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

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.
Written by David Braue, Contributor

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?

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