Australian Government Involvement in NBN Company & Telecommunications Industry - Case Study Example

Australian Government Involvement in NBN Company & Telecommunications Industry Student’s Name Institutional Affiliation Rationale behind the Government Owning NBN Co In my opinion, I think that the Australian government should own NBN Co. presently, Australia does not have enjoy a vast investment in superfast broadband services for the next generation despite the fact that it plays a critical role in provision of effective and efficient infrastructural platform necessary for Australia’s future economic affluence (Gans & King, 2010). It is important to note that there should be involvement of the Australian government because broadband services, pricing mechanisms and take-up processess in Australia are deemed ineffective and inefficient in comparison to other OECD countries (Gans & King, 2010). A fundamental aspect triggering the rather poor rating outcomes is highly attributed to a significant lack of imminent incentives to conduct investment as well as challenges faced in the course of competing with other industry giants like Telstra that underwent privatisation despite their lacking an effective competition structure being put in place (Gans & King, 2010). Most interestingly, in the period between 2008 and 2009, the Australian government executed a tender process in order to search for a private sector company that was indeed prepared and capable of providing high-speed broadband services (Gans, 2009). Unfortunately, none of those that showed interest was found to offer any value for money. To address this impeding situation, the Australian government should go ahead and own the NBN Company in order to develop and operate an effective and national wholesale-only superfast broadband network services that would serve all citizens regardless of their placement in the country (Australian NBN Names First Fibre Projects, 2010). The government should own the firm in order to attain the already established objectives that can be noted as follows; to allow Australian consumers have access to a rather quality and high-speed superfast broadband services that is to be offered in a fibre-to-the-premises(FTTP) model, to ensure that a superfast broadband services is availed to the entire nation under the “Coverage objective”, to ensure that there exists a national uniformised wholesale pricing mechanism for broadband network services and, also to ensure that there is always relative competition amongst broadband serving companies that is supportive of such important elements as openness and equalised access to wholesale services on the telecommunication infrastructure (Australian NBN Names First Fibre Projects, 2010). By way of making sure that the aforementioned goals are delivered on a national platform, the Australian government is also set to avail intensive and equitable access of superfast broadband services to all citizens (Australian NBN Names First Fibre Projects, 2010). The fundamental objective of going ahead to own the company rests with the fact that it will support a level playing field especially which would protect against opportunistic firms that could exploit all potential consumers. The Australian government’s immediate plan for NBN Co lies in the structure attaining a national coverage of superfast broadband at uniformised and affordable wholesale prices; notwithstanding, the acquisition will still allow entry of other private firms into the industry (NBN Kicks off Satellite Broadband Segment, 2011). Advantages & Disadvantages of Government Ownership To meet its objective of providing wholesale priced superfast broadband services, the Australian has many options that are either under regulatory or non-regulatory in nature. The advantages and disadvantages of engaging in these options by the Australian government especially in owning NBN Co is discussed as follows; Advantages First, through this ownership, the Australian government is set to accomplish its policy objectives through offering NBN Co wholesale-priced superfast broadband network services to all Australians placed in metropolitan as well as in those in the rural areas (Burkitt-Gray, 2011). Secondly, the NBN Co will provide clear technical guidelines that will foster greater level of certainties for the entire telecommunications industry to bear since it will call for imminent speed and quality to consumers and thereby provide a recommendable retail competition (NBN Kicks off Satellite Broadband Segment, 2011). Consequently, the consumers will be positioned in a fair position to access services that are fairly conversant with the overall government objectives, while still provided an opportunity to select from a wider selection of broadband service providers (NBN Kicks off Satellite Broadband Segment, 2011). In fact, it is also set to reduce the overall costs incurred by taxpayers since it facilitates provision of NBN on a national platform in a manner that will minimise duplication and technical differences that might arise out of non-interference from government agencies (Burkitt-Gray, 2011). It is important to note that the efforts of the Australian government to ensure equivalent commitments will prevent against vertically integrated carriers from engaging in overconcentration of their rather retail business at the expense of the other access seekers