Cheaper broadband will slow NBN adoption, says Turnbull

Carrier club SLAMS Comms department's submission to ACCC wholesale price caper

Australia's Department of Communications has argued that higher broadband prices are necessary in order to protect the under-construction National Broadband Network (NBN).

The Department, helmed by Communications minister Malcolm Turnbull, has written to the the Australian Competition and Consumer Commission (ACCC) as that body conducts a consultation into fixed line services. The Department's submission, PDF) signed by department secretary Drew Clarke makes the following arguments:

department of communications's submission to ACCC

The Competitive Carriers' Coalition (CCC), a group of junior telcos, has issued a very sternly worded statement calling for the nations communications minister Malcolm Turnbull to retract the submission because it feels it supports Australia's dominant telco Telstra.

The roots of the CCC's ire can be found in June's news that the ACCC's assessment of costs telcos are allowed to charge for wholesale services should be dropped. Telstra is bound to wholesale many of its services in order to encourage competition and had argued it should be allowed to increase its prices.

The CCC thinks the Department's arguments represent an attempt to “advance the interests of Telstra” and therefore are “extraordinary, unwelcome, unwarranted and sets a dangerous precedent.” The coalition goes on to say it's odd for the government to support higher prices and odder still for it to “to tell an independent pricing agency to throw out the result of a two year inquiry because it does not want prices to fall.”

“The Department's arguments that Telstra needs to be compensated for the NBN have been examined and rejected under a two year exhaustive independent ACCC inquiry,” the CCC statement adds, but leaves the NBN migration argument untouched as it thunders a call for the submission to be withdrawn.

But the CCC leaves the NBN migration argument untouched. That argument sees the Communications suggest that lower wholesale prices aren't bad per se, but that if the price of wholesale access to Telstra's copper connections goes down it could create the unintended consequence of making current broadband services so cheap fewer people bother migrating to Australia's under-construction national broadband network. When they do so – or are forced to as old infrastructure is turned off – the Department's submission worries about “significant price shock.” The submission also says that if retail carriers can cream it on copper obtained through wholesale deals, they won't hustle their customers onto the NBN either because they'll cling to higher margin services.

Here's the argument in detail:

dept of comms analysis of nbn pricing

Perhaps the CCC is silent on this argument because some of its members are putting their money where their mouths are: internet service provider iiNet currently advertises itself as “The NBN Specialists”, perhaps a sign it has no plans to keep its subscribers on DSL under current wholesale rules. ®

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