Continuing confusion on broadband

Here is a question: what does duplication mean and when is it bad?

And here is the answer: duplication means building two or more of the same thing where just one would be enough. It is potentially bad when you already have one of those things and you build another. Of course, if by building another, you get say, competition, the benefits from that might offset the costs of duplication.

What relevance does this have to the Telstra-NBN agreement that effectively proposes preventing Telstra’s cable network from offering broadband? The answer is nothing. Why? Because what is being proposed is to incur all of the costs of duplication with not one bit of the benefits.

What is more, no one seems to understand that. Today’s case in point, Robert Merkel (who is singled out for being clear and for referencing me):

Joshua Gans is disappointed that Telstra’s existing networks aren’t going to be competing against the NBN. I’m not; duplicating telecommunications infrastructure to the home makes about as much sense as running multiple competitors’ power or water networks to individual homes and businesses.

What he is saying is that he thinks it is just fine that we shut down (effectively) a perfectly good network and build a new one over the top of it. That is, we duplicate — because we are building a new network — but don’t get any benefits — competition, extra capacity or whatever. If you think duplication is bad when thought about sensibly, how can you possibly advocate the most senseless duplication imaginable?

Personally, while I might have lamented the loss in facilities-based competition, I would have been far less concerned if NBN Co were purchasing the HFC network and then allowing others (e.g., Foxtel) access to it. At least there would be no duplication — well, at least until far into the future when the HFC network was actually obsolete. This proposed plan has no public benefit associated with it.

And while I am at it: we already have a ton of duplication of the cable network — anyone know what happened to Optus’ network?

1 thought on “Continuing confusion on broadband”

  1. I have to admit that I’m not quite clear of the full implications of the NBN deal with Telstra. But if the net effect of the deal is that the NBN leases Telsta’s network merely for the purpose of decommissioning it then that is, of course, quite foolish.

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