I say “how much” because it is becoming increasingly likely that our competition laws may well be relaxed on a variety of fronts to help the NBN earn a commercial return. Here are the worrying signs:
- Deal with Telstra on copper: the notion that we would decommission a perfectly functioning copper line network that could provide competition for the NBN would, on the face of it, be anti-competitive. To judge whether an agreement that would have Telstra use the NBN for its services and also decommission alternative infrastructure we need to think about what would happen without the agreement. Without the full agreement (access + decommission), Telstra would be forced to compete with the NBN. Australian consumers — across the whole country — would get the benefit of that competition. The same analysis applies to cable. I would really like it if the Government — and for that matter the ACCC — would explain why the analysis isn’t as simple as I just described.
- The NBN ‘opt out’ policy: to ensure take-up of the NBN, the NBN will apparently offer the following deal: “hook up now or pay $300 later.” Of course, this threat becomes a virtual compulsion if you want fixed line service in the future as Telstra is pulling out. On one level, this is all just a consequence of (1) above. But let’s suppose a private company offered the same deal. Suppose that the NBN was owned by Telstra and suppose you currently purchase fixed line service from a provider other than Telstra (who currently accesses Telstra’s copper network according to long-established competition rules). Are you telling me the ACCC would allow Telstra to do this?
- The NBN ‘national uniform price’ policy: Minister Conroy says the NBN will have a single price across the entire country. We know why that arose — because of the election deal. The weakness of this has been exposed with Brisbane’s plans to roll out its own network. And why shouldn’t it? It can actually do it for less and charge a lower price than the NBN. While that sounds like a good deal for consumers think about what the NBN policy is doing. The NBN will have market power across many markets but perhaps not Brisbane. To ensure that the Brisbane competitor doesn’t get too aggressive the NBN has commitment not to discount price in response to competition in Brisbane. That commitment leads to higher prices in that market. That sounds like taking advantage of market power in other markets to reduce competition in the Brisbane market. Now what is possible is that that commitment leads to competition all over the denser urban areas of Australia. So Conroy’s ‘one price’ policy for the NBN unravels to some extent to become high prices for the bush than what is on offer in the city. The point here is that you cannot claim uniformity or cross-subsidisation as a public benefit to reducing competition as that isn’t really going to occur. Instead, you get duplication without much benefit.
Big questions remain. Will the ACCC actually do its normal approach to all of this and have a public examination of all of these policies and agreements? We should recognise that all of this stuff is political. Conroy wants the NBN to earn a commercial return and could crimp competition to get it. In that case the claim that the NBN is one big monopoly with no social benefits rings true. If the Labor Government were really acting like a Labor Government it would ditch the commercial criteria and focus more on social ones; in the mix, starting to act in the interests of competition and consumers (who also happen to be voters) rather than seemingly against them.