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Broadband PolicyBroadband, which was the subject of an entry in the last briefing book, continues to be a prominent element of the communications policy debate. To a considerable extent, this can be attributed to the media focus on the broadband statistics published by the Organisation for Economic Co-operation and Development (OECD). In 2006, Australia’s ostensibly low ranking for broadband subscriptions per 100 inhabitants made broadband a popular cause in the media and among the public. Australia has since moved up in the 2007 OECD rankings from seventeenth to twelfth, as it now has 22.7 per cent of the population subscribed. Denmark, which is ranked first, has 34.3 per cent subscribed. Importantly, the OECD statistics do not measure the number of users of broadband or its availability, which is far better in Australia than the OECD statistics suggest—particularly in metropolitan areas. Hence, the utility of these rankings for informing policy may need to be reconsidered. However, the economic and social benefits that are claimed to come from the widespread availability of broadband demand that Australia has a clear and measurable plan for broadband over the medium to long term. This should take into account not just current uses, but also those that are emerging or anticipated, such as advanced health services and online learning, as well as providing capacity for services that have yet to be imagined. Members and senators may like to reflect on the vast changes associated with the public internet in the last decade alone and venture to develop policy that has regard to future services. Broadband basicsBroadband is a service for connecting users to the Internet, either by fixed lines (for example, asymmetrical digital subscriber line [ADSL], cable, optic fibre) or wirelessly. Broadband coverage changes rapidly, but is tracked by commercial enterprises. In Australia, 83 per cent of broadband services are delivered by ADSL, making it a focus of regulatory attention. ADSL uses the copper wire running from each exchange, via a node (essentially a distribution point) to each home. Generally, Telstra owns the copper wire and nodes. As the owner of most of the critical access network and a retailer of services, Telstra has considerable market power in the provision of broadband services, and the ability and incentive to use it for its own benefit. This market power affects competition, which underpins the regulation of telecommunications. A competitor to Telstra can provide broadband services by reselling a Telstra ADSL service or by ‘renting’ the copper wire to a home and installing its own equipment in the exchange. ADSL services degrade with distance from the exchange, so that some premises in an area may have broadband, while others quite nearby will be in ADSL blackspots. Unless another technology—like wireless, cable or fibre—is used in those ADSL blackspots, it is possible that no broadband service is available. The limitations of ADSL can be addressed by replacing the copper wire with optic fibre from the exchange to the node (FTTN), kerb, or home. Fibre has more capacity and reach than copper. An area served by a fibre-enabled exchange may have no blackspots. Both the Australian Labor Party (ALP) and the Coalition have proposed to use FTTN. However, a key difference is that the ALP aims to reach 98 per cent of the population with fibre while, for non-metropolitan areas, the Coalition engaged OPEL Networks to provide broadband using a combination of ADSL and wireless delivery (WIMAX). For metropolitan areas, the Howard Government appointed an expert taskforce to guide policy development. These FTTN proposals will attract the attention of Telstra and the consortium of nine major carriers (called G9), which have existing FTTN plans. Policy issues for the new parliamentThis technically, economically, commercially and legally complex area presents considerable policy and regulatory challenges. The challenge for the 42nd Parliament will be to continue to facilitate competition. At the very least, this will require that the Rudd Government not damage competition by subsidising investment where competitive services already exist. Additionally, regulatory settings that ensure competitive markets for broadband by enabling access to what will, almost certainly, be monopoly infrastructure will need to be put in place. The settings must strike a balance between encouraging the necessary investment in infrastructure, and allowing commercial access to services by firms other than the infrastructure owner. A separate, but related, issue is the substantial power of Telstra in most markets, including (possibly) any new markets fibre deployment creates. The vertical integration of Telstra’s network, wholesale and retail operations, which creates the ability and incentive for it to favour its downstream operations, has underpinned calls for separation of these business elements. Past attempts, most recently in 2005, have not been successful against a company that is now more aggressively prosecuting its legitimate interests, following privatisation in 2006. Calls for the divestment of Telstra’s interest in the Foxtel cable network are aimed at the same problem. The FTTN proposals of both parties raise difficult policy issues. These include:
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