Monday, March 14, 2011

Incomprehensible rubbish from the Hon. Malcolm Turnbull

Someone claiming to be Malcolm Turnbull has offered a comment on a story about a radio interview he did. It may well be Malcolm.

If so it is very, very sad. He says:

I think you miss the point about HFC. My simple point is this. If the objective is to provide fast broadband to all Australians at an affordable price then we should try to do so in the most cost-effective fashion. If there is infrastructure which enables us to do that (HFC for example) then it makes sense to use that rather than overbuild it. You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support. The mistake the Gillard Government has made is never to even ask the question: how do we do this for the least amount of taxpayers' dollars, and instead rushing to what must be the most expensive solution. For example, I was very interested to see in Incheon where there is a new broadband enabled city being built that the fibre runs to the basement of the brand new towers and the service then runs over the buildings LAN, on ethernet. So it is very much fibre to the basement. In Singapore on the other hand the Government is requiring that fibre is pulled through to every apartment. Nonetheless here there is no obligation for Singtel to decommission its copper and no restriction on the HFC network being used to compete with the new fibre. So there is both here and in Korea continuing facilities based competition. So in summary: there is no dispute between us and Labor on the need to have universal fast broadband. We differ on two main points. 1) The cost, we do not accept that this is the most cost effective way of delivering it and cannot understand why they did not follow their stated policy of having a cost benefit analysis, 2) the establishment of a new government owned telecoms monopoly is turning policy on its head and going back to the days of government owned Telstra, added to that preventing facilities based competition runs the real risk that this will result in a more expensive network than a different approach would have delivered.

So on the one hand the Government has erred by rushing hrad long into fibre because it might have been cheaper to use the HFC. But on the other hand the Government is erring by not leaving the HFC in place when it does deploy fibre.

His greatest line is "You make a point about Telstra not being prepared to make it available as a wholesale service, well all of those structural issues can be addressed in the separation of carriage and service which we support.", but he hasn't told us how he would pull off structural reform of the industry. He really should read Paul Fletcher's book.

By the way he says fibre "must be the most expensive solution". This is not necessarily true, because if you believe any other solution is at best temporary till we need to build fibre anyway, then A the expenditure on the temporary solution is wasted. That is what the NBN Expert Panel told the Government - it is there in the documents that were released when the announcement was made.

Novae Meridianae Demetae Dexter delenda est


Ross Kelso said...


You err in your understanding as to why there is no competition with each of the currently-monopilised HFC networks, cable-modem-wise.

Back in 2001 (& importantly never since then), no Australian ISP ever approached the ACCC to declare a cable modem service so that it would become subject to the standard access obligations of the Trade Practices Act. I have personally verified this with the key ACCC official. In other words, each HFC network remains a monopoly, one Telstra & the other Optus, simply because the other ISPs have not requested access!


Ross Kelso

David Havyatt said...

Ross is partially correct. The ACCC never undertook a declaration inquiry due to their being two HFC networks.

However, were they to have conducted such an inquiry there is no guarantee that they would then have declared the service. There were after all two HFC networks.

An indication of the regulatory thinking could be seen from a related question asked about "pre-selection for mobiles" effectively to choose your international carrier for mobiles. There the ACCC concluded that as there were three providers there was already sufficient competition.

I should note that at the time I did try to excite one provider to seek access to HFC . There was a lack of interest because of (a) the coverage problem and (b) the building access problem (you couldn't get HFC based services in some MDUs - and none from Optus).