Struggles continue over NBN separation

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Struggles continue over NBN separation

As the tender process for the national broadband network (NBN) continues, the argument over separation of the network rages on.

For most of the key players, the discussion has mainly centred on structural separation, which is seen by many as the best way to ensure fair access for everyone involved.

“Structural separation isn't a necessity, but is ideal if you want to be sure there is equal opportunity for all players,” said IDC analyst David Cannon.

“Scepticism around the validity and value of separation are understandable, but at the end of the day it forces the incumbent to have a more considerate view of the wholesale market.”

However, Telstra and those who share its interest are spending the time leading up to the submission deadline hyping the drawbacks of heavy regulation.

This week, Telstra touted the opinions of two overseas experts speaking at an ACCC conference. The speakers stressed that regulators should play less of a role and allow the market to operate freely.

"Regulation emerges from what would otherwise be a free market system because stakeholders with political power are able to entice politicians into imposing regulations that shift wealth from the less powerful to the more powerful,” said Dr Mark Jamison of the Public Utilities Research Centre in Florida at the ACCC conference.

At a meeting in Sydney last week, telco vendor Alcatel-Lucent, who have worked with Telstra on its network, also warned against separation.

Dwight Davis, vice president of solutions and architecture, cited the only two examples of structural separation in the world, which took place in the US and the UK. Davis said in both cases, separation actually meant worse service for the consumer, and that competition can still exist without separation.

“There are other ways to spur competition other than separation,” Davis said. “All markets are different, and it’s naive to think you can apply a generic model to every country.”

Indeed, pundits on both sides of the argument seem to agree that no matter whether the network is separated or not, Australia needs to look to itself for a NBN model, rather than look overseas for inspiration.

"Structural separation must be viewed from a case-by-case basis,” said Cannon.

“Every incumbent’s situation has its own idiosyncrasies and comparing other countries attempts at this is mainly a futile discussion.”

“Ideally, this should have happened prior to the Government selling Telstra, but that wasn't in the best interests of the Government at the time," he said.
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