An NBN or not?

15 September 2010 | John Hibbard

Australia’s national broadband network (NBN) is turning out to be one of the bargaining chips likely to determine the outcome of the country’s recent election, writes John Hibbard.

At the time of writing, Australia is in a mood of post-election uncertainty – with no outright winner having been declared yet. This election has significant interest for the telecommunications industry because one of the key issues is the country’s controversial NBN project. You will have read about the previous Labor government’s plan for a $A43 billion (approx $US38 billion) roll-out of fibre to 90% plus of the Australian population. The government created NBN Co to undertake this, and it has been working vigorously to meet its objective with an initial contract given to Alcatel-Lucent.

In the southern state of Tasmania, the first roll-out of the NBN network has just taken place and observers are now watching with interest to see the level of take-up – not that broadband users can be expected to change automatically overnight. What nobody is disputing is that the NBN is a rare foray into long-term infrastructure development in a country where short-term political opportunism is the usual tactic of its governments.

The largest provider of telecommunications in Australia is Telstra, which has infrastructure capable of serving close to 100% of the population with a significant proportion having no alternative provider. Under the previous Conservative government, Telstra resisted proposals to jointly build a fibre-to-the-node (FTTN) network with competitors, or at least accept the requirement to make capacity available on reasonable terms. The then regime in place at Telstra decided to confront the government on its right to require them to engage constructively in the competitive market. When you try to take on a government and challenge their power to rule, you can lose. In a country that is generally acceptant of a government’s role in bringing about fair competition, this is what happened to Telstra, leading directly to the plan for the NBN that is now being constructed.

In taking on the government in the way that it did, Telstra’s then management alienated much of the Australian public. The result has been considerable support for the NBN, albeit with a slight nervousness about the cost. Few believe it will end up costing the full amount; and more believe that competition for Telstra would be good for consumers. The new regime at Telstra is to fold its copper network into NBN Co in a hopefully peace-making if still-to-be-completed deal.

The Conservative opposition, who had previously also fought vigorously against Telstra’s power play, has now taken the politically opportunistic position of opposing the NBN and supporting the return of Telstra to its dominant role. They don’t like the large expenditure, they don’t believe that we need high capacity broadband this decade and ideologically they are opposed to government ownership of a major provider of communications. However they have not enunciated any plausible alternative, other than to continue using what is there now.

The NBN issue will not decisively swing this or any other election (although it is wonderful to have telecommunications on the front page of the paper) but the result will have a major impact on the direction of Australian telecoms in the coming years.