ACCC suggests breaking up the NBN

The Australian Competition & Consumer Commission (ACCC) describes itself as Australia’s competition regulator and national consumer law champion. It aims to promote competition, fair trading and regulate national infrastructure to make markets work for everyone.

It is under this objective that the ACCC released a report today recommending that the National Broadband Network should be broken up into smaller, competing networks to create greater competition before being privatised by the government.

The problem that the ACCC foresees is that the NBN will have dominant market powers as the almost-monopoly provider of wired internet to the country.

The ACCC chairman, Rod Sims, had a few things to say to the Australian Financial Review about this suggestion: “Try and have it exposed to competition as much as you can. We think breaking up into its technological parts solves your problem there. The last thing you want to do is keep it together to maximise the sale profits.”

If the NBN were to be broken up it could have profound impacts on the telecommunications industry. Perhaps it would lead to different prices being charged for different area networks? Perhaps the big players like Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPM) would be able to buy some of these smaller networks?

It’s an interesting suggestion and I’m sure the government would like to be rid of the NBN as soon as it can.

Foolish takeaway

Ultimately, we may see 5G overtake the NBN as households’ number one choice to access the internet. It may provide much faster and more reliable connections than the NBN. Either way, no-one seems to be keen about the NBN. Australia seems to have missed a chance to bring its internet infrastructure up to speed with the best locations like South Korea and Silicon Valley.

To avoid the NBN mess, I’d much rather buy shares of these exciting growth businesses.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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