Report pushes for NBN to be utilities-based

Telstra rejects claims it is not acting in the nation's interests

Broadband's increasing status as a critical driver of service industries like health and education means the forthcoming national broadband network must be truly open access with utilities-based pricing at its core, according to a report issued by telecommunications research firm BuddeComm.

The report warns that without a change in access and pricing structure, Australian businesses and consumers will continue to lose out on competitive advantage and fall behind the rest of the developed world.

BuddeComm conservatively estimates that broadband will add over $100 billion to the Australian economy over the next 10 to 15 years through distribution of services to customers, and as a communication, electronic marketing and electronic production tool.

BuddeComm director, Paul Budde, said that full broadband deployment can significantly boost productivity and allow Australian organisations to tap into overseas markets. The flipside is that overseas organisations are paying less to compete in Australia's market.

"That in itself is a tricky area because if we have a lower quality of broadband and higher broadband prices, that is an advantage to overseas companies to compete on the Australian market, and it's a disadvantage to Australian companies. We are running at least two years behind the rest of the world so we have to be careful that running behind doesn't start costing the economy," Budde said.

The key factor of this shortcoming, according to the report, is the move from technology to affordability. While ADSL2+ technology has become widely available, the price is too high for more than 60 percent of current broadband users.

Budde, often critical of Telstra, believes an open access network that removes Telstra's monopoly on the current infrastructure would solve the problem.

"You need an open access network so everybody can freely compete on the network, and that has to be linked to affordability. Our prices are somewhere around double the prices they charge in Europe, so that is not stimulating people to move into broadband," he said.

"In other countries Web pages are very rich, video-based pages, which is a much better sales and marketing tool than just text. So we are hampering the Australian economy by not giving full throttle access."

"If you look at telecommunications as a national interest, you have to price the infrastructure as you do other utilites like gas, water and electricity. At the moment the ROI that Telstra wants is twice as much as it has, and that is the reason why in many situations our access price is twice as high as in other parts of the world - that is the real culprit that the government will have to regulate in order to solve," Budde said.

Telstra spokesperson Jeremy Mitchell disagrees, stating that the high concentration of people in small geographical areas such as Europe or East Asia means it is unrealistic when compared with the low concentration of people spread over Australia's vast geographical area.

"If you look at any international comparison of OECD countries, from the entry price to the high level deluxe broadband services, we are on comparison to them. Some are lower, some are higher, but if you look at the range that is available through the OECD we are comparable to other countries," Mitchell said.

"When you look at the terrain and distances Australia has, whether its telecommunications, roads or electricity, the costs are higher for geographic reasons," he said.

Budde wants to see broadband access regulated in the same way as other utilities, where utilities-based pricing could see the cost of broadband drop to around $30 a month instead of upwards of $70.

"It's worthwhile considering utilities-based pricing rather than the sorts of profits Telstra would like to see. It's understandable [for Telstra]- if you are a monopoly you go for the high prices, but it's not in the national interests to do so," he said.

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