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Sell the NBN not long after rollout ends says Infrastructure Australia

Calls for sale - in pieces - to promote competition, plus reveal of bush services' costs

Australia's nascent national broadband network (NBN) should be sold sooner rather than later, according to the new Australian Infrastructure Plan published today by Infrastructure Australia (IA).

The plan (PDF) says that “Over the medium term, the National Broadband Network Company should be transferred to private ownership.”

“To achieve this, the Australian Government should commission a scoping study to define a pathway to privatise an appropriately-structured National Broadband Network into an efficiently-regulated market.”

The Plan doesn't specify just when the “medium term” might come about, but offers a strong hint by saying ““It may be desirable to defer the privatisation of NBN Co until the rollout is complete, both to avoid disrupting a complicated infrastructure project and in recognition that private investors are likely to have less appetite for risk during the rollout phase.”

As the rollout phase of the NBN is scheduled to conclude around 2020, presumably the medium term starts not long afterwards.

Once the network is ready for sale, IA agrees with the ACCC, the National Commission of Audit and the National Broadband Network Panel of Experts led by Dr Michael Vertigan AC,92 NBN Co that the NBN should be split “into distinct business units to encourage infrastructure competition, promote private investment, and allow for specialisation in managing different networks.”

Those units could be “split along technology lines: one company selling services over the Hybrid Fibre Coaxial cable networks … one over Fibre to the Premises or Fibre to the Node networks, and others through the satellite and wireless networks”. Or perhaps NBN Co could “be split along geographical lines: for example, by major city.”

Cue howls from the bush, anticipated by the suggestion that “Remote and regional services covered by satellite services could be managed separately through [customer service obligations ] CSOs, where there is insufficient commercial appetite to deliver services through a private model.”

There's also a call for any consideration of CSOs, as NBN Co is currently bound to provide a flat wholesale price regardless of the cost to provide services, effectively a subsidy for remote users.

“Where possible, the Australian Government should make clear the aim of this CSO, its present cost and funding source, and establish a competitive process for delivering the CSO,” the plan says. “Exposing the CSO to the market should improve the quality of services and lower the cost to taxpayers.”

Selling off the NBN is advanced as a way to ensure greater competition in the telecommunications sector. As such IA is at odds with the philosophy of the NBN, which was to remove the potential for network owners to restrict competition among retailers of telecommunications services. Suggesting that NBN break into several network operators, all required to offer retailers open access, sustains the current policy objective. But the plan doesn't outline how it thinks better competitive outcomes for subscribers will flow from a breakup and/or sale of NBN.

Elsewhere, the Plan is positive about the NBN's potential to improve national productivity. Government and private sector organisations are both urged to adopt more broadband-enabled applications sooner rather than later. ®

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