Is the NBN a policy conflict?

Is the NBN a policy conflict?

Summary: Joshua Gans and Jerry Hausman's submission (PDF) to the Australian Competition and Consumer Commission (ACCC) on Telstra's separation undertaking is interesting because of its comments about competition, but I found it even more illuminating on the subject of government goals.

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Joshua Gans and Jerry Hausman's submission (PDF) to the Australian Competition and Consumer Commission (ACCC) on Telstra's separation undertaking is interesting because of its comments about competition, but I found it even more illuminating on the subject of government goals.

Hausman is a US economist, and Gans was a University of Melbourne professor who was a selected participant of Kevin Rudd's 2020 panel.

The submission takes into account two issues: the government's requirement that Telstra move its customers from the hybrid-fibre coaxial (HFC), and the requirement that Telstra not promote its wireless network as an alternative to the National Broadband Network (NBN).

The economists argue that such moves would be "strongly anti-competitive" for various reasons, one being that competition from cable providers had been a driver for broadband investment in other markets, such as the US.

But what they had to say on the topic of regional broadband was what really interested me. They were tackling the argument that competition would only emerge in densely populated areas and so it was necessary for the NBN to take charge of the whole Australian network to enable the entire network to be viable, and for urban areas to subsidise a rural roll-out.

This idea was illogical in the authors' opinions.

You see, the idea of Telstra's separation was to provide an equal standing for the industry, to foster competition.

Competition policy, they said, should not get tangled up in other goals, such as the desire to enable rural broadband.

"It is not the role of competition policy to facilitate cross subsidies. Competition policy should promote competition, and if governments wish to promote another goal (say the economic provision of broadband services in rural areas), they should finance that policy in another and more transparent manner."

If you're thinking about broadband in that way, then the Coalition's policy does make more sense, as it allows competition to act in the areas that it can, and only tackles those areas that are uneconomic.

In Gans and Hausman's opinion, the policy would move Australia back. What do you think? Have we become too entangled in the idea of broadband as an Australian standard; that we're forgetting about competition? Or are these economists full of it?

Topics: Government, Broadband, Government AU, Telcos, Telstra, NBN

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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113 comments
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  • suzanne, the anti nbners have been saying from day 1 that the nbn is not a good investment and highlighted the poor hurting taxpayer as their proof. totally ignoring that the nbn is firstly a national infrastructure build, replacing the superseded copper and then secondly an investment.

    now you say the taxpayer should actually hurt by allowing private enterprise to scrape the cream, while the taxpayer funds the unprofitable areas and misses out on the profitable areas, all in the name of political ideology, hiding behind the guise of competition?

    i found it interesting too that mr. gans in his submission suggested nbnco cross subsidising rural areas as being anti competitive. but yet the opposition have said they too will cross subsidise!

    you know, sometimes we have to look past the dollar factor, competition and ridiculous political correctness and just do what is 'right' for australia and it's people.
    Beta-9f71a
    • Beta, I don't think Gans and Hausman wrote their piece with the left or the right of politics in mind but rather what is best for the average consumer in the long term.
      mwil19-a34f7
      • blah blah, mwil19.

        if the first comment wasn't from me you wouldn't have bothered.

        so please
        Beta-9f71a
        • Considering that Joshua Guans was on the policy for a centre left party (Labor), I would say that if anything, this is coming from the left ;)

          And also could you point out where the coalition supported the coalition?
          deteego
        • *coalition supported cross subsidisation

          I seriously do not see anywhere in their policy where they say they will cross subsidize
          deteego
          • lol... mr i have no political allegiances, but agree with absolutely everything the libs say, always and nothing labor says ever, has returned.

            dated 4/8/11 - "Our commitment to the bush is that all Australians will have access to fast broadband at a price that is comparable to that available in big cities," Mr Turnbull said on Wednesday. Due to geography and lower population density subsidies would be required to meet that commitment, Mr Turnbull said.

            http://www.computerworld.com.au/article/396008/libs_promise_bush_comparable_broadband/

            you will note too how turnbull then goes on to say in politician speak, so roundabout, that he will primarily hand australia's comms back to telstra, speaking of competition concerns.

            i now await an excused filled reply, based around vague interpretations of one or two words contained within the url, 'as usual', in support of the coalition. but of course, you have no political allegiances...rofl!
            Beta-9f71a
          • That is not Malcolm Turnbull saying he will cross subsidize broadband nationally

            Again please quote where Malcom Turnbull is saying that, or else admit you are being intentionally deceitful (or stupid)
            deteego
          • speaking about politically deceitful and obviously stupid.

            you asked i already pointed, so if you are too politically blind to see well, that's your problem.

            always has been always will be and proves why nothing you say can be taken seriously because you are simply a mouthpiece for the conservatives.
            Beta-9f71a
          • Politically blind? ROFL

            The liberal party is a centre right wing party, whos whole agenda is against the concept of cross subsidization, especially since Turnbull has himself argued against it

            If you can claim what anyone says as "lying" then you can prove anything (and it works both ways)
            deteego
          • seriously puppet of the party...

