Broadband is not a utility, nor is the NBN. Discuss.

Broadband is not a utility, nor is the NBN. Discuss.

Summary: Pragmatism has already forced Malcolm Turnbull to step away from the Coalition's non-interventionist telecoms dogma. But as a coalition of US carriers threatens a freeze on infrastructure if that country's government declares broadband, it's worth considering which approach will deliver the most desirable outcomes.

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Malcolm Turnbull's oft-repeated bon mot about Labor's “socialist paradise” has regularly offended supporters of Labor's government-backed egalitarian monopoly national broadband network (NBN). Yet, as the Net neutrality debate heats up in the United States, it's clear that Turnbull isn't the only one concerned about excessive government involvement in the telecoms sector.

One of the turning points in this debate has been the discussion about whether telecommunications is or is not a utility – and, therefore, whether government intervention should make it equally available to all Australians, as for things like electricity and water and sewerage.

Pont_du_Gard_Oct_2007 - http://en.wikipedia.org/wiki/File:Pont_du_Gard_Oct_2007.jpg
The Romans of 2000 years ago knew government intervention was crucial to building essential infrastructure – but we're still debating the issue. Image: CC BY-SA 3.0 Emanuele

Australian supporters of Labor's interventionist NBN have long favoured the utility model as a parallel, arguing that robust communications is as fundamental in organising modern society as water has been to societies back to the Roman Empire and earlier.

Engineering ready access to water and sanitation was one of the significant achievements of Roman society, and it wouldn't have happened without imperial mandate.

However, 2000 years later, many would have us believe telecommunications will find its own way: witness the heads of the largest telcos in the US – including Verizon's Lowell McAdam, AT&T's Randall Stephenson, Time Warner Cable's Robert Marcus, and Comcast's Brian Roberts – who have written to the country's Federal Communications Commission (FCC) to argue that the only way American broadband will continue to evolve will be if the government leaves it to build broadband when, where and how it wants to.

In the country that is the world's staunchest bastion of capitalism, it's hardly surprising that the leaders of telecoms enterprise should be arguing against increased government intervention – and threatening to stop investing in infrastructure if the government tries to force them to share.

They are, you see, already living the free-market dream of which Australia's Coalition government are devout fans – and were they operating in this country they would no doubt view the previous plans for our NBN with a nervous, prolonged angst.

Imposing Title II requirements would, US carriers argue, let the government “regulate rates, terms and conditions, mandate wholesale access to broadband networks and intrude into the business of content delivery networks, transit providers, and connected devices.” Sound familiar?

While our carriers address long-running concerns by lobbying the government to limit the scope of NBN Co so as not to clash with their own retail business models, the US carriers are coming from an entirely different perspective: in that country, of course, there is little danger of the government building a network to compete with those run by private-sector giants.

No, the US carriers are up in arms about suggestions that the government might enforce Net neutrality provisions preventing them from providing favourable broadband services for certain types of traffic.

Classification of telecommunications services as Title II 'telecommunications services' under the US Communications Act of 1934 and Telecommunications Act of 1996 imposes conditions of equitable access on carriers, which even back in 1934 required them to provide services without “unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services”.

It's a move conceptually similar to declaring services in Australia, where the ACCC finally declared wholesale ADSL services in 2012. That move annoyed Telstra but paved the way for its competitors to ensure better access in the market – an outcome that is largely paralleled within the Title II legislation in the US, which long ago dealt decisively with the market challenges posed by having a single market and infrastructure monopolist.

While declaring services has been used as a means to improve competition in Australia, the American CEOs are arguing that same standards of equitable access to US broadband services would be tantamount to not only killing the golden goose but stuffing, roasting it and serving it in multigrain sandwiches with dollops of cranberry sauce.

Imposing Title II requirements on their services would “impose great costs, allowing unprecedented government micromanagement of all aspects of the Internet economy,” they argue.

