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NBN Regulatory Review March 2014

Submission on USO Levy

The Bureau of Communications Research at the Department of Communications is tasked with finding out how to fund non-commercial services on the NBN. An industry levy seen as the prime mechanism that will sustain these services in the presence of infrastructure competition (as I argued in my 2010 submission to the Senate).

This submission is a response to the request for comments on the Bureau’s first consultation paper.

To access the submission, click USO-Levy-JdR

Option 6: Assessing the revenue impact of the “Traffic Model”

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

Submission to the NBN Regulatory Review

This submission suggests that long term affordability and medium term integration with mobility are
more important than the short term issues that have dominated the debate to date (i.e. structural
separation of Telstra, fixed regulation and a focus on short term pricing) in the context of
unrealistically high absolute speeds, and a false assumption of fixed broadband being independent
of mobile.

Australia is at a fork in the development of fast and ubiquitous broadband. It is in danger of taking
the wrong path towards further industry consolidation, higher prices and under-utilisation of an
important national asset. In this “more of the same” scenario, the current NBN Co. pricing and POI
policies continue to support the emerging oligopoly of retailers.

The other fork, or scenario, can still be navigated and leads to greater retail competition, improving
the affordability of access and quicker convergence of broadband communications putting Australia
at the head of global broadband innovation rather than playing a game of catch-up from far behind
in fixed broadband. In this “more innovation” scenario, the brakes are taken off the NBN service,
more affordable entry-level pricing is made possible and opportunities for service innovation are
opened up.

Neither February’s Regulatory Issues Framing Paper (RIFP) nor December’s Strategic Review
explicitly address the impact of the high cost of the NBN (still high after policy changes) on
affordability. The Strategic Review shows that the situation is worse than previously understood and
the culprit is the ACCC approved ICRA which underpins the high CVC charges. Both need to be
replaced. These recommendations are discussed in Section 2.

To read more please click on the link Submission to Vertigan Panel (March 2014)