Friday, July 20, 2012

Optus HFC Sold to NBN: Sometimes "Less" Competition is "More"

SingTel Optus has been providing services in Australia for quite some time. But with the launch of the Australian National Broadband Network, which will supply wholesale access services to all retailers who want to compete, SingTel Optus has decided it would not be able to compete, long term.

So it is selling its business to the NBN, with 400,000 HFC network customers, and also will decommission parts of the network, following the Australian Competition and Consumer Commission’s final approval of the AU$800 million HFC asset deal.

That puts a major cable operator out of business, which might be deemed "bad" for competition. But SingTel Optus, which seemed already to have put a halt to further expansion, likely would have begun to lose customers at some point to NBN-using competitors.

That would have raised operating costs per customer, as more and more assets would have been stranded. Ironically, the loss of SingTel Optus, a facilities-based competitor, arguably will not deter competition, as the former SingTel Optus customers presumably will be sold to one of the retail providers, eventually.

Still, it is somewhat odd to see a facilities-based cable competitor essentially put out of business by a monopoly access provider.

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