Are monopolies bad? Of course they are! Monopolies are not interested in competition and represent the ultimate market failure.

And don't forget your password. Photo: Thinkstock

We should all know that monopolists will do their utmost to raise prices and stop new competitors. That’s why we all need to be fearful of the monster NBN monopoly.

Yes, Senator Stephen Conroy is a passionate advocate of the NBN and we all know that Malcolm Turnbull keeps the good Senator on his toes regarding the NBN and the monster monopoly that it’s fast turning into.

But before anyone gets too excited and thinks that the NBN is simply a political issue, it’s important to think through what the NBN really means from a financial, economic and consumer perspective.

The first thing to note is that Conroy and NBN Co have gone out of their way to knock out any potential NBN competitors for the provision of fixed broadband services at the wholesale level.

Telstra will hand over its copper network for lots of taxpayer money and Optus will do the same for its cable network. Both were clearly potential competitors to the NBN for the wholesale provision of fixed broadband services.

Here the funny thing is that both Telstra and Optus will be getting lots money for infrastructure that could still have been very effectively used against NBN Co to drive down the price of fixed broadband services.

Telstra would have certainly been a very effective competitor to NBN Co at the lower broadband speeds as not everyone wants or needs the higher and generally more expensive NBN speeds. And Optus would have been an effective competitive to NBN Co at the higher speeds as the Optus cable network is certainly capable of very fast fixed broadband speeds.

So, the only reason to give Telstra and Optus lots of money is to knock them off as competitors. Surely that’s anti-competitive? Well, yes, but we are told by Conroy and the ACCC that we shouldn’t be worried because consumers will “benefit overall.” Sounds strangle doesn’t it? How can less or no competition at the wholesale level for fixed broadband services “benefit” consumers?

Well, the argument goes that since the Federal Government believes that the NBN benefits consumers, Conroy is entitled to do everything he can to ensure that the NBN is not undermined by existing or potential competitors seeking to cherry pick high value customers from the NBN, especially those in the city areas.

Quite simply, according to the NBN supporters, any cherry picking by NBN competitors would mean that while the cherry picked customers could get a better price than they could through the NBN, those customers are needed by the NBN if it is to have any chance of recouping its construction costs and then possibly making a profit.

So the NBN is to be protected from competition by getting the green light by Conroy and the ACCC to buy out its potential wholesale fixed broadband competitors. Yes, that’s right. The NBN is to be protected from competition and will become a monopoly at the wholesale level for fixed broadband services.

Where have all the free market fundamentalists gone and why aren’t they attacking the monster NBN monopoly? Of course, we have the Liberal Party pointing out the flaws in Conroy’s vision for the NBN, but what about all those free market theorists out there who are ideologically opposed to any government intervention in their beloved “free” markets?

In fact, you would expect all the free market theorists in the Federal bureaucracy to be giving advice to the Federal Government that promoting government monopolies is bad because monopolies don’t produce the types of consumer gains that competition does.

You would also be expecting all the economic and legal consulting firms that are always quick to attack any government intervention to be attacking the NBN. Where have they all gone?

Could it be that the economic and legal consulting firms are distracted by the considerable consulting work that the NBN may require during its existence? Surely, the possibility of making lots of money from consulting services to the NBN wouldn’t reduce a consulting firm’s love of free market theory? Could it be that we are facing the first real danger of a monopoly and that is the fear that any criticism of the monopoly will lead to some form of retribution?

We all hear stories of suppliers afraid to speak out against Coles and Woolworth for fear of being sent on a “holiday” or delisted from supermarket shelves. And that’s a duopoly where at least you can try to play one of the supermarket chains off against the other?

You won’t have that opportunity against a NBN monopoly. What if an internet provider or consulting firm gets on the wrong side of the NBN? That may go part of the way to explaining why there may be some legitimate fears out there in relation to the NBN Co spreading its tentacles in the same way that Coles and Woolworths have done.

