NBN Co @ Year 10 – time to get serious about breaking it up

CommsDay, an Australian telco industry newsletter, held its regular conference in Sydney on April 8th and 9th of 2019. This happened to co-incide with the 10 year anniversary of the creation of NBN Co by the Rudd Labor Government in 2009.

I was part of group of speakers invited to give their thoughts on the NBN Co @ Year 10.

In my presentation (a fully copy of which is available here) I called agin for the break up of NBN Co. This is necessary to transition to a policy of infrastructure competition which will drive the necessary future investment in Australian fixed broadband.

Australia’s nostalgic belief that fixed broadband is a natural monopoly has to be overcome. The majority of other developed and developing countries overcame this telephony era policy dogma in the early 2000s. However, Australia missed the change and doubled down on the old monopoly thinking with the creation of NBN Co. Government legislation and regulation was enacted to protect what is now clearly an “unnatural” monopoly, as evidenced by the threats from not only competing fixed technologies but also wireless technologies.

The inevitable characteristics of monopolies are now plain for all to see. Higher prices, less retail competition, declining service standards and most importantly of all no pathway to the future necessary investment in deep fibre infrastructure.

Labor has announced it will hold an economic review of the NBN if it succeeds at the now imminent election.

The Coalition decided not to go down the NBN Co break up path in 2014 when it was recommended by its own panel of experts. I supported the NBN Co breakup option at the time, not for ideological reasons, but because the telecommunications industry is a dynamic, innovative, technology based industry and only competition can liberate the benefits of this technology in efficient and effective ways.

Governments can have a role in driving technological innovation if there is general community and bipartisan support for the goals and the technology direction. This is normally only the case in areas such as national defence, health and education. The NASA space program, for a period during the Cold War, was such a government sponsored program that created enormous spin-offs, but it also eventually succumbed to questions of benefits versus costs.

The Coalition made a big mistake in not even considering the break up of NBN Co in its strategic review of late 2013. Unfortunately the haste and pressure to get building something overwhelmed the need for some calm and considered thinking about the best way forward.

Hopefully, Labor will learn from the Coalition’s mistakes and undertake a considered review of all the economic options for the NBN if they come to power in the next months.