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  • News - Written by on Wednesday, March 30, 2011 13:16 - 26 Comments

    NBN will stifle competition, says AAPT

    AAPT chief executive Paul Broad today called on fellow telcos to stand up and “make noises” to protect competition in the new world order of the National Broadband Network.

    Broad said the current telecommunications legislation — chunks of which was approved just days ago — was all about stopping and preventing competition, recreating a monopoly situation which the industry had fought to dismantle in the last 20 years.

    He said competition at the infrastructure level was fundamental to the telco market. “My concern about today’s debate about infrastructure is we spent a lot of time in the last few weeks building up legislation to prevent competition,” he said. Then, referring to the uniform national wholesale price to be used by the NBN: “How can we offer a competitive product when we all face the same wholesale price?”

    Broad said the industry should look back at past experiences to avoid future mistakes. He said that in the mid 1990’s his then-company Energy Australia tried to use energy infrastructure to drive a retail competitive outcome in parts of the market where it thought it could have been successful.

    But, Broad said, the final result didn’t deliver. “We thought at that time we could actually build a multi-utility concept using energy infrastructure … that part failed,” he said. According to Broad, in the mid 1990’s, nobody predicted that competition could be at an infrastructure level. “Sometime we forget we have made a few mistakes in the past which might help think about the future,” he said.

    Broad claimed the debate about the NBN and the “cherry-picking” provision that happened in the past weeks was all about re-establishing a monopoly, that the industry had already experienced 20 years ago. He said the industry had undertaken a significant transformation in the past two decades since competition entered the market and that the benefits of a competitive field have been “enormous”. For these reasons Broad called on the industry players to stand against the current NBN legislation.

    “We industry should certainly have an argument about the fact we have all taken a pretty big journey in the last 20 years,” he said. “We all have investors and invested capital in our business that changed the nature of our business.”

    Broad said competition was to the benefit of both telcos and consumers, stating that if it was true that the concept of having fast broadband might be appealing to consumers, being taxed for it might as well not make them happy. He said that AAPT today had over 11,000 km of fibre and that in the process of deploying fibre the telco has lost and won money, acknowledging that was part of the game of competition.

    “I can’t tell you that it’s all been successful,” he said. “When you are in the private sector you take risk, you take risk and you invest”. He concluded that if NBN Co were to be a new monopoly, the Government should have just bought back Telstra from the private sector.

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    26 Comments

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    1. PointZeroOne
      Posted 30/03/2011 at 1:33 pm | Permalink |

      “How can we offer a competitive product when we all face the same wholesale price?” <- You offer other things to go along with that net connection ^_^

      Really how is this a bad thing? It just means they can't undercut each other by making a nice deal with the wholesaler.

      It's win win for the consumer.

      Also I'd be happy to pay $10 for my connection if that meant I got certain features over another plan/ISP

      • Posted 30/03/2011 at 7:37 pm | Permalink |

        Exactly.

        Everyone has the same base line – that’s a “level playing field”. It will be the service providers who offer the best extra services on the network who’ll win the fight for the consumers.

        That’s competition.

        The big existing carriers can see their current advantages disappearing. Well, sorry guys – sharpen your pencils and do a better job.

        This is being done for the consumer – not the carriers.

    2. RS
      Posted 30/03/2011 at 8:02 pm | Permalink |

      Indeed Michael..

      By having the network accessible to all, it leaves RSP’s the ability to concentrate on their “core business” of supplying us, products and services… NOT being involved in network construction.

      I have asked many times but not one naysayer has been able to answer (or rather willing to answer as the actual answer is simple)… “how many airports has QANTAS built”? Anyway…

      Nothing will change for us a s consumers in relation to how we buy our comms. For example, as it stands now, we don’t deal with the network owner/wholesaler. Even if we deal with Telstra, we deal with their retail side. So whether we are currently a Telstra customer, a customer of a Telstra reseller or whatever, the network owner to us the consumer, is totally inconsequential!