Getting into NBN Co’s bad books may be a worry, but getting into the Federal Government’s bad books may be much worse as they tend to have long memories. Critics of Governments tend to get overlooked for consultancies or appointments to regulatory bodies.

So there’s no shortage of “yes” people lining up for consultancies or government appointments. Of course, independent thinkers do get appointed to regulatory positions, but governments usually don’t like `independent thinkers’ as they might have a mind of their own and may not be shy to express their views on what’s best for consumers.

The point is very simple. The NBN Co will have lots of market power and we know that Australia’s weak competition laws are difficult to enforce against the supermarket giants, major banks and oil companies. We know that despite the ACCC’s Chairman Rod Sims looking closely at allegations of unconscionable conduct by the supermarket giants towards suppliers, Sims is finding it tough to take any of those matters to court. It’s clear that our weak competition and consumers laws are currently no match for the market power of our growing number of oligopolists, duopolists and monopolists.

And what about when the NBN is eventually sold off to private interests. As much as a government monopoly may be bad, a private monopoly can be a nightmare. Remember when the Federal Government owned the major airports. Yes, we heard complaints about the level of service and charges, but what happened when the major airports were privatised? You guessed it. Airport charges went up and service levels fell. And, yes, the level of complaints went up. Now we are hearing renewed calls to regulate the major airports.

With all the historical problems with monopolists you have to wonder why we are creating a monster NBN monopoly that may end up in private hands. And, that’s the real point of any debate on the NBN. What happens when a future government wants to privatise the NBN? What will stop Telstra from acquiring the NBN Co when it’s finally put on the market?

In the meantime, we urgently need a small Independent agency to oversee all aspects of the NBN on a daily basis. And we need to put an independent thinker in charge of the agency who will keep the NBN Co and the Federal Government honest at all times on behalf of taxpayers and consumers.

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    • steve says:

      10:06am | 10/10/12

      But whats the point in having competition if all the competitors are stagnant and don’t progress the technology.

      If any of the providers had taken the steps move our communications network forward with current technology the NBN wouldn’t have been necessary.

      One of the governments jobs is to provide essential services (which in telephone and internet access are in todays world) that the private sector isn’t.  The only flaws I see with the NBN is how slow it’s being rolled out and the fact that they aren’t going for highest density areas first.

    • MD says:

      10:32am | 10/10/12

      THIS, same deal as in the US. Private companies don’t innovate if they don’t see enough profit from it. And as we have a much smaller population and population density, it leaves us here in Aus 10 years behind the rest of the developed world.

    • Joe201 says:

      10:42am | 10/10/12

      @Steve: The private companies were doing it based on demand. Internode (a very good SA based ISP) were rolling out their own fibre optic cable in some areas before the NBN came out. Internode had actually been doing a lot of work to improve service to areas like Mount Gambier and Victor Harbor… only now, they’ve had to merge with iiNet because the NBN makes them uncompetitive.

      Now today, you can argue that the internet is an “essential service” so the Government has to step in but the point is - you already have it. In fact most Australians already have internet access not only through their home computers, but also through their mobile phones. And at speeds which are sufficient (and in a lot of cases, more than sufficient) for the services that are being used (Facebook, Twitter, Email and posting comments on the Punch).

      This isn’t like electricity where people are still using gas lamps. We’re already using it. The only thing the NBN provides is faster speeds, which may have some need in the future sure, but which right now simply aren’t required.

      You don’t need 100 Mbps to update your facebook. And as soon as someone had developed a technology that required faster speeds and which people started to demand, ISPs would’ve begun to roll it out.

      The only thing I need fast broadband for today is gaming. And that (sadly) is NOT an essential service.

    • MD says:

      11:20am | 10/10/12

      Joe, they didn’t *have* to merge because of the NBN, iiNet bought them fair and square. Arguing that we already have internet so we don’t need it to be faster is disingenious, we’d be stuck with dialup if that had any merit. Streaming services are becoming the norm for media on the internet, on demand tv and movies are replacing traditional mediums. If we’re stuck on rubbish net speeds none of that will appear here.

