Sorry Malcolm, the NBN must be a monopoly

Allowing telcos to compete against the NBN would turn the government's infrastructure proposition into a budget-eating monster. The only option is to make it a legislated monopoly.

The government must either legislate for the National Broadband Network to be a monopoly or ditch it. There’s no other alternative.

To allow Telstra and TPG, and perhaps others, to compete against it would turn a marginal infrastructure proposition into a financial disaster, and Malcolm Turnbull couldn’t blame Stephen Conroy either: Conroy’s NBN was going to be a monopoly. 

Turnbull’s the one who, in opposition, talked airily about allowing competition against the NBN, and now both TPG and Telstra are taking him up on it. TPG has announced plans to lay the fibre to the basements of apartment buildings, and last week David Thodey of Telstra said, in effect, that if TPG is allowed to do that, then so will Telstra.

Here is what Thodey is reported to have said a few days ago: “If they (the government) are going to continue with what was the original intent to have no infrastructure-based competition, then they need to plug the hole.

“Should they change their mind and be willing to consider infrastructure-based competition, then it would be a different situation but we need some clarity on whether that’s permitted or not. We’ve got an FTTB trial going now and we’ve had them for a few months.

“I think it’s an area the government had not thought through clearly and it’s just a bit of tidying up depending on what policy they implement.”

That’s perfectly clear and understandable, except that much more than a “bit of tidying up” will be needed if Malcolm Turnbull decides to stick with his plan to allow competition.

The key piece of infrastructure is not so much TPG’s FTTB, but Telstra’s hybrid fibre coaxial cable. 

That network passes about two million mainly city homes and is currently providing very fast broadband. If it’s not either acquired by NBN Co or closed down with the copper network, the NBN would be deeply unprofitable – the whitest of white elephants.

But in many ways the TPG plan is the most awkward problem. NBN Co and Telstra are already in negotiations about NBN acquiring the HFC network in addition to the copper network, which is to be acquired so it can implement the Coalition’s policy of using fibre to the node where appropriate. 

But there’s no point doing that if TPG is still allowed to offer a fibre service to apartment buildings or someone else, perhaps, does fibre to shopping centres, or industrial parks, or the best suburbs.

The NBN is, at heart, a mechanism for subsidizing regional broadband. If its urban services are not a profitable monopoly, it can’t do that and the whole thing turns into a budget-eating monster. 

If he isn’t already, Treasurer Joe Hockey will insist the NBN is a legislated monopoly to protect the Federal budget.

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