NBN impetus traced back to 'asset rich' Telstra

Failure to manage telecommunications assets is leading to massive overspend

This week the “revelation” that an uncooperative Telstra prompted the National Broadband Network will hit the headlines again as the ABC digs into the politics of the telecommunications industry. In reality the writing has been on the wall ever since deregulation more than a decade ago.

Tonight the ABC’s Four Corners program will screen an investigation into the emergence of the NBN in light of the estimated billions in compensation that the federal government would have had to pay Telstra to access its last-mile infrastructure.

True deregulation back in 1997 would have involved creating an NBN Co-like company to manage the telecommunications infrastructure

The show is yet to go to air, but the ABC is keen to ride the wave of NBN publicity and has started posting details of the report on its own online channels.

The threat of Telstra competing with any fibre-to-the-node network was also a contributing factor in the government’s NBN strategy. Not bad for company built by the government and its tax payers to begin with.

With the structural separation of Telstra still on the cards, the federal government’s failure to manage its own assets continues to dog the industry.

True deregulation back in 1997 would have involved creating an NBN Co-like company to manage the telecommunications infrastructure and establishing Telstra and an enterprise and consumer services retailer.

This doesn’t mean Telstra wouldn’t have been able to deploy its own infrastructure, especially in the mobile space, but it would have removed Telstra’s artificial monopoly position – before it was privatised!

Now the government wants to “buy back” the infrastructure in the form of NBN Co.

A comedy of errors indeed and unfortunately for rural and regional areas, the problems won’t just disappear with an NBN, assuming the project actually succeeds.

For years and years the other telcos and ISPs have complained about Telstra’s last mile monopoly. Even as recently as mid-2010 Telstra was fined $18.5 million for anti-competitive behaviour.

With that in mind, there’s no reason why the public should have any confidence in Telstra’s ability to work with the NBN or whether the same mistakes won’t be repeated by NBN Co, which is being run like a commercial business, not as a not-for-profit service provider.

If Telstra is forced to cooperate it will, but it is set to benefit financially from the outset through a transfer of assets to NBN Co and it is investing heavily in mobile infrastructure which may or may not need to use the NBN backhaul. If it doesn’t then Telstra will be able to go about its mobile business unhindered by NBN pricing regimes.

Basic infrastructure like roads, railways, electricity and fixed-line telecommunications are best kept in public hands to avoid conflicts with the private sector economy.

They’re not “free” as taxes (in theory) fund them, but the government always seems to find a way to increase the cost of their use, despite having the profitable luxury of being a monopolist.

This is a predictable outcome of the NBN even if it remains wholesale-only. Access costs will increase which will be then passed on to consumers. The Big T under another name?

If nothing else, tonight’s Four Corners report will be a good lesson in how to bungle national broadband development. The federal government couldn’t have done worse if it tried.

Follow Rodney Gedda on Twitter: @rodneygedda

Follow TechWorld Australia on Twitter: @Techworld_AU

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