    • TheRealDave says:

      12:38pm | 10/10/12

      So much utter crap in one post Joe.

      iiNet were never ‘uncompetitive’ - they were bought out by iiNet who’ve gone on a massive buy up of ISPs over the last 5 years. You may have missed that given that you have no idea of that which you speak.

      As for not needing fast speeds - kudos for you, but Corporate Australia does. Education Australia does. Entertainment Australia does. Government Australia does. Etc.

      Basing the entire countries communications infrastructure on how fast/convenient you can download and play Angry Birds or some Fart Noise app on your Phone/Tablet is moronic. As is thinking that using Twitter and Facebook is what most of the net is used for. But thats all the Noalition seem to think the net is for..well..that and Porn n’ Piracy.

      But lets not let new thinking cloud your critical though processes wink

    • Steve of QBN says:

      12:44pm | 10/10/12

      @MD, in a way you are both right and wrong. 

      How wrong?  I can remember my first dial-up experience with the internet using a 3200 baud modem!  Since then, except for the cost of buying new equipment, I now have 14k download speeds via ADSL2+.  Like anything else in this world, it is consumer driven.  Business wants faster line speed, telcos provide it.  The up side is, the home consumer benefits from this.

      How right?  As I said, consumer driven means more demand for more services.  More services equals more bandwidth.  The downside is, higher charges because I want streaming TV and movies.

      None of these were forced on telcos by Government, they were pressured by consumers saying “if you don’t provide me what I want, I’ll go elsewhere.”

    • steve says:

      12:45pm | 10/10/12

      @Joe:  You don’t need 4 lanes of sealed asphalt to drive your 35km to the CBD to work every day.  Yes it may take longer on the goat track but if we needed a more efficient road system the government would provide us with on.

      Oh wait, they do, or do acceptable base level of service only apply to services you understand and use?

    • lostinperth says:

      04:20pm | 10/10/12

      @ Steve

      But what if, after installing the 4 lanes of ashpalt, the government then blocks or removes the goat track and all other roads. And then charges you to use the road .

      You are now forced to pay for something that is more then you really need but now have no alternative but to use because all the alternatives are barred.

      How is that a win. You want to use a 4 lane highway, pay for it. But why should I be forced to use it and pay a high price to do so, in effect, subsidising big corporations amnd the government?

    • TheRealDave says:

      05:01pm | 10/10/12

      You still have a rotary phone or wireless telegraph system in your house Lostinperth?

      The current copper infrastructure costs in excess of 1 Billion dollars a year in Maintenance. Why would you want to keep maintaining that old obsolete failing system other than for political reasons - given that NBN prices are not only cheaper and faster but also have higher data packages.

      Lets call a spade a bloody shovel shall we?? The only honest objection to the NBN is not the technology, nor is it the cost - its purely political. In that one team came up with the idea and the other one didn’t.

      Thats it.

      Anything else is utter bollocks and jsut pisspoor attempts to pretend its not because your team didn’t think of it.

    • Gah says:

      05:04pm | 10/10/12

      lostinperth, your analogy falls apart. You’re already paying to use the goat track, which has rubbish speed limits. The NBN “highway” will NOT cost you more (one look at the prices ISPs are providing for NBN services will tell you that) - you can still pay goat-track prices and still get an immensely superior service. If the cost is going to be the same, why the bloody hell would you want to stick with the goat track?

    • Lost in the details (in Perth) says:

      05:25pm | 10/10/12

      lostinperth

      no one is taking your goat path away.
      your goat path has been upgraded to a sealed road and you can still use it for the fee that you used to be charged to use the goat path.

      nothing has changed except you get a more reliable goat path that doesn’t get washed out in floods and you can use for an automobile when you upgrade from your goat.

    • answer this says:

      05:30pm | 10/10/12

      lost in perth
      Do you pay to use the goat path at present or do you leach off your neighbors unsecured wireless router of a goatpath?

