Competition and Regulation Policy in Antipodean Government-Funded Ultrafast Fibre Broadband Markets
Bronwyn E. Howell
Victoria University of Wellington - School of Management
March 29, 2012
Both the Australian and New Zealand governments have committed to spend substantial sums in order to bring forward the nationwide deployment of ultra-fast fibre-to-the-home (FTTH) broadband networks. With deployment proceeding apace, two significant questions have arisen regarding the economic, commercial and political rationale for the Australian and New Zealand governments’ decisions. The first is why the respective governments are assuming a central role in the design, financing, deployment and (in Australia’s case) operation of a nationwide network of a specific technology type, given that such intervention is at significant variance with both recent international industry policy and practice advocated by international agencies such as the OECD and the ITU, and the recent policy and regulatory history in both countries. The second is how these new Government-funded networks will affect the nature of competitive interaction in the telecommunications (broadband) industry in their respective countries.
This paper addresses these questions. First it traces the development of the Australian and New Zealand fibre investment policies in the context of international competition policy orthodoxy. It then examines the competition and regulation policies that will govern the insertion of the respective government-funded fibre networks into environments where both legacy policies and technological developments have shaped, and will continue to shape, the evolution of the respective telecommunications sectors. The analysis finds that political, rather than economic imperatives have dominated the government investment decision in both countries. The Australian investment has been accompanied by a comprehensive set of competition and regulation policies aligned with maximising the likelihood of fibre uptake, but both the up-front costs and political risks are high. The New Zealand initiative is lower-cost initially, but lacks clear over-arching competition and regulation policy objectives to guide sector development. The result is a fragmented regulatory regime and a range of contradictory and confusing incentives for all sector participants that will inevitably increase the economic costs of the project and lead to delays in fibre network uptake.
Consequently, the Antipodean ‘experiments’ in government funding of fibre networks are unlikely to offer good models of either policy or process for other jurisdictions.
Number of Pages in PDF File: 49
Keywords: Competition Policy, Regulatory Policy, Fibre Networks, Australia, New Zealand
JEL Classification: L11, L51, L52, L96
Date posted: April 3, 2012 ; Last revised: August 16, 2012