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Time to test $300m pa for USO?

This one page Economuse draws attention to the $3oom pa paid to Telstra for the “copper continuity obligation”, which maintains fixed copper services outside the NBN fixed network footprint. It suggests that changes to the definition of the USO and the growing availability of mobile services mean that there may be savings possible in a renegotiated contract. See Economuse 2016-07-14

The NBN and competitive neutrality

In my previous column, I said I would explain how the discount rate might be set for a company with neither debt nor equity. The NBN is not quite the same but the same solution was used for it both by the ACCC and the BCR. Combining that information with the BCR’s estimate of the economic loss that the NBN incurs in supplying fixed wireless and satellite services, I find that that there is some evidence that the NBN is breaching competitive neutrality – i.e. competing unfairly. This issue was first raised by the NBN’s competitors in greenfield fibre sites and the issue is likely to arise again.

The most logical solution, it seems to me, is to write-down assets (and the corresponding amounts in the ICRA) so that the overall internal rate of return becomes commercial.

For more, see Economuse 2016-06-06

Farmwide – a lost maverick

A maverick is a disruptive operator that forces incumbents to make non-trivial changes to their business models. The disruption can be through innovation or pricing.

The previous article explained how the UK and the European Union were prepared to block a merger of two mobile operators to preserve a maverick and competition.

Australia is a smaller market with fewer operators. But, there was a potential maverick internet operator in Farmwide, which was not nurtured as it might have been.

DISCLAIMER – I want to distance myself from the headline CommsWire put to my column. Farmwide was not murdered and indeed survives today; though not as an ISP.

To read about Farmwide, click Economuse 2016-05-27

Australia – Few players and no mavericks

This column discusses the importance of disruptive or maverick operators to drive innovation and price competition in mobile and fixed networks. Two days after the attached opinion piece was published in CommsWire, the European Commission supported Ofcom’s decision to block the merger of 3UK and O2; see

http://europa.eu/rapid/press-release_IP-16-1704_en.htm

The opinion piece below also discusses the lack of competition in Australian mobile and fixed broadband markets. Ofcom’s research suggests that mobile prices may up to 20% higher than they could be in Australia.

For more, see Economuse 2016-05-09

CVCs – Is pricing crippling the NBN?

This week, Bill Morrow announced another tweak to CVC pricing which seems to imply a $1.75 cut in the current $17.50/Mbps CVC price as early as July. But even with this and tiered discounts (for which an implementation date has yet to be announced), CVC costs per end user are going to be double what the sector is looking for.

In the PC world we have seen that bigger chips and improved performance have been closely followed by more sophisticated software that eats up the new capacity. But, we have a chicken and egg situation with the NBN. We know that users are not prepared to pay for speed. Users will not need more speed until the applications require them. And the applications will not arrive until users have the speeds to use them.

We can cut through this impasse and unleash innovation if nbn™ Co. turns on speed with just one or two AVCs (say, up to 100 Mbps and unlimited). It would catapult Australia to the top of global speed ratings. More importantly, Australia would become the global lab for developers looking for ubiquitous, true broadband.

For more details, read Economuse 2016-04 and (same day) COMMUNICATIONS DAY-7-4-2016