    • Bill says:

      10:10am | 10/10/12

      There is a fundamental flaw throughout this thesis: Surely a government monopoly is not going to behave the same as a private industry monopoly. The intentions from the outset are entirely different, for starters. The former is for the benefit of consumers, the latter for enriching itself. If we were in any pick of the more corrupt countries of the world then a government monopoly would indeed be not ideal. And while efficiency might be an issue (e.g. the old Telecom), I’d much rather the Australian government handle my telecommunication needs than have a Telstra/Optus rip-off duopoly.

    • Steve of QBN says:

      12:55pm | 10/10/12

      @Bill, there is no flaw in the argument.  A monopoly by it’s very nature prevents competition regardless who owns it.  If the line speed costs are the same between Optus, Telstra, iiNet, TPG etc then the cost to the end user will be the same.  The only difference will be in provider content.  Things like unlimited downloads might be a thing of the past.  If there is no impetus for the provider to change, why should they?.

      Under the old PMG, Telecom, Telstra people complained about how they had this monopoly and that the breaking up of Telstra was a “good thing”.  What do you think will happen when, sometime down the track, a government decides to SELL NBN Co?  Would you be happy that instead of the Australian Government owning it, it’s now owned by CinCo? Verizon? AT&T? France Telecom?  A monopoly is a monopoly and regardless who owns it, it stifles competition.

      And yes, a government monopoly must pay for itself and return profit to the government for it’s building and running costs.  So they will pass those costs on to the ISP’s who will be only too happy to pass it along to the consumer.

    • Bill says:

      04:14pm | 10/10/12

      Yeah right Steve so we may as well just leave it to good ‘ol Telstra, Optus etc to run the show, eh? National government, Telstra - what’s the difference, right?! As a consumer I’d feel in real safe hands with the likes of Telstra in charge. Not.
      I find it hard to believe the government wouldn’t have considered what happens when/if it does eventually privatise the NBN…

    • Alfie says:

      10:11am | 10/10/12

      I wouldn’t buy a used car off Conroy.

    • Anubis says:

      12:25pm | 10/10/12

      @Alfie - Even if he is wearing red underpants on his head?

    • Alfie says:

      01:48pm | 10/10/12

      @Anubus
      Probably yes…I would be too scared not to.

    • Gerard says:

      06:25pm | 10/10/12

      “I wouldn’t buy a used car off Conroy.”

      Not even a “fucking fantastic” used car?

    • Molten says:

      10:25am | 10/10/12

      You really shouldn’t write long winded rants about things of which you have no understanding.

      Think of it like this.
      All the iron ore in Australia is the NBN.
      Mining companies (the ISP’s) are allowed to mine the iron ore and sell it.

      See, NBN is no monopoly, it just is, like the iron ore beneath our feet.

    • Perdix says:

      11:52am | 10/10/12

      or, think of it like this,

      All the telecommunications cables, pits, trenches and conduits belong to NBN,
      ISP’s are allowed to buy from NBN , but can’t negotiate pricing, terms and conditions.

      oh wait! that means we only have one telecommunications network provider .......last time I saw this was when the P & T had a monopoly,

      so I guess NBN is a monopoly after all!

    • Inky says:

      12:18pm | 10/10/12

      @Perdix

      As opposed to pre-NBN, when effectivly all the pits, trenches and conduits belong to Telstra wholesale…    a private entity.

      You’re right, it’s much better to have a private monopoly than a government one.

    • Molten says:

      12:48pm | 10/10/12

      perdix

      difference is everyone pays the same for access to the NBN.
      You really shouldn’t write comments about things of which you have no understanding and expose your ignorance for all to see.

    • Steve of QBN says:

      01:12pm | 10/10/12

      @Inky,  Telstra was a monopoly BECAUSE it used to be part of the PMG (Post Master General).  A government department who’s sole reason to exist was to provide telephone, telegraph and mail services to Australia.  All it’s infrastructure was bought and paid for by the Australian taxpayer.  The government “privatised” it (as they did with Qantas) and slowly sold off this wholly government owned infrastructure.  To this day, the only service provider who is required to provide basic telephone services to new developments is Telstra.  No other provider is forced to do this, only Telstra as a carry over from it’s days as part of the PMG.

