Steps to stop an NBN monopoly: Optus

Optus CEO Paul O'Sullivan today called for extra measures to make sure that the National Broadband Network doesn't become a monopoly that restricts competition instead of fostering it.
Written by Renai LeMay, Contributor and  Suzanne Tindal, Contributor

Optus CEO Paul O'Sullivan today called for extra measures to make sure that the National Broadband Network doesn't become a monopoly that restricts competition instead of fostering it.

Firstly he repeated calls for more transparency around the deal between Telstra and the NBN Co, asking that the details of the deal be disclosed to all Australians.

O'Sullivan was concerned that such a deal had the chance to distort the fledgling NBN Co market from its early stages.

There would be a land grab for customers, he explained, because the NBN services were set to be much stickier than previous services, not only providing broadband, but also television and even cloud services. "It will be a very difficult service to churn," he said.

If the $11 billion deal Telstra was negotiating with NBN Co and the Federal Government was used to provide Telstra with the funds to throw money at customers to lock them in, the competitive field could be uneven from the start, according to O'Sullivan.

"Our major concern is that the economics of acquisition will be greatly distorted by the deal between Telstra and the NBN Co," he said.

"All I'm asking is that the industry gets a level playing field as NBN Co is launched."

A new monopoly

O'Sullivan also talked on how Australia could make sure that NBN Co didn't become the next monopoly itself.

He said that the National Broadband Network Companies legislation yet to be passed in parliament was one step to stopping the formation of a new monopoly, but he also believed that additional steps needed to be taken.

He raised two concrete proposals:

  • that the operation of the NBN itself be put out to competitive tender
  • that the government should create an independent oversight board for the NBN Co

The first he thought would enable NBN Co to be subject to the same market forces that the commercial sector faces every day. The idea was that while NBN Co would own the ducts, the fibre and probably the IT systems for the network. Meanwhile, management services such as rolling out trucks to connect people and repair services would be outsourced, with tenders held national, on a state or local level every three, five or seven years. Then people could compare how different operators performed, encouraging efficiency.

His second suggestion, the oversight body, would not have to be a parliamentary body, he said, but rather "a body that would sit independently of government".

"It would be tasked with ensuring that the NBN is run to a well defined set of criteria."

A similar body, he said, was the Reserve Bank, which had a clear charter and the independence to make decisions free of political interference.

"Whatever the model," he said, "it's really important that we don't make the mistakes of the last fifteen years," he said, adding that it couldn't become the next British Rail or Telstra.

Lastly, the Optus chief called for greater clarity around the regulation of the next generation of applications content which will be delivered over the fibre network. He claimed that companies like Google and eBay had achieved a "winner take all" dominance over the internet.

"There is a huge cliff edge for any second entrant which wants to be a challenger in those application areas," he said, highlighting the problems being suffered by Telstra advertising and search division Sensis, which has recently revealed that it is suffering sharply as a result of the decline in interest in print advertising.

O'Sullivan suggested that "hyperlinks" could be placed on the websites of companies like Google and eBay, linking to competitors or even that the traffic for such sites could be auctioned to provide access for "others who might bid to hold that auction, or for providing that search at a better price".

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