If iiNet’s shareholders accept the TPG offer and the ACCC approves this take-over (neither of which is certain), the prospect of vigorous retail competition in the fixed network is dim. The extent of price competition currently is debateable and increased industry concentration is irrefutable.
To read this column, click Economuse 2015-04-01
The next column will examine how the competitive process can still be strengthened, with or without this merger.
Two current consultations by the ACCC show a marked difference in the regulator’s treatment of the legacy (Telstra) access network and its treatment of the new broadband network being built by NBN Co.
Both Telstra and NBN Co. are subject to the building block method for calculating allowable revenues (wholesale only in the case of NBN Co.). But in application, the ACCC continues to hammer Telstra while mollycoddling NBN Co.
The ACCC hopes that keeping Telstra’s access prices low will be good for competition and end users. It may be wrong (see reference in the attached to “price competition has stalled”) and it is short sighted. The real issue is the long term affordability of broadband which has been compromised by the regulator’s unusual assent to deferred revenue increases at NBN Co.
The article can be found by clicking Economuse 2015-03-12
Every September, I review the ADSL2+ and corresponding NBN retail broadband plans to assess the state of price competition. Last year, I concluded that competition had stalled because ISPs were waiting to see realistic NBN wholesale prices and/or settling into a cosy oligopoly.
In the last 12 months, a couple of players (Exetel and TPG) have launched unlimited data plans; which may shake things up a bit. But, it wont help make the NBN more affordable – there are very users who want unlimited data.
To see the results, click Economuse 2014-09-23
NBN Co.’s July consultation paper on pricing and billing has wilfully ignored the only serious option that has been put up against its own product and pricing construct. Unless it is changed, the NBN will not be affordable and will not increase broadband utilisation.
This paper calibrates the options against the 2012-2015 NBN Corporate Plan and other analysis.
It includes the “traffic model” as Option 6 and concludes that this will make the NBN more affordable and give the industry the certainty is seeks in future reductions in unit traffic charges.
The paper can found by clicking here: Economuse 2014-08-14
This paper complements others written about the Traffic Model. It is described as Option 6 because it was wilfully neglected in the Options considered by NBN Co. in its July 2014 consultation paper.
The wholesale tariffs in this paper were calibrated from retail broadband prices at September 2013 and the revenues are compared with those in NBN Co.’s 2012-2015 Corporate Plan (the only publicly available plan currently).
It is interesting to note that despite a very low entry level (Starter) tariff of $10pm compared with NBN Co.’s $24 pm (includes CVC component); the Traffic Model is viable.
The Traffic Model is a better match with real consumer expectations and policy goals than NBN Co.’s current revenue model.
The 4 page paper can be accessed by clicking Option 6