Split NBN to boost competition, says Sims

ACCC boss Rod Sims will back recommendations to split the NBN into ­technology-based parts to promote competition.

ACCC boss Rod Sims will back Vertigan Committee recommendations to split the National Broadband Network into ­technology-based parts to promote infrastructure competition.

In a speech in Sydney today at the CommsDay conference, Mr Sims will acknowledge the government’s reluctance to split the NBN during the rollout, but will say: “It should be done prior to privatisation. After that time, it is highly unlikely separation will ever occur.”

When Telstra was privatised, starting from 1997, the Howard government refused to split its retail and wholesale arms for fear this would reduce the sale price.

This structural separation is ­finally happening through the NBN, and Michael Vertigan’s committee recommended to Communications Minister Malcolm Turnbull that it should be split into technology-based parts, with satellite, HFC and fibre units.

Mr Sims will say: “When contemplating (the split) the government should not limit competition in order to maximise the proceeds from the sale; there is too much at stake for that … It will be strongly in Australia’s long-term interests for, say, three separate entities based on delivery technology to be sold that can provide a platform for future infrastructure-based competition.”

Mr Sims will also use the speech to attack critics of the ACCC, which include Mr Turnbull and Vertigan committee member and veteran Telstra adviser Henry Ergas. Mr Sims will say their claims “that the ACCC has stifled infrastructure-based competition through low unbundled local loop regulated prices” reflect “an extremely one-side view” of the world.

Mr Sims notes that Telstra users have attacked the ACCC for setting high prices and the regulator has to reach a balance. He will point out that Australian prices had been set high, on a global benchmark, and that the prices attracted a flood of investment in so-called DSLAM technology that piggybacks on Telstra’s network.

“As far back as 2003 the ACCC recommended to the government that it requires Telstra to sell its HFC network and 50 per cent stake in Foxtel to ensure the development of infrastructure-based competition between copper and cable in telecommunications services,” he will say. The HFC purchase is happening through the NBN but Telstra retains its 50 per cent stake in Foxtel.

Mr Sims supports the concept of ACCC merit reviews. Still, he says the review mechanism “should not allow for the appellant to pick off individual points of ­difference”.