. In the meantime, I welcome your comments and ideas on how we can avoid monopolisation and begin with deregulation that is real and beneficial to all Australians.

Tony Simmons has worked as an IT & Telecommunications lawyer for Minter Ellison, British Telecom (London) and Telstra. He is the founder and managing director of The Full Circle Group, a communications software company.

original image by srqpix [Clyde Robinson]

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