I have been hearing for months from one particular quarter that Australia’s broadband situation is ridiculous. Now today, Kenneth Davidson, in The Age, states that:
“Neither side of the political divide has yet developed a sensible broadband policy…Australia has a high-cost, second-rate telecommunications network. The reason is that neither side of politics will admit that the network is a monopoly which must be regulated in the public interest…When will the politicians admit reality? Telstra must build the high-speed broadband network…The biggest barrier to the roll-out of a high-quality, low-cost broadband network in Australia is the failure of the major political parties to recognise that the network is a natural monopoly and the regulatory framework has to reflect and facilitate this.”
In a nutshell, with neither side acknowledging the need for a sensible policy that includes the removal of regulatory ‘roadblocks’, the two positions are:
For $1 billion the Optus-Elders (Opel) consortium will establish a WiMAX wireless network in the bush. Most experts say it is not suitable for rural and remote areas and the policy decision seems to have been based on a hatred of the current Telstra management.
Even if WiMAX works, it could be made redundant by the roll-out of fibre optic cable in the bush, possibly within four years if the incoming government agrees to Telstra’s terms.
Labor supports the Telstra proposal for the $8.7 billion roll-out of a fibre-optic network, involving a $4.7 billion government capital contribution.
Telstra is in a strong position to construct a fibre to the node network (FTTN) as it owns the existing network though the Optus G9 consortium has already lodged an access undertaking with the ACCC. In power, Labor will invite tenders to submit suggested necessary regulatory reforms that they believe are required to deliver the project.
Telstra is saying that unless it is able to get a full commercial return on its proposed investment in broadband, there is no deal. Kenneth Davidson explains:
“In my written questions to Senator Conroy I pointed out that Telstra’s own $8.7 billion estimate for the fibre to the node network (the box at the end of the street) would require using the existing infrastructure of ducts, fibre optic cables and copper tails.
In other words, the $8.7 billion is the incremental cost of upgrading the existing network. This infrastructure was built out of retained earnings from generations of telephone subscribers for a cost of around $20 billion and has since been sold to Telstra’s 1.5 million shareholders.
If one of Telstra’s competitors won the right to build the broadband network, should they be able to access the existing infrastructure to run their fibre optic for free? If not, how much should they pay?
Thanks to privatisation, this infrastructure is no longer public property. Rolling out a parallel network would cost $20 to $30 billion involving endless litigation delaying completion of the project for years.
Surely Labor isn’t serious about a competitor being licensed to build the broadband network? Any other course except to allow Telstra to build it would dwarf all the previous telecommunications stupidities.
Fibre to the node bypasses the exchanges where Telstra’s competitors have their modems, so they would have to put their modems on each node at the end of the street, which would be physically (and economically) impossible.
Network competition has no future if Australia wants a high-quality, economical broadband service. There is no option except a regulated Telstra monopoly unless some group of financial engineers with influence within Rudd Labor is concocting a “structural separation”, sold in the name of “releasing value”. That value would certainly accrue to the promoters, but it would be at the expense of Telstra’s shareholders or telephone users.”
QUESTION: Will this most important part of Australia’s future get adequate airing in the pre-election climate to ‘knock it into a realistic shape’ or will ‘unreality’ continue to reign?