      Optus / SingTel, Verizon, anyone can now lay their own cables, create their own infrastructure and sell services BECAUSE Telstra no longer have that monopoly.  Under NBN, there will again be only one provider, NBN Co.

      A monopoly is BAD. NBN Co will set the prices, line speeds and limits.  All that will differentiate the individual ISP’s will be any “add-ons”.

      At the end of the day you will have a Government monopoly that one day WILL be sold off to the highest bidder and all that tax payer funded infrastructure will be owned by Telstra.  Or Verizon.  Or France Telecom. Or CinCom and you will be the first to say “how dare xyz set themselves up as a monopoly….”

    • Inky says:

      02:07pm | 10/10/12

      @Steve

      Yes, I’m familiar with Telstra’s history.

      But saying that other companies can now lay their own lines is wishful thinking. The reality is the majority of areas are serviced by Telstra cables.

      Would you prefer to have 5 differnt varieties of incompatible cabling laid to your house and every time you change providing having to pay a hefty installation fee as they dig up your driveway, just so you can feel safe knowing a future government can’t sell off a monopoly.

      And no, I won’t be the first to say “How dare xyz”, I’ll be the first to say “What a ****ing stupid government we have, way to sell off the future to make a quick buck now.”

      “To this day, the only service provider who is required to provide basic telephone services to new developments is Telstra”

      And no, this is inaccurate. They are the service provided required to provide basic telephone services to new developments prior to Jan 2011.

    • Leigh says:

      10:27am | 10/10/12

      Australia is steadily marching to the brink under socialism.

    • TheRealDave says:

      12:25pm | 10/10/12

      Ooga Booga!

      SOCIALISM!!

      BOOO!!

      Oh wait…this is Australia and not Fox News. The word ‘Socialism’ doesn’t scare us like 100 million rednecks and Tea Baggers in the US.

      But thanks for playing wink

    • Trebby says:

      10:44am | 10/10/12

      Hi Frank,

      This who article is flawed.
      The NBN was started due to market failure…simple as that. Telstra had the chance to tender for it and decided not to

    • Steve says:

      11:08am | 10/10/12

      Wow, so many uninformed comments.

      “Are monopolies bad? Of course they are! Monopolies are not interested in competition and represent the ultimate market failure.”

      I don’t know what voodoo economics you studied, but here on Earth we learn about natural and unnatural monopolies.
      Take electricity for instance.
      Does it make sense to have two distribution companies with two different wires coming directly to your house? Of course not. This is a natural monopoly.
      Does it make sense for there to be multiple sources generating electricity? Of course, this is not a natural monopoly.
      Does it make sense to have multiple retailers offering electricity at different rates with different products? Of course, this is not a natural monopoly.

      Substitute NBN, or any other telco network for the electricity distributor, content providers for electricity generators and ISP’s for retailers and it is exactly the same. Like someone said previously, for natural monopolies it makes sense for them to be government owned, as they should not gouge prices as much to make a buck, and if they do and enough people get pissed off they get voted out.

      The market failure was the fact that when Telstra was sold off it was not structurally separated, and so you had a vertically integrated private monopoly. Yes that is very bad, and is the ultimate market failure. Since NBNCo aren’t producing the content though, and won’t be an ISP, they are not vertically integrated.

      I do agree that controls should be made to make sure any future government wishing to sell off the NBN does not do so in a what to create a vertically integrated monopoly.

      And NBNCo is independent. The CEO and Board of Directors are hardly Labor lackeys, in fact they are corporate titans for the most part. There are some minor policy details that can be worked upon, but the main problems the NBN is trying to solve - ubiquitous fast reliable internet through FttH, and the removal of a vertically integrated monopoly to increase retail competition - should remain at the forefront of any policy.

      The only ones who disagree either have no or very little knowledge about the actual industry, or a hyper-partisan lackeys. This is the only good forward thinking policy in the 2000’s so far (let’s see if either side can get a decent NDIS going).

