Thursday, August 28, 2008

Australia - Broadband

Australian opposition party threatens structural separation for government-funded National Broadband Network

The 'S' word has been exchanged in Australia to a chorus of disapproval from dominant operator Telstra and a chant of support from Telstra's competitors.

Last year the Australian Labor government announced plans to invest up to $4.7 billion in a high speed national broadband network, designed to boost the country's broadband capabilities and overcome the huge distances and low population densities which always hinder economic network roll-out there.

The building and operation of the new network has been put out to tender and dominant operator Telstra is expected to be named as the builder and manager.

Now, however, the country's opposition 'shadow' spokesman on communications has publicly backed a 'structurally separated' version of the national broadband network initiative - a stance that will arguably radically change the risk/reward calculations undertaken by the company winning contract.

In doing so, the spokesman, Bruce Billson, has been accused by Telstra's regulatory affairs director of having "thrown out a decade of coalition policy". Clearly structural separation is not an option that appeals to Telstra. The company has made it be known that it would not bid for the contract if structural separation is required.

Billson, however, is unrepentant.

“The Opposition has made it clear that if $4.7 billion of taxpayer money is to be utilised, then we need commensurate public policy gains,” Billson said at a Sydney conference. “We’re not about imposing new burdens on taxpayers, new burdens on shareholders, new burdens on corporations.

"We’re about saying ‘if you want the money, there are strings attached to it,’ and we believe that achieving effective structural separation needs to be one of those things, because of the natural monopoly that will be produced requires that kind of clarity.”

Telstra's competitors are delighted by the intervention. One such, Terria, which is bidding for the contract and promising structural separation as its central pillar told CommsDay. “I think that it’s a very sensible proposal, I’m heartened he thinks that way. Separation is all about getting the alignment of interests right... we’ve been all the time saying separation is vital to a truly independent, open access network.”

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