Non-compete clause exposes flaws of fibre network

Consumers must not be told that a wireless connection could give them a better deal

THE entire basis of the National Broadband Network has been exposed as fundamentally unsound by the "wireless non-compete" clause in the deal between NBN Co and Telstra. At its simplest, it's a clause that is completely unacceptable and arguably illegal. What would be, what was, objectionable with cardboard boxes should also be so with broadband services.

Broadly, but simply and accurately, NBN Co and Telstra agree not to compete. Worse, NBN Co is actually paying Telstra for that agreement. Indeed the Communications Minister himself no less, Stephen Conroy, all but put it in exactly those terms on Melbourne's MTR radio yesterday.

He explained, indeed justified, the non-compete clause as being a "perfectly sensible corporate decision". "A commercial arrangement." That Telstra agreed not to "take NBN Co's money and sledge (the) NBN". Conroy was all but saying that NBN Co was paying Telstra not to compete with it.

Indeed. Where was Conroy when the late Dick Pratt needed him to explain that his Vizy group had a "perfectly sensible commercial arrangement" with Amcor for each not to "promote" their boxes as a "substitute" for the other's?

The relevant clause in the deal is that Telstra can't promote "wireless services as a substitute for fibre-based services for 20 years". But it otherwise remained free to compete in the market for the supply of wireless services.

Telstra explains this clause by saying that it can't put flyers in letterboxes saying buy our wireless broadband instead of NBN Co's fixed broadband. But we're perfectly free to put flyers in letterboxes saying buy our wonderful wireless broadband that can do all these wonderful things. And that further, it didn't see the clause -- insisted on by NBN Co -- as limiting in the slightest its ability to sell wireless. Except and absolutely crucially, that's wireless against wireless. Not against fixed.

Two points. Except of course it does limit its ability to sell wireless. And does so for 20 years. An awful lot of technology can be invented and developed in that timeframe. Right now Telstra might not want to sell wireless broadband instead of fixed fibre. But in 10 years?

The second point is exactly that. Telstra doesn't want to sell wireless instead of fixed broadband in the new world of the NBN. It wants to sell wireless and fixed together, in a package.

Why? Because it sees the NBN as finally freeing it to use its market dominance across the telco space in a way that it has been limited in doing under the existing competitive regulation. Given that the NBN is coming at it whether it likes it or not, it's perfectly happy to share monopolies, so to speak, with it. Rather than competing head to head with the NBN -- my wireless network against your fixed fibre network.

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