      So when NBN is available it won’t matter either, as we will still be dealing with Telstra, Internode or whoever!

      Does it matter to you who actually owns Holden, when you go to buy a new Commodore? Or who owns Sony when you want a HiFi or camera? No you dealing with a retailer only, to wrangle the best deal you can and so it will be with the NBN!

      • Me
        Posted 31/03/2011 at 5:14 pm | Permalink |

        OK – I’ll answer your QANTAS question. Probably none.

        “SYDNEY AIRPORT earns more money per passenger and provides worse service than any airport in the country, the consumer watchdog has found.”

        http://www.smh.com.au/travel/travel-news/watchdog-lets-fly-over-airport-standards-20110207-1ak90.html

        You still want to keep going with your airport analogy? Maybe Monopolies can be a bad thing…

        • Posted 31/03/2011 at 5:19 pm | Permalink |

          Yes, of course they can be a bad thing. It’s up to the ACCC to make sure they’re not.

          • Me
            Posted 31/03/2011 at 5:29 pm | Permalink |

            Yes, but if you have such faith in the ACCC, how do you explain the whole Sydney Airport thing?

            Sydney Airport is what happens when there is no competition. While I’m more than happy for the NBN to go ahead in some shape or form, the anti cherry picking regulations scare me.

            Will we one day see this headline:

            “NBN earns more money per customer and provides worse service than any network in the country, the consumer watchdog has found.”

            • Posted 31/03/2011 at 5:32 pm | Permalink |

              Except the NBN is a Government Owned Enterprise, and we have exactly the same people with a monopoly with Telstra, arguably worse.

              • Me
                Posted 31/03/2011 at 5:36 pm | Permalink |

                Great, a monopoly run by the Government! What could possibly go wrong?!

                • Posted 31/03/2011 at 5:41 pm | Permalink |

                  Great a monoploy run by a profit hungry enterprise (Telstra), what could possibly go wrong?

                  • Me
                    Posted 31/03/2011 at 5:43 pm | Permalink |

                    I think you’re forgetting that I’m arguing against a monopoly in any form. You’re the one who brought up the airports :)
                    Cya!

              • Posted 01/04/2011 at 10:30 pm | Permalink |

                Can you explain to us exactly what legally mandated monopoly Telstra does currently have?

        • RS
          Posted 31/03/2011 at 6:07 pm | Permalink |

          @ poster Me

          LOL… Yes I do want to keep that analogy going. Because if you had any powers of comprehension at all you might be able to answer it.

          You answered nothing but proved your own stupidity…

          So AGAIN this time read my lips… “How many airports have QANATS built…”? This was, is and will remain the question.

          Clock is ticking!

          • Me
            Posted 01/04/2011 at 8:48 am | Permalink |

            Already answered. Look above.

            “Posted 31/03/2011 at 5:14 pm | Permalink | Reply
            OK – I’ll answer your QANTAS question. Probably none.”

            You see to be a very angry little person.

            • RS
              Posted 01/04/2011 at 8:53 am | Permalink |

              Probably…?

              Yes I am “probably” from dealing with stupid, evasive little people…!

          • Posted 01/04/2011 at 10:28 pm | Permalink |

            How many airports have QANATS built…

            You have failed to explain why this is in any way a relevant question, nor even a meaningful question given that none of the major Australian airports reached their present-day state in a single build by any single entity. For that matter the NBN is not a full network built from scratch either, it is merely yet another round of piecemeal upgrades to existing network infrastructure.

            For what it’s worth, back when Qantas was private, it contributed to both Longreach airport (where some of the original Qantas hangars still stand) and Brisbane airport (which was demolished, and rebuilt in a different place). Of course, the Australian military also put work into those airports, as did the US military. After Qantas became a government entity (i.e. 1947), I guess you could regard all government contribution to airport development to be at least partially by Qantas and for the benefit of Qantas but then it’s hard to account for all the internal subsidies that happen with government entities, so once again it’s a bit of a pointless exercise.