      For many this is the only issue that they will decide on at the election. Trusting a politican (of any stripe) is a dangerous game, and occasionally they get it right (i.e. NBN), especially when they leave it to people who know what they are doing to do it (i.e. Quigley and his team).

    • MarkS says:

      12:14pm | 10/10/12

      @Steve
      Yes correct, the network should by a public owned monopoly, banned from providing services on that network. The Telstra selloff as a vertically integrated company was a dreadful decision.

      There is this idea among some nuffies, that private companies are always more efficient then public management. This is only true until the private company has a monopoly, then it is less efficient from the public’s point of view then public management. But more efficient at gouging the public for super profits.

      The NBN is one of the few good idea’s done half right by the ALP government.

    • TheRealDave says:

      12:28pm | 10/10/12

      Bingo Steve - well said.

      Its unfortunatle that the only response to this (and the NBN in general) from the otherside will be indignant foot stamping and shrill cries of ‘You only want it for porn and piracy’ rubbish.

      Thats all they have since they have never gotten a single technical aspect of the project correct in the last 3 years.

    • Steve of QBN says:

      01:41pm | 10/10/12

      @Steve, a couple of incorrect analogies here.

      “Does it make sense to have two distribution companies with two different wires coming directly to your house? Of course not. This is a natural monopoly.”

      But NBN Co will be the ONLY company providing the poles and wires connecting the ISP to your house, thereby creating an un-natural monopoly

      “Does it make sense for there to be multiple sources generating electricity? Of course, this is not a natural monopoly.”

      But, if they ALL have to use the same infrastructure, an infrastructure that changes the same per client, how does that impact on how many power providers you have?

      “Does it make sense to have multiple retailers offering electricity at different rates with different products? Of course, this is not a natural monopoly.”

      The IPS can charge the end user as much as they like but they MUST change a minimum that pays their line costs to NBN Co.  And if that line cost is the same across ALL providers, how can an ISP complete with lower pricing without going broke?

      While end users can and do change providers as required, they generally switch (like the current round of banking fees and electricity prices) because their old provider was too expensive, or the new provider is cheaper, or offers more content.  Without the ability to provide that competition, the ISPs may as well be owned by NBN Co.

      NBN Co will control who gets bandwidth and who doesn’t.  What happens if an ISP hosts (or allows access to) a blog that the government of the day does not like?  Could the NBN Co shut down services to that ISP?  The NBN Co will also control allocation of IP addresses, might they deny addresses to political opponents?  Extreme I know, would never happen I hear you say but, it IS a government controlled agency and “accidents” have been known to happen.  Add to this the internet filter and it’s “unwanted content”.  The government of the day decides what is and what is not “unwanted content”.  While this may well be porn and pirate torrent sites, it could also include political movements, WWF and Green Peace (both listed as subversive groups because of extreme elements in their ranks).  What if say, a large mining company has a fight with a government about the introduction of a new tax.  Is it possible for their IP addresses suddenly be “unwanted content”?  And remember, Conway is not telling anyone (even the Greens) what this unwanted content is.  There are currently some 1200 web sites that Australian ISPs are banned from accessing but the filter is expected to expand that to some 15,000!  That’s a lot o’ porn and piracy folks!

      Regardless if the Board of Directors were “titans in the industry” or lick spittle toady political hacks, one day, NBN Co WILL be sold to the highest bidder.  The new owner might be a venture capitalist, a consortium of ISP’s and telsos or even a government controlled telco like Chinese Telecom.  Will you be so happy then that this monopoly still exists?  Or would you demand it be broken up?  And what would be stopping the new owners from providing content?  Setting up their own IPS’s in competition?

      And will the new owner also be in change of the internet filter?

    • Inky says:

      02:20pm | 10/10/12

      Allow me to sum up Steve of QBN’s post.

      At first, he responds to the argument about distribution being a natural monopoly with a resounding “nuh uh”, citing no actual logic for this.

