NBN – What is it all about? (Part 1)
Well, to understand what the National Broadband Network (NBN) is all about we have to go back about 30 years.
About 30 years ago in 1980 Australia had just 2 telecommunications providers, Telecom Australia for domestic services and the Overseas Telecommunications Corporation (OTC) for international services. Both were government owned and by law had no competition.
In 1981 Australia created a third government owned telecommunications organisation named Aussat, it was created to provide satellite services domestically within Australia.
So, by 1985 there were 3 telecommunications providers, all government owned and none of which had any competition. Australia suffered due to the lack of competition by paying high prices and also caught with poor service with no choice of provider.
In the late 80’s the Australian government decided to go down the path of competition and privatisation and the telecommunications industry was ripe for the picking.
Initially limited licenses were issues to “Value Added Resellers”, these were organisations who could resell telecommunications services but had to add value to a basic service. They could not sell a basic phone line, it had to have added features. In reality most added functions in the core and resold Telecom services.
The government’s agenda was to open up the market to full competition but they had to take small steps, these were the first baby steps.
On the road to competition there were a few changes, Telecom Australia and OTC were merged to eventually become Telstra and Aussat was a bit of a problem so the government added Aussat to the bid process for Australia first privately controlled telecommunications license.
In 1992 Cable and Wireless won the right to compete with Telstra through a bid process that contained a number of specific conditions including reaching a certain percentage of the population & owning and continuing to run the Aussat satellite system. The company name for this new entity was Optus.
Optus had basically 5 years where they were part of a duopoly, no competition except for Telstra, or so it seemed. In reality there were already quite a few large Value Added Resellers in the market selling cheaper phone calls and Telstra was playing hard ball on access to it’s exchanges and the copper network that connected peoples homes.
Jump ahead to 1997 and nothing much changed in the industry structure except the market was suddenly open to anyone who wanted a Telecommunications License. The government hailed this as full competition but Telstra still had a stranglehold on the copper network and the customers.
Putting this into perspective, Telstra controlled around 85% of the market.
Jump ahead 10 years to 2007, the Internet has taken off, city and surrounding areas have reasonable coverage for broadband services but remote and rural communities have very patchy service. Telstra has the ability to role services out to these locations but decides not to because the ACCC will not provide them a monopoly on the infrastructure.
So, what is the answer? How do we get these services to be developed when no one is prepared to invest in the infrastructure and the ACCC will not allow us to go backwards to a pre-competition environment.
Thats a quick run down of the history that got us to this point and helps frame the answer to what is the NBN all about, Now to part 2..Part 2
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