            So what does all this prove anyhow?

    3. nonny-moose
      Posted 31/03/2011 at 1:42 am | Permalink |

      In any case, is there not competition to be fought over providing the NBN these backhaul links that these carriers/ISPS are getting their knickers in a knot over? those who have owned backhaul of course, but these seem to be the ones screaming the loudest at the moment?

      and ‘just buy back Telstra’ HAH the government doesnt need a retail operation, doesnt need a mobile operation, doesnt need the management headaches coming with that. they just need the network, not all the extraneous crap hanging off it. they certainly dont need the political wrangle of putting Telstra under its thumb again (and Telstra would squirm mightily in that situation). Not a realistic policy suggestion to my mind….

      • Posted 31/03/2011 at 9:16 am | Permalink |

        Well, the government could buy back Telstra – just the network/wholesale arm. The legislation for the structural separation of Telstra passed before Christmas, so it’s quite “possible”.

        But there would be no value in doing so. Presuming that it costs about the same $11b Telstra would be getting as part of the NBN deal to buy the network back, what does that $11b buy the government?

        The same 60-year-old network that needs to be replaced. Two steps forward, two steps back.

        • nonny-moose
          Posted 31/03/2011 at 8:36 pm | Permalink |

          true. but at this point in time I’m unsure how much of the structural sep process has actually been carried out, and expect the government ‘buying back Telstra’ will still need to unpick that particular Gordian knot, until such time as the SS process has actually been completed.

          Fully agreed tho regardless where that process is at the monent, such a tactic would land us nowhere but right where we already are – the 60y.o. network needing to be upgraded and the govt holding the bag.

    4. PeterA
      Posted 31/03/2011 at 10:12 am | Permalink |

      I’m sorry, there IS no competition in this market.

      Why does it cost 10,000 dollars to get fibre installed into a building in william street in melbourne.

      (and by installed, I mean hooked up to one of the cables running past the front doorstep).

      Why is the cheapest price (2 years ago) for a point to point link (one block distance) utilising fibre already in ground around 40,000 dollars. (plus ongoing costs)

      My company might have been getting shitty quotes, but if there is this great infrastructure competition going around, where is the cost saving happening exactly?

      • PeterA
        Posted 31/03/2011 at 10:12 am | Permalink |

        * not my company, my workplace

      • Posted 31/03/2011 at 12:29 pm | Permalink |

        Exactly.

        At my previous place of employment, we needed to get fibre into a customer site that was 350 metres from the nearest fibre – (of ANY carrier, from memory there were two possibles for the site) – on the northern fringe of the Melbourne CBD. The build cost was going to be $95,000. We didn’t get the sale, strictly on that price.

        There’s a lot of great fibre around, but it’s DAMN expensive to get onto.

        • Merlin
          Posted 31/03/2011 at 6:48 pm | Permalink |

          I am curious though why the NBN costs $5000/household when it’s done for significantly less in other countries.

          • Dean
            Posted 31/03/2011 at 9:39 pm | Permalink |

            First of all, you’re not counting the number of businesses, it’s probably closer to $4,000 per home/business. Secondly, what countries did it for less than that?

            • Merlin
              Posted 01/04/2011 at 8:12 am | Permalink |

              Well I’m living in the US and Verizon did it for $1500/home… rural ISPs seem to manage to do it for under $2000/home for all but the most absolute remote areas. A good resource for information is dslprime.com.

              • Posted 02/04/2011 at 8:22 am | Permalink |

                It may surprise you to know that Verizon has significantly consulted with/to NBNCo on the nature of this project, and we are following an almost identical design. The major difference is population density, and Verizon “cherry-picking” the most cost effective locations for the service.

                From memory, it is in about a dozen states, and does not cover the entirety of those states, just the major cities and the larger towns.

                The NBN is about ubiquitous coverage for 100% of the Australian population – there are many differences between the two builds.

      • Posted 31/03/2011 at 5:08 pm | Permalink |

        Ouch.




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