write-down
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
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
Last chance to reform NBN pricing?
In the previous column, I argued that the TPG-iiNet merger would cause an alarming increase in industry concentration and less price competition. But with or without this merger the competitive process can still be strengthened with a few changes that will shore-up both competition and NBN Co.
To read how, click Economuse 2015-04-02
Will the TPG-iiNet merger kill competition?
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.
Act now – or the NBN will be a white elephant
The current (Aug 2012) NBN business plan is a fantasy and we must now assume a legislated monopoly will not hold.
The new carrier licence condition that will apply in January may close the loophole in legislation that TPG exploited. But TPG has a Plan B that uses wireless spectrum and cannot be stopped so easily.
The real issue for the NBN is that mobile is rapidly becoming the de-facto standard for broadband access. It is already competitive with the NBN for downloads up to 15 GB per month.
These issues and some ideas for dealing with them are explored in Act now – or the NBN will be a white elephant