The government would, they warn, be able to “regulate rates, terms and conditions, mandate wholesale access to broadband networks and intrude into the business of content delivery networks, transit providers, and connected devices.”

Sound familiar?

No matter what the Coalition wants to believe about free enterprise, the reality is that such measures are necessary – to some extent – to ensure viable broadband in Australia.

Is Australia’s model – which is unashamedly socialist-styled as it is fundamentally based on notions of equal access at all costs – all of these characteristics and more were introduced as part of Labor's legislative and service framework, designed to wrench the market away from a single monopolist that had a long track record of playing badly with others.

Despite its promise to compromise long-held ideals of telecommunications competition, the design was held by many to be a necessary evil that would ensure NBN Co could be cost-justified as a government investment.

No matter what the Coalition wants to believe about free enterprise, the reality is that such measures are necessary – to some extent – to ensure viable broadband in Australia. Even Ziggy Switkowski, who has not been able to fully commit to the Coalition's non-interventionist dogma, is working with CEO Bill Morrow to lay down NBN Co strategy based on the recognition the infrastructure investment of TPG Telecoms threatens NBN Co's viability.

The gap between American rhetoric and Australian reality is so large that even Turnbull, despite his open disdain for Labor's “socialist paradise”, was forced to prematurely issue a revised Statement of Expectations to facilitate Switkowski's full-frontal assault on TPG – highlighting exactly the kind of government intervention that America's private sector fears.

That kind of intervention would have McAdam, Stephenson, Marcus and Roberts rolling over in their graves, were they not alive and well and threatening the US telecoms market with a freeze on infrastructure investment if the government has the gall to reclassify telecommunications services to ensure equal access for all.

With a showdown apparently imminent on that side of the Pacific, it's worth reflecting on the situation in Australia – and wondering whether it's now better to be loosening controls on NBN Co to improve broadband access, or reining it in so as to avoid further menacing the industry with what Turnbull has called a “repugnant monopoly”. The success or failure of Australia's sort-of socialist broadband paradise could well inform the debate around the world.

What do you think? Can socialist telecoms policy reconcile itself with the mores of conservative self-determinationism?

Topics: NBN, Government AU, Government US, Telcos, AT&T, Australia

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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14 comments
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  • Broadband, the UN and Utilities

    Legal Definition of "Public Utility", taken from the Free Dictionary. The key word in the following text is "essentials":
    "A public utility is a business that furnishes an everyday necessity to the public at large. Public utilities provide water, electricity, natural gas, telephone service, and other essentials. Utilities may be publicly or privately owned, but most are operated as private businesses."
    http://legal-dictionary.thefreedictionary.com/Public+Utilities

    Taken from Forbes:
    "The United Nations Says Broadband Is Basic Human Right"
    http://www.forbes.com/sites/randalllane/2011/11/15/the-united-nations-says-broadband-is-basic-human-right/

    So the UN says that access to Broadband is a basic human right. This means that it is essential - which also means that it should be classed as a utility.

    Pretty clear cut I think.
    colonel.mattyman
    • Pretty well everying is a utility by your definiiotn. So what?

      "A public utility is a business that furnishes an everyday necessity to the public at large."

      That by definition covers pretty well most businesses. And so, as a result, it is a concept that is pretty well meaningless.

      It is also a concept that is grossly misused.

      A typical example is the idea that all utilities should be regulated by governments in exactly the same way. Would you regulate Starbucks (the purveyor of the essential caffeine) the same way that you regulate - oh whatever - Internet access by AT&T?
      Ian Easson
      • Caffeine?

        > Would you regulate Starbucks (the purveyor of the essential caffeine) the same way that you regulate - oh whatever - Internet access by AT&T?

        I can make a living without Starbucks. I can make a living without Cola. I can make a living without coffee or tea.

        I can't make much of a living without the Internet.
        quinks
        • Soory kiddo

          my mom has made a living since the 1940's and I have 1980's before widespread growth of the net. Millions op pole around t he world do make a living without the net every day.

          How pathetic is this generation
          Richardbz
          • You set then!

            If the 1940's and 80's roll back around...
            Tinman_au
      • Extremes

        There is a word for when someone takes an argument to ridiculous extremes, look it up. There is a balance to everything, and the Internet fall way, way over into the water/power/phone side, so please do not compare it to Starbucks.
        bzdata2
  • Only Way

    Cut ALL internet for ONE Month,
    The consequences will clearly tell us whether it is an ESSENTIAL utility or not

    Any claims for compensation to be paid for by those that propose it is not an essential utility
    Abel Adamski
  • Malcolm screwed up

    The Broadband provider layer is alive and well in Australia, it's the infrastructure layer that's always been the problem (mostly thanks to the Coalition selling Telstra as a single entity and not breaking it into wholesale and retail before the sale). If John Howard had done it right, Telstra Wholesale would have been the defacto NBNCo.

    Labors NBN was a much smarter option than Malcolms version. It avoided the mess currently in the US with 'net neutrality' (NN), it used hardware that wouldn't be redundant within 5 years and it allowed open competition between large and small RSP's.

    Malcolms is such a poor idea that it makes telcos overbuilding it a viable business strategy, opens the whole NN debate here, will need to be upgraded within 5 years and will create pockets of locked in clients in the most profitable areas.
    Tinman_au
  • Of course we need regulation to keep an open internet

    The internet has proven to be an amazing incubator for new businesses, new ways to educate oneself and institutions, like Wikipedia, with no counterpart in the world before the internet.

    But people seem to have forgotten what made this possible. It's the principle that the broadband carriers charge their customers only for the cost of delivering a specific level of service.

    Any other solution means that the broadband carriers are using "terminal access monopoly" to hold the internet hostage, or more specifically to demand random from the edge providers, think Google and Netflix, from having access to Comcast's customers.

    The fact that broadband carriers have conducted their business according to this principle, until now, is the only reason that this amazing cacophony we call the internet exists in it's present form.

    Comcast, of course argues that the long haul internet providers will pay each other fees for when they receive more data than they receive. But these companies are in a different business than the broadband carriers. The long haul providers don't have the consumer as their client and don't have the power to cut off businesses who want to send data to consumers like the broadband carriers.
    Jake3.1
    • To clarify...

      What I meant toe says was "It's the principle that the broadband carriers charge only THE CONSUMER, who is their client, for the cost of delivering a specific level of service.
      Jake3.1
  • Broadband is not a utility, nor is the NBN

    Australia has a vastly lower population density than the US. Comparisons with the US on utility networks are pointless the conditions are so different.
    Peter H Cohen
    • In that case

      a) What is it ?
      b) Why should the taxpayer subsidise broadband of any form to regional or high cost areas. After all if it is not essential and not a utility.

      As I said take it away , including the private network of any variety.

      Depending on the impact or otherwise of that broadband free time period the category of essential utility or commodity.

      Glad you have offered to defray any compensation claims by making your definite statement. Obviously you are prepared to put your money where your mouth is
      Abel Adamski
  • I just don't understand...

    …how Turnbull et al can argue that a Government owned, maintained and regulated internet infrastructure layer can negatively impact business. It will provide everyone in the country with access to the internet to build, create and participate in old and new business and allow the country as a whole to develop.

    The downside? Customers in cities effectively subsidise their rural countrymen because they don't get a discount through economy of scale and ISP type businesses don't get the opportunity to create their own mini-monopolies through cherry-picking and the construction of their own infrastructure.

    To me it's a no-brainer. I don't see how the interests of a few companies and the minor financial burden incurred by some customers is more important than lifting the collective country out of what is effectively our digital dark ages.
    The Guv
    • Broadband is not a utility, nor is the NBN. Discuss.

      "To me it's a no-brainer. I don't see how the interests of a few companies and the minor financial burden incurred by some customers is more important than lifting the collective country out of what is effectively our digital dark ages."
      But ideology trumps all unfortunately.
      wombatwal