      He then argues that one of the examples of unnatural monopoloes have no relevance to thi, and in the other, goes on to suggest that retailers will have no ability to actually compete and modify their prices. Sure, just like the power industry doesn’t, right?

      He then dons his tinfoil hat and goes on about how the government will use NBNco to steal your everything.

      Anf infally, he closes with saying that a future government will sell it all off anyways. Frankly, i’m a little sick of that argument, you might as well say no government should ever do anything becaue a future govenrment might turn around and cancel anything they do. Don’t blame something for the hypothetical and highly stupid potential actions of a greedy future government looking to gain a quick buck for their precious surplus.

    • PsychoHyena says:

      03:02pm | 10/10/12

      @Steve of QBN, I’m sorry but only one company could possibly provide the poles and lines to houses, or does someone come along and remove the other companies lines and poles when you switch power company? You’ll have to forgive my ignorance here as in Tas we only have one power provider and one infrastructure provider.

      For point 2 see my above comment.

      For point 3 ISPs can attract customers by offering say more services or greater bandwidth limits or increased sources of “free downloads”. They can also charge higher or lower based on these services regardless of whether the services increase their expenditure or not.

    • Steve of QBN says:

      03:33pm | 10/10/12

      @Inky,

      Allow me to rephrase myself….

      If the broadband access is controlled by one party, it is a monopoly REGARDLESS of the number of ISPs who provide content.  Further, if the transmission method is controlled by the same party that controls access, that is ALSO a monopoly.

      Power companies are the generators of power.  Using the example provided by the other Steve, several power companies vying to provide service is good.  However if another party controlled total ACCESS to your house, the power companies must set a minimum price to pay for that access.  THAT creates a monopoly in the DELIVERY of said power, regardless of how many power suppliers there are.

      Selling tax payers assets has long been the fall back of governments.  My comment is that, by allowing NBN Co to BE a monopoly, then it is finally sold, a new, bigger, stronger Telstra will arise with all of the “badness” that we associated with Telstra Mk 1.  Have NBN Co, once it is set up, open the area to others, just like now.  NBN will then need to sink or swim on it’s own.  But this won’t happen because the government NEEDS the monopoly to make back the cost of NBN.

      Didn’t even need the tin foil hat for that… smile


      A monopoly, REGARDLESS who owns it, is anti-competative and will not provide true savings to the end user.

    • TheRealDave says:

      05:13pm | 10/10/12

      Steve - NBNCo ‘owns’ the backbone network. It cannot and will not sell retail (in 99% of circumstances and yes I am aware of a couple of circumstances where it will but for all intents and purposes its “No they won’t”). Unlike the situation now where Telstra owns the network AND sells retail. Telstra have a long history of convictions, fines, court cases etc of anti-competitive practices in the field of telecommunications and Broadband. Everyone essentially knows this, its not news. NBNCo will sell to ISPs at a set rate. Telstra will buy service off NBNCo and re-sell retail - as will every single other ISP in the market. So you the end user and business owners will be able to shop around for the best deals you can get. ISPs can choose to offer various flavours to distinguish themselves ie better services, better data caps, better ‘free’ services, better package/bundling rates and all that.

      Best of all ‘We the People’ will get back a steady 7% ROI for decades. The system WILL pay for itself and start geenrating profit for us and for the ISPs reselling access. The reason why Private Enterprise would never touch it is because they would never do a multi-Billion dollar rollout for such a low ROI and over such a long time frame. There is not enough money in it for them and it won’t come in quick enough. Which is why governments need to do this kind of work on this scale.

    • Aux says:

      05:45pm | 10/10/12

      @ Steve QBN

      The issue of it being sold is all about regulation / terms of sale then. What you should be worried about is how the Govt of the time sells it (hopefully they hold onto it however).

      Telstra was sold without much thought, and barely any regulation. That is the reason we are stuck with what we have now, and why creating a new network was also the only logical option we had to break free from it.

