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Productivity Commission – Submission on USO

The Productivity Commission is taking submissions on the policy for the universal service obligation (USO). Submissions are due by 21 July. The draft report is expected in December with a final report to the Commonwealth bu April 2017.

My thoughts on the future of the USO are expressed at length in my Occasional Paper for ACCAN (see my publications page). But, I have submitted some key point in this 3 page submission USO-Prod.Com.July-2016

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

Data roaming – Let’s roam like at home

The OECD’s latest report on the state of international data roaming shows that Australia is getting left behind. The cost of using data overseas is outrageously high. Efforts to reduce such costs on a reciprocal basis for travel between Australia and new Zealand stalled two years ago. There is draft legislation on both sides of the Tasman that will give the responsible regulators the teeth to see progress. It needs to be acted on.

For more, see Economuse 2016-04-29-roam