The NBN Saga:Q&A with Layer 10's Paul Brooks

05/12/2008 22:04

With the deadline for NBN bids officially closed, much of the attention has been focused on Telstra's non-compliant bid. At 12 pages - almost 1000 pages shorter than the Optus-led Terria bid - Telstra's proposal to construct the NBN will be considered, communications minister, Stephen Conroy, said.

Q: If Telstra gets its wishes for more dialogue with the government to guarantee protection from regulation and no structural separation, what would that mean for the ISP industry which will be purchasing services to resell?

Paul Brooks: If Telstra gets all the concessions they have asked for then for other ISPs it would result in a continuation (at best), or a worsening of the stranglehold that Telstra has at the moment. Telstra's bid letter shows they have little regard for separation, putting more detail around their proposed retail pricing than they did for wholesale pricing, and making very explicit that their retail arm would take full advantage of the natural monopoly advantage Telstra would have on the new network to introduce bundling discounts for bundles containing fixed telephone lines and broadband services.

It was notable that the only wholesale products discussed by Telstra were broadband services, and nowhere was there any mention of wholesaling the fixed telephone line services that other service providers will need to offer to provide a competitive solution to bundles - nowhere did Telstra mention a wholesale equivalent of the retail basic telephone service pricing they highlighted. The ability of Telstra as a wholesale owner to bundle services they don't make available to other wholesale customers could make a complete mockery of the concept of open access.

Q: In its bid letter Telstra said it is "impossible" to build or maintain a network if structural separation is enforced, is this true?

PB: No, of course not. They might not enjoy the same levels of cross-subsidisation they currently access regarding basic network infrastructure costs and high value-add retail products, but that's an economic argument, not an argument about whether it is possible or not. In practice, all the non-Telstra service providers today that use Telstra's wholesale and re-sold services and products are proof that it is possible to have a business model that works when a company provides value-added services, which are delivered through a combination of their own equipment and other parties' networks, including Telstra's. If the wholesale arm actually had incentive to make things easy for their customers, then the business case for the separated retail arms becomes even stronger.

Full Story: Computerworld
Dr Paul Brooks is the founder of independent telecommunications strategy and design consultancy, Layer 10

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