I like my comms – premium, with a little help from my friends $800m

The ACCC has given its final approval for Optus decommissioning its HFC (cable) network and not compete with the NBN’s monopoly service in a $800m cash deal. Opposition criticism is levelled at the ACCC with them saying it was “a dark day” to reverse a position it had taken persistently to be against quasi-monopoly status in telecommunications because of the need for more competition.

However, put aside the politics, the telecommunications market on its own shows no history of giving us a competitive network without regulatory intervention. Expand the argument to the regular market facts and findings of the Reserve Bank, and you will see they acknowledge that sophisticated and quasi-regulated markets need intervention at some point.

CO2Land org feels that facts point to the issue for the telecommunications case is whether a government sponsored monopoly can deliver an improving practice model, and that needs to be tested.

Thinking a little more on the subject: Why might the ACCC feel the need to move to create a monopoly: Removing the middleman makes it easier to manage rising costs – and all we know is evidence of cost rising continues. Changes in the delivery structure will not cause relinquishment of the current players net profit margins. Customers want to pay less for a premium service – not more! But what if we prefer vanilla flavoured – not an option?

Assume it will be a success for the NBN Co. would the indicators be:

The cost of the goods sold would have less cost recovery pressures. Churn of the customer base will not occur and the price effects removed from the equation. The monopoly player will have the sole access to the consumer with the volumes.

The cost of production could be tuned and reflect a price of take or leave it, and the consumer and component producers would become ‘price takers’ and having very little say in what they pay or receive and influence in terms of efficiency.

On the later point It may well be the only fair way to access a fair price to pay is the necessary read any NBN Co. report put forward and pay particular attention to what might be listed as “other” costs –they tend to be less transparent.

While being critical of some of the material taken from the initial reference for this story. The need to write was the result of a communication sent out by the office of Malcolm Turnbull and Published on: July 20, 2012. CO2Land org picked up the story from viewing his tweet.