in the broadband network services. This is set to encourage retail-based competition and as a result, offer fairly perfect outcomes for the customers (NBN Kicks off Satellite Broadband Segment, 2011). Government’s engagement will avail a structural platforms necessary for making sure that all broadband network services treats all of their respective wholesale clients on a rather equivalent status (NBN Kicks Off Satellite Broadband Segment, 2011). Of particular interest, the ownership will ensure that that government establishes a level playing field for the entire telecommunication industry. Most notably, according to NBN Kicks off Satellite Broadband Segment (2011), the ownership would ensure that NBN Co’s sustainability and its capacity to avail on its policy goals especially in low-income areas and as a result, reduce the overall need for further taxpayer maintenance. Disadvantages First, while the acquisition of NBN Co by the Australian government is deemed to develop a competitive framework for other superfast broadband providers, there would be little or no assurance that its policy goals would be accomplished as planned (Bushell-Embling, 2010). In fact, there would be no developed mechanism that would be put in place to ensure that there are relevant and reliable broadband investments would attain proper degree of speed and intended quality or will even be ready to ensure unlimited access. Even though there is already some level of investments related to the superfast fixed-line infrastructure that operates on an open access status, they remain to be of limited scale hence limiting potential and existing end-users to a provider that does not conform to the overall government policy goals (NBN Kicks off Satellite Broadband Segment, 2011). Furthermore, there is a possibility of competing firms resulting to a reduced NBN Co’s revenue prowess especially in high-value markets (Bushell-Embling, 2010). The issue could result to erosion of the firms capacity to avail a distinctive national coverage and a uniformised national pricing, which might go a long way to distort NBN Co’s sustainability levels or even charge end-users in such markets prices that do not conform to NBN Co’s recommended pricing strategy while they experience lower relative costs. This might lead to the generation of a windfall benefit for these broadband providers as opposed to potential end-users and in the end prevent the company from delivering the Australian government’s objectives (Bushell-Embling, 2010). Second, it is possible that the overall financial costs of providing the Australian government’s policy goals might be extrapolated as NBN Co might fail to counter its imminent roll-out costs incurred through distinctive revenue platforms especially in the higher-return, low-cost markets already in place (Connolly, 2015). Thirdly, since ownership of the Australian government will call for adherence to technical specifications, it might result to limiting other providers’ flexibility to choose the technological advancements of their choice while still, there being potential implications for such important aspects as innovation and their respective capacities to attain market demands at minimal costs (Connolly, 2015). The aspect of specification could thereby limit the service options available to potential and existing end users (Ayre, Hinton, Gathercole, & Cornick, 2010). In essence, the technical specifications, as postulated and called for by the Australian government, would only be limited to competing FTTP-based investments at the expense of upgrades to the already established HFC networks and the copper networks as well. Third, since upon acquisition of NBN Co, by the Australian government, all broadband service providers will be required to operate under an open and equivalent basis, there is possibility that it can impact on the underlying business decisions and investments of vertically-integrated operators like Telstra and Optus as they will be limited from supplying their retail operations on a rather preferential basis (NBN Co. doesn't need Telstra, or does it? 2010). In addition, McDonald (2013) note that the proposed ACCC regulation of access prices could prevent the abilities of broadband service providers to enjoy a desired and expected rate of return on their investments. References Australian NBN names first fibre projects. (2010). Global Telecoms Business, (113), 8. Ayre, R., Hinton, K., Gathercole, B., & Cornick, K. (2010). A Guide to Broadband Technologies. Australian Economic Review, 43(2), 200-208 Bushell-Embling, D. (2010). Down Under carriers feel NBN pain. Telecom Asia, 21(4), 14 Burkitt-Gray, A. (2011). Future-proof fibre network will serve Australia for 70 years, says minister. Global Telecoms Business, (116A), 29-31. Connolly, B. (2015). NSW, QLD suburbs in trial to speed up NBN rollout. Cio (13284045), 1. Gans, J. S., & King, S. P. (2010). ‘Big Bang’ Telecommunications Reform. Australian Economic Review, 43(2), 179-186 Gans, J. S. (2009). ‘The right policy for telecommunications and broadband’, submission to the Senate Select Committee on the National Broadband Network, 18 June. McDonald, S. (2013). ACCC seeks greater role in NBN oversight. CIO (13284045), 1 NBN Co. doesn't need Telstra, or does it? (2010). Telecom Asia, 21(5), 44. NBN Kicks Off Satellite Broadband Segment. (2011). Telecom Asia, 22(5), 6. Read More