news Australia’s independent authority on infrastructure has recommended the Federal Government split the NBN company into pieces based on technology or geographical lines and sell it off to the private sector, but without publishing any justification at all for such a move.
Today Infrastructure Australia released what it billed as a 15-year Infrastructure Plan and associated priority list, marking what the agency said was 18 months of work (presumably since the 2013 Federal Election). The agency said the “first of its kind” plan delivered a roadmap to “more affordable, innovative and competitive infrastructure”.
Page 110 of the plan (available in PDF format online) deals with Infrastructure Australia’s vision for the future of the National Broadband Network project.
In its document, Infrastructure Australia states baldly that over the medium-term period, the Federal Government should “transfer NBN Co to private ownership”.
The agency does not include any justification — at all — which may outline its reasoning why such a move would benefit Australia. It appears that the agency has either merely assumed that such a move would benefit Australia, or that the agency has chosen to completely withhold any reasoning for such a move from its document.
The document merely states that it is Infrastructure Australia’s view that the privatisation of the NBN company should go ahead.
In the document, Infrastructure Australia lists a number of previous reports commissioned by the Abbott/Turnbull Coalition Government as backing the idea that the NBN company should be privatised, including the National Commission of Audit’s report and the NBN Panel of Experts report, led by Michael Vertigan.
However, these reports are commonly viewed as being strongly influenced by the Coalition Government’s agenda and are not viewed as being politically independent.
The only reference Infrastructure Australia makes to an independent authority supporting the sale of the NBN company is comments made by Rod Sims, the chair of the Australian Competition and Consumer Commission, who has repeatedly called for the NBN company to be broken up and sold off.
In its report, Infrastructure Australia said the NBN company could be split along “technology lines” into separate companies selling its various technologies — HFC cable, Fibre to the Node, Fibre to the Premise, Satellite and Fixed Wireless.
Alternatively, the company could be “split along geographical lines: for example, by major city”.
Infrastructure Australia said to prepare for a future sale, it was important that the NBN company did not “enmesh” different technologies in a way that cannot be separated later.
“Accordingly, NBN Co could establish separate internal business units in anticipation of creating a more competitive network,” the agency wrote. It advised the federal Government to undertake a “scoping study” to consider the objectives of any sale, before privatising the NBN company.
Infrastructure Australia particularly took aim at the cross-subsidy which the previous Labor Government set up to ensure that retail pricing on NBN broadband services would be the same Australia-wide.
“Currently, NBN Co is providing equivalent broadband services at the same wholesale price, regardless of geographic location or the technology platform used to deliver them,” Infrastructure Australia wrote. “This allows for consistent retail pricing for equivalent services – a requirement set by the Australian Government – but it constrains the recoverable revenue through wholesale pricing.”
“It means densely populated cities and urban centres are cross-subsidising our regional and more remote areas. A hidden cross-subsidy does not support transparency for service delivery in regional areas. This arrangement could also inhibit the transition to greater competition. Where possible, the Australian Government should make clear the aim of this [community service obligation], its present cost and funding source, and establish a competitive process for delivering the CSO.”
“Exposing the CSO to the market should improve the quality of services and lower the cost to taxpayers.”
The Infrastructure Australia plan also made reference to the need to change the way that the Government’s Universal Service Obligation plan. Currently the Government and industry fund a model which sees money delivered to Telstra to act as the telecommunications company of last resort, especially in regional areas.
However, mobile telco Vodafone has argued that the money should be diverted towards mobile services in regional areas instead, and the IA plan agreed.
“The Australian Government should consider phasing out its existing USO and diverting it to improved mobile coverage,” the report stated. “Diverting funding to provide better mobile coverage in the regions will support greater use of new technologies that rely on smartphones. This could involve introducing a technology-neutral USO to support mobile services, in conjunction with existing programs.”
The report also recommended making NBN backhaul and Fixed Wireless towers more available for use by mobile telcos in regional areas, as well as taking steps to encourage mobile telcos to co-locate their mobile infrastructure.
Opinion/analysis to follow.