Won't somebody think of the Universal Service Guarantee!?!

The Australian is National Broadband Network induced meltdown today. Dennis has declared that Prime Minister Gillard’s deal to get Senator Xenaphon’s vote is humiliating, the editorial thunders that the NBN should be scrapped on the spot, and astonishingly, a Liberal Party MP who used to run Optus doesn’t like the plan either.

Of course the business plan is eerily silent on the provision of the universal service, on who, how and at what cost the equivalent of a basic telephone will be put in people’s homes once the Telstra-NBN deal is finally inked.

Let’s start with the basics. The NBN, either by fibre or some other technology, will supply broadband connectivity of at least 12Mb/s to every premises in Australia. I’m pretty sure we’re all on board there, but it’s important to know before we move to the next idea, and it’s the big one. Voice communications are just another form of data.

Copper wire to an exchange

Right now most voice traffic moves using analog electrical signals over a copper wire to an exchange, where it’s converted to a digital signal and is routed to its destination, being converted back to an analog signal to traverse the final part of the copper network. It should be acknowledged, however, that this is becoming much less the case as businesses and even some consumers transition to using Voice over IP, which essentially moves voice data as a digital signal via existing data networks from end to end. All that will happen once the NBN is finalised is that our voice calls will be converted to digital signals in our homes rather than at the exchange.

The Network Termination Unit or NTU is the device which terminates an individual fibre optic cable and separates out the individual services being subscribed for e.g. telephony, high speed broadband or IPTV.

The NTU supports a Plain Old Telephone Service (POTS) interface via an RJ12 plug, so any standard telephone that is used in the home today and plugs into the existing telephone network will be compatible with the NBN Tasmania network…..

But who’s responsible? Well the NBN Co will be responsible for supplying you with a connection to the network, then any retailer can offer you a telephony product, much like today you can choose any VoIP provider to make calls over your broadband connection. Skype doesn’t care who provides your internet, nor do any of the other VoIP providers in the market.

Firstly, Australia doesn’t have a national telco. What we have is a former national telco, now owned by the private sector, which grudgingly provides a universal service guarantee as a part of its licence conditions. Secondly, one of the most famous anti-trust cases in the USA resulted in the division of AT&T, which was arguably as close to a national telco as could be had, into seven smaller regional businesses and a separate long distance business. Finally, Morgan himself, later on in the article, refers to the fact that NZ Telecom has undertaken structural separation exactly like what is being proposed for Telstra.

Comparable population density to Australia

Perhaps it’s because no other country has a comparable population density to Australia, or an expectation that people in remote areas should have access to services similar to those available in metropolitan areas? People who live in rural areas know what happens if you can’t force a communications company to provide a service; you simply miss out. The NBN is a subsidy for regional Australia by design, but this is a position that governments of both political persuasions have accepted as the norm for a long time now. The alternative is to allow the private sector to ignore low profit areas until they are paid, you guessed it, enormous subsidies to provide the service. The NBN won’t deliver wheelbarrows of cash to privately held companies in exchange for looking after regional areas, but I’m not convinced that’s a bad thing.

As part of that deal Telstra is freed of its responsibility to offer a universal service, the right all Australians have enjoyed for 100 years to a standard telephone service at a uniform retail price irrespective of where they live