Yesterday, the Federal Government announced what we all expected: it completed its policy to roll out basic broadband across the whole country and appointed an expert panel to decide its role in the next generation of broadband investment (you know the stuff that will make internet TV possible). The expert panel comprises public servants, experienced regulatory economists and business people. But what is that panel really deciding?
The Government is looking for infrastructure investors to put in a fibre to the node (FTTN) network as early as mid-2009; years quicker than Labor’s timeline. And the process of submitting bids to the expert panel will begin immediately. Realistically, it seems we will have two bidders – Telstra and the G9. With the G9 already proposing capital city broadband pricing below current rates, their pricing is looking like a worst-case scenario for consumers. But there is much that is uncertain.
The big question is what type of legislation will be required to implement either scheme? The G9 wants cost-effective access to Telstra’s copper network. Telstra wants reform that keeps the ACCC at bay. Presumably, to actually get a serious bid, the expert panel will need to entertain these legal changes. That means that their deliberations have implications that are far broader than broadband.
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If the panel decides in favour of Telstra, it will seemingly have to find against the ACCC. If the panel decides in favour of the G9, then it will have to support legislation to access Telstra’s network. And if Telstra’s constitutional challenge at the moment looks a far cry from The Castle, government legislation makes it seem less like they they’re dreaming.
But we should take some comfort in these obstacles: they face both the Government and Labor. The solution for one will be the solution for the other. Indeed, only by by-passing Telstra completely (right to the home), could any government avoid those issues and keep competition policy alive. But I suspect that some dollars will have to accompany that sort of move.
Joshua Gans is professor of economics at the Melbourne Business School. He blogs on these issues at economics.com.au.