      NBN Co and the way its set up to run now will be about as fair as its going to get. You cannot trust a company who has shareholders to do anything for the good of its customers or the industry - all about profits. Add little regulation to that, and you’ve got the disaster we have now. You only need to look at Telstra’s legal and illegal conduct to see its obvious.

    • Wayne says:

      11:42am | 10/10/12

      Surely that’s anti-competitive? Well, yes, but we are told by Conroy and the ACCC that we shouldn’t be worried because consumers will “benefit overall.”

      “Sounds strangle doesn’t it?”

      Best typo today.

    • Inky says:

      12:07pm | 10/10/12

      Dear Frank

      Stick to writting about parking at shopping centres.

      Love, Inky

      I suppose it’s been a while since we had another NBN scare article, but at least this one the comments section seems to be surprisingly informed for a change.

    • TheRealDave says:

      12:31pm | 10/10/12

      @Inky - thats only because all the Menzies House accounts are still frothing at the mouth in the Slipper threads. You can’t expect them to load their astroturfing software for two different policies in one day do you??

      *runs*

    • Utopia Boy says:

      01:01pm | 10/10/12

      Clearly a silly article. As satire it fails miserably.
      There will always be room for companies to create their own network, whether wireless or not. The fact is the NBN will be there like Social Security; to make sure there is a backbone for government and business to carry on without the fear of the entire thing collapsing due to “market readjustments” or crap management of providers.
      The only drawback with the NBN is it’s 10 years too late! I was in Romania in 2008 and the landline internet speed there was startling. Extremely fast and consistent. It was the first time I had been able to use a webcam to talk to my children, and I still cannot do that comfortably in Australia. In 2002 in Queensland, I could not get ADSL to my house in a brand new estate because the phone lines were “paired.” In NSW, ADSL was affected by bad weather due to rotting copper wire.
      There can only be benefits from the NBN. It is the right way forward due to Australia’s size and spread of population.

    • Siege of Perth says:

      01:57pm | 10/10/12

      Natural Monopoly, everyone who studies economics knows its a good thing. Even if you ignore the Natural part, Telstra is already a monopoly, and as a private one they are ripping everyone of, at least a government one would be keep prices down. The idea that they could provide competitive infrastructure to those who dont need the greater speeds is obviously spoken by someone whos never been stuck on Telstra ADSL 1 network. It costs double the price for half the speed now. Even if the NBN was more expensive (which it wont be) the cost would be the same for about 50 times the speed. The reason the government is doing this though in the end is there was and still is no interest from the private sector to build a fibre network. This network should have been built 10 years ago by the private sector. Private sector doesnt build roads (except maybe one highway in a city) but doesnt mean we dont need roads built so the government has to do it. The NBN is exactly the same, the NBN is a digital road and not building it would be like having gravel roads everywhere except the freeways. We need this network to become international competitive across all industries for the next 50 years.

      Mr Turnbull support the NBN as it is now, just say you will do it quicker and cheaper (to save face, cause I have no issue with the speed or cost personally) and your party will win the election in an absolute landslide. Its the only policy keeping Labour in it.

    • Inky says:

      02:25pm | 10/10/12

      “Its the only policy keeping Labour in it. “

      Only reason they get any support from me, ayup. As long as the Coalition keeps talking about FttN solutions and wireless solutions, I’ll be preferencing them back in the stone age where they belong.

    • Shane From Melbourne says:

      04:31pm | 10/10/12

      Hmmm…. While you are ranting on about the possible NBN monopoly can you write about the privatization of federal airport monopolies? Ah yes, John Howard’s gift that keeps on giving to the private investors while screwing the public on such things as car parking and retail rents…...

    • Gerard says:

      06:45pm | 10/10/12

      Economic monopolies are bad enough. The critical problem with the NBN is that this is not only an economic monopoly, it’s a media monopoly. Conroy’s department will be free to impose any conditions on
      NBN usage that they feel like (big hint: Conroy wants to force ISPs to censor content). No legislation or debate required, or in fact allowed. If the ISPs don’t like it, they’re free to sign up with a different…um, no actually, they have to agree to whatever Conroy demands.

 

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