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Telstra banned from buying the NBN – why?

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A day or so after Telstra indicated  that in the right circumstances, and if the opportunity were to occur, it would be interested in buying the NBN but hot on the heels,  the ACCC announced that Telstra would not be allowed to buy the NBN.

On the surface this makes sense. The disastrous situation of the Telstra monopoly of the 1980s, 1990s and finally during the Sol Trujillo years in the early 00s is still fresh in the minds of many people. Certainly lessons have been learned from that, and that period of telecoms monopoly is something we definitely don’t ever want to see happening again.

However I would have expected a less explicit response from the Regulator – something along the lines of the ACCC being committed to ensuring an open, wholesale-only national infrastructure with strict regulations attached to it. This would be the most critical issue for both the industry – in order to have a competitive market, and for consumers – a monopoly hampers innovation and keeps costs high.

It doesn’t really matter who owns the wholesale infrastructure NBN company. No matter who buys it we need to ensure that we don’t return to a state of monopoly. It is worrying that we now see monopolistic tendencies from the nbn company. If Telstra were to be allowed to buy it there would have to be a totally new structurally separated company for the NBN (separate management, separate board, different name and so on).

A seriously worrying element in the upcoming debate on the future of the NBN will be the partisan politics that are currently operating in the telecoms industry. If political interference in the future telecoms market continuous this will most likely undermine the outcome needed – a national wholesale-only company, strictly regulated. Without bipartisan support any outcome will be disastrous (look at the NBN, of which at least $25 billion will now need to be written off to make it financially viable).

However, it does makes sense for Telstra to be interested in buying the NBN if this were to become a possibility. It would make Telstra’s future more sustainable, as the company is currently facing serious challenges – declining profits and declining share value. The acquisition would be a good fit with its infrastructure company – but as mentioned the combined company would have to be completely structurally separate from its retail company.

Having said this, I fully understand that the rest of the industry would be very sceptical about a possible purchase of the NBN by Telstra. But I would be equally worried if an overseas incumbent carrier or investment company bought the NBN.

I am convinced that the ACCC will be adamant about the NBN always remaining structurally separated, and this means that the current competitive retail market channels will remain in place.

As mentioned in my blog from last week (NBN and the common good – write offs and Telstra’s interest in buying it) a worrying element is that we haven’t started a proper discussion on this topic, over the last few days the government, the opposition, nbn, Telstra, ACCC  and the department are all making comments about these issues which is only spreading further confusion and causes people to get entrenched in their positions, none of this is conducive for a solid, open discussion on the future of the NBN.

Paul Budde