why couldnt telstra do what nbn is doing, page-5

Other than for MDUs, there is no competition in a fixed line CAN because of the way it is regulated. Any investment increases TLS's incremental cost of capital, reducing the value of its competitive assets.

And if Telstra did invest under the terms of the USO it would be prohibited from making any economic profit from that investment - i.e. equal access -> No competitive advantage; + accounting profit delivering a return on equity in line with a regulated cost of capital- which implies the maximum NPV of the investment will be zero.

So Telstra faced the situation where it had to consider making an investment with a maximum NPV of zero which would decrease the NPV of its other assets. Its an easy decision to make....

The nature of the monopoly is dictated directly by the regulatory regime. All monopolies NBN Co, Telstra fixed line, water and electricity have the same desire to maximise their profitabiliy. However the regulators see 1 step forward and push pricing down to negate any efficiency advantages of investment.


CBD MDUs is the only place where there is competition. They account for a very small percentage of the overall asset base of Telstra.... The socialism in NBN policy here is the implicit cross subsidy between low cost connections and high cost connections. That would be great, provided that eg Armidale subsidises Mosman and Point Piper's real estate values?