NBN has not opened the market

By John Durie, Senior Writer/Columnist, The Australian

The top three carriers control 90 per cent of traffic on the NBN so the small carriers have a point when they argue the NBN has failed in its objective of opening the market to competition.

Today, under the moniker Commpete, they will launch a renewed drive for simpler resale contracts and better pricing offers to level the NBN playing field.

A notable absentee from the list of complainants is Aussie Broadband, which is capturing market share reselling NBN access at affordable rates with good service.

This begs the question: if Aussie can do it. then why can’t the others? A fair point, but it still doesn’t get around the fact that NBN has so far failed to deliver on its promise of opening the retail market to competition now Telstra has lost its monopoly.

Telstra has 51 per cent of the market, TPG 22 per cent and Optus 15 per cent. Throw in Vocus at about 6 per cent and you get to 94 per cent held by the big four.

Telstra has 51 per cent of the market, TPG 22 per cent and Optus 15 per cent. Throw in Vocus at about 6 per cent and you get to 94 per cent held by the big four.

Vodafone is poised to strike now it has rolled out to the 121 points of interconnect, so the smaller carriers are up against it.

The NBN was meant to open up competition but the incumbents have been ruthlessly effective in maintaining market share by exploiting their existing client relationships.

To make matters worse, while Telstra complains about losing high-margin fixed-line control it is collecting as much as $98 billion in compensation subsidies, on Credit Suisse figures, over the next decade or so. This gives it a head start in NBN marketing.

The ACCC decision to require connection to 121 points of interconnect exacerbated the harsh reality that telecommunications is a scale game.

This means a regional player must either roll out across the country or buy access from others.

The ACCC mandated 121 points to avoid stranding existing fibre already owned by the incumbents, and it has since suggested the NBN offer packages to help out the little guys.

In the middle of the land grab for market share, the NBN is reluctant to offer any special package for fear of upsetting the big guys.

This concern is overplayed.

Likewise, the Commpete arguments about complex contract terms could be easily remedied.

The bottom line is there is a legitimate debate about the NBN’s limited success in opening the market.

Supporters say it is early days — the game now is just to grab market share but down the track entry will be easier.

Likewise, they say the focus has so far been on retail customers and the business battle is yet to begin, although Optus is proving successful in grabbing Coles stores from Telstra.

The Commpete campaign is timed to coincide with the coming appointment of a new NBN boss.

The argument is Bill Morrow has proved very effective in delivering on the rollout but the new boss could open the network to more competition by adopting the ACCC suggestion on new product choices.

What better time to strike than when the board is just starting to think about hiring a new boss?

https://www.theaustralian.com.au/business/opinion/john-durie/nbn-has-not-opened-the-market/news-story/ba1fa75bcbf11bc1f8b6781199cb4ade