Australia - Continuing debate over the roles of governments and markets in the roll-out of broadband

[arnnet] Analysts have provided lukewarm responses to an open letter from senior telco executives that criticises the Government’s National Broadband Network.

The letter, which is signed by several telco bosses such as AAPT CEO, Paul Broad, and BigAir CEO, Jason Ashton, claims the Government “has failed to convince” Australian on the need for a national fibre-only NBN solution.

“For the short to medium