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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

The Future of the USO

On 25 November, ACCAN (the peak consumer body for telecommunications in Australia) released an Occasional Paper on the future of the universal service policy in Australia. That paper is on the Publications page ACCAN-USO

The CEO, Teresa Corbin, was kind enough to say:

“John (de Ridder) provided us with an analysis of options for a future universal service policy in Australia. It proved to be thought-provoking and will be very helpful for our work going forward.” – Teresa Corbin, CEO, Australian Communications Consumer Action Network (ACCAN)

Since the concepts of availability, accessibility and affordability were enshrined around 40 years ago in the obligation on Telstra to provide a standard telephone service that meet these principles, a lot has changed. Mobiles are now the preferred means of communication and access to broadband on both fixed and broadband networks has become essential.

The need to revise USO policy is widely recognised; the Shiff Regional Telecommunications Review last month being the most recent example.

Six options are discussed in the Occasional Paper but the two most promising are the subject of this column at Economuse 2015-11-25

USO levy study – Final paper

This opinion piece looks at the final consultation paper on funding options for the NBN’s fixed wireless and satellite services. The focus of the critique is on the continued under-estimation of mobile broadband, neglect of asset write-downs as another funding option and lack of consideration about how the recommendations fit with future privatisation of these services.

To read the column, click Economuse 2015-10-20

Mobiles and the USO

The “Rethinking the USO” report by Prof. Reg Coutts this week does not go far enough.

Yes, the universal service obligation (USO) needs reform and a universal service fund will be part of that. The changes that have driven the need for reform and why I think Reg Coutts has stopped short of the conclusion that leaps out of his analysis are discussed in Economuse 2015-07-15

The USO is very complicated and more reflections on possible approaches for the future will be published in these columns before the end of the year.