Natural Monopoly?

Theres a natural Pit and Pipe monopoly, but ISPs are hardly bound to it. The Pit and Pipe asset is a gift from the federal government to Telstra, who sold it to NBN for a steal. There are multiple fibre companies in a lot of our pits. PIPE, Vocus, Optus. They are prevented by legislation from diverting any of that asset towards residential users. The only exception where theres any kind of competition at all, was TPG taking NBN to court over apartment buildings, otherwise its illegal to overbuild NBN. The penalty is quite hefty too.

In fact NBN is being directed to overbuild other fibre providers. NBN says, we arent coming to this community. Community organises their own fibre. NBN says hey we actually do want to be in this market now. Now its a legal grey area as to whether the existing provider can continue their rollout.

Thats before we get into fixed wireless. I spent 99% of the NBN "debate" with a 300M residential fixed wireless service. Shady operators give it a bad name, but a well engineered wireless link is a godsend.

We had a functional market in this country. It was ULL. Legislation forced Telstra (through gritted teeth) to sell ULL copper instead of reselling their services. It lead to the largest sharpest increase in internet speeds in this country. The ULL model allows providers to provide their own hardware and upgrade it as demand requires. It removes a middle man from their logical networks. Why we trashed this model for an NBN cost recovery makes no sense. Singapore rents glass, it was a big undertaking and it has been extremely successful. Companies competing to be the first to roll out 5/10/100 gig services.

Any discussion in this area needs to acknowledge it is illegal for me to rent pit and run a fibre cable into a residential dwelling thats already serviced by the NBN. There's nothing natural about it.

The other thing the government (specifically, Graeme Samuel, Rod Sims and the Australian Competition and Consumer Commission) did was structure the NBN so that small operators couldn't join without buying connectivity from one of the large incumbent players.

The original model for the NBN was that there would be 14 points of interconnection nationally, which means if you were a smallish ISP you only need a physical presence in 14 locations to be able to offer service on the NBN nationally. That was the clear preference of NBNco itself, and the smaller (often regional) ISPs who now had a real shot at becoming national operators and challenging large incumbents like Telstra, Optus and TPG.

The ACCC decided that it does not, in fact, want to foster or support competition and that it wanted to continue the status quo, where a handful of large telcos control the market. NBN instead ended up with 121 POIs, which only the best capitalised carriers could service. That lead to massive consolidation in the market; many small to mid sized players either closed up shop or sold out to operations like TPG, and the small operators who survived now buy wholesale connectivity from the incumbents.