Is Australia’s government fiber initiative crowding out private investment?

[Commentary] Just when we thought the tales of the Australian government-funded nationwide fiber-to-the-home network could not get more incredible, news emerges that that the Telecommunications Industry Ombudsman has been called upon to make a ruling on the legality of private sector firm TPG’s plan to provide fiber-to-the-basement services to high-rise apartment buildings in the inner-city Melbourne suburb of Docklands.

Docklands does not yet feature on any National Broadband Network (NBN) rollout plans, and residents are apparently crying out for better broadband services. If this were the United States, then TPG’s plans would be manna from heaven, not cause for administrative inquiry. The problem is that, under anti-cherry-picking provisions governing the NBN, competing network operators must offer services under the same terms as the NBN. So the ombudsman is being asked to determine whether a new service, which offers capabilities not currently available to residential consumers, is illegal because it does not provide its services under the same institutional arrangements as another service which could be (but is not) offering services presently in the area.

If the ombudsman decides that it is illegal, then the good citizens of Docklands will have no choice but to continue with their current ADSL and wireless services. Not because there is no fiber available, or because no-one is prepared to invest, but because allowing a non-approved business model may stand in the way of forming a new government monopoly super-fast internetwork in the manner intended.

[Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]