In a major step forward for the Government and the NBN Co, Telstra has today agreed to provide access to Telstra infrastructure, including pits and ducts, for a total cost that is likely to be more than $11.5 billion.
The full details of the agreement have not yet been made public, and there is concern that Telstra will still be able to dominate the wholesale market and the critical backhaul networks. The details released so far do not indicate if Telstra will be selling the infrastructure to the NBN Co or simply providing limited access to the NBN Co. Unless there is a transfer of infrastructure ownership from Telstra to the NBN Co there is always going to be the future possibility that Telstra will identify loopholes in any agreement and look for further compensation.
The announcement indicated that Telstra will be compensated for customers moved to the new network and for the eventual decommissioning of the cable network. This aspect of the agreement will raise interest amongst Telstra's competitors. Will Optus be compensated for the eventual decommissioning of the Optus cable network? Will Telstra's competitors also be provided with incentives to move customers to the new network?
Another aspect of this agreement is the likelihood that true competition will not occur in the wholesale and backhaul market in Australia for at least another generation. It is important for the Government to outline how competition will be developed in this crucial market segment. Without competition in the wholesale and backhaul markets it could be argued that Australia has moved from one monopoly to another, even if this has been done with the best intentions of providing a new faster access system at the same time.
The NBN appears to be moving forward, yet legislation to support the fundamental changes that are needed to support the NBN Co and to provide further competitive change have yet to appear and are unlikely to pass through Parliament prior to the next election. Now that the Federal opposition has said it will cancel the NBN project, the announcement today of an agreement between Telstra and the Government makes it more important that legislation is put before the parliament sooner rather than later.
It is important that the Australian Competition and Consumer Commission (ACCC) look very closely at the deal. Australia does not need nor want to move from one dominant carrier that holds an effective monopoly in some areas to another that is Government owned. This would be a backward step and it is now important and urgent that the Government spell out how competition will be guaranteed in the wholesale and backhaul markets. The ACCC should also be looking at the question of pricing and access parity. With the NBN Co being effectively owned by the Government, there is the question of who will set access prices. The ACCC should ensure that the prices be published so that the public know who is paying what and if access is being provided fairly, openly and competitively.
The premise for the NBN which is to move Australia to a Fibre to the Premise access network is one that cannot be challenged for its timeliness and forward looking approach to Australia's digital future.
An important issue is that most of the content accessed by consumers resides overseas (eg. YouTube, Facebook, etc.). The Government should look at this problem. Currently, one reason why Australian consumers pay exhorbitant prices for network access is the cost of international traffic. The Government should look look at ways to entice larger consumer Internet destinations to move some or all of their content to Australia. It is possible, through a study to identify what Australian consumers view on the Internet and to then look at ways to replicate the information locally and thereby reducing international traffic.