            the entire discussion has evolved around subsidisation of rural customers, so that they pay equal to urban customers.

            turbull has said he will do like wise.

            but you aren't promoting a "taxpayer subsidised handout", as opposed to nbns user pays (your party's usual slogan) are you?

            never mind once you get out of school, the only place you have ever been and into the real world and actually learn things for yourself instead of taking it as gospel what your parents and teachers tell you, you will understand, until then enjoy your childhood, rofl!
            Beta-9f71a
          • Turnbull has never said he will cross subsidize the countries wholesale broadband prices

            Again, please tell me a direct quote of Turnbull saying that, or you are purposely spreading bullshit

            He has been consistent with his policy, just as Labor has been

            Also I am no longer in school, I finished it years ago
            deteego
          • well then you are FOS, because at delimiter you keep saying things like here at unsw and you are not old enough to be a teacher. you did so again just a fortnight or so ago, iirc.

            so either that comment or this comment is a complete lie. but great now that you have finished, you can start to think for yourself as i said, hallelujah.

            anyhoo, since you are no longer at uni (so telling absolute lies at delimiter) did they teach you to read?

            again from the url i supplied...

            dated 4/8/11 - "Our commitment to the bush is that all Australians will have access to fast broadband at a price that is comparable to that available in big cities," Mr Turnbull said on Wednesday. Due to geography and lower population density subsidies would be required to meet that commitment, Mr Turnbull said.

            people in the bush will pay the same as those in the cities and subsidies will be paid for this to occur.

            clear as day.

            so again i ask you would you prefer a user pays subsidy, like the nbn or a "tax payer handout" for this to occur?

            and also my above prophesy... "i now await an excused filled reply, based around vague interpretations of one or two words contained within the url, 'as usual', in support of the coalition. but of course, you have no political allegiances...

            that's exactly all you have done and seriously if you aren't a Lib stoolie, you wouldn't care anyway...WOULD YOU?

            so keep digging that hole deeper matty, because with all that digging, you will soon be able to get a job with nbnco, laying cables...rofl

            and seriously saying another is spreading bs, coming from you the bs king, is absolutely priceless.

            enjoy uni tomorrow...
            Beta-9f71a
          • That is not cross national subsidization

            Please try again, do you even know what cross national subsidization is?
            deteego
          • do you know what telling porkies is? of course you do, as clearly witnessed.

            matty boy, as i said, you will as the faithful lib stooge, sheep, now argue over the semantics. one or two words here and there while totally ignoring what Turnbull said.

            and guess what? rofl.

            so while you are continuing practicing for the nbnco job, by digging deeper, i'll ask you for the third time now, listen carefully this time.

            ((((would you prefer a user pays subsidy, like the nbn or a "tax payer handout" for this to occur))))?

            well it is you who's desperately trying to differentiate between the types of subsidisation options, because you asked and received the answer YOU din't want. i.e you again blurted out uneducated (ironic uni and all eh?) lib sponsored cr^p.

            we are waiting for an answer or do i need to ask 4 times or more?
            Beta-9f71a
          • So I guess that's an admittance that you were lying then (or purposely misrepresenting Turnbull)

            Thanks for clearing that up
            deteego
          • why don't you grow some and just answer? then i suppose seeing how it's now proven you chronically lie, what would be the point?
            Beta-9f71a
          • NUP....carp ...the question is not as you state. It is:

            Would the taxpayer prefer to fund:

            (a) $37.5 B capital subsidy with dubious ROI for both URBAN/RURAL, OR

            (b) $0-NIL capital subsidy for URBAN, together with a much reduced capital subsidy for RURAL.
            sachmodog
          • c(a)rp indeed.

            1. $37.5B WHICH WILL BE PAID BACK IN FULL AND THEN TAXPAYERS WILL HAVE AN ASSET WHICH CAN BE SOLD, maximising taxpayer dollars and improving Australian comms.

            2. Gift $B's out of sheer ideological lunacy, the likes of which you sheep repeat, to private companies, for them to run/own Australias comms, equalling no return, no repayment and no asset for taxpayers.
            Beta-9f71a
        • Rizz, relex I'm not having a go at you, just pointing out that both sides like to automatically demonise anyone who disagrees with their point of view. The Australian is trying to paint Gans as a leftist since he went to one Rudd sponsored forum, whereas pro NBN'ers are trying to paint him as a member of the conservative right. If you go to his own blog, he identifies with neither, but tries to state the case that his intent was on voicing concerns for the consumer, nothing more.
          mwil19-a34f7
          • mike relax and stop reading extras into 'my' posts.

            because i didn't mention any political leaning either way in relation to prof gans...! my comment was to suzanne, with an interesting byline relating to subsidies mentioned by prof gans. i did in another thread mention i believed he had displayed some pro Telstra views previously, which he is entitled to.

            perhaps your political demonising comment would have been better suited to deteego, looking at his claims?

            ;)

            So mooy poing really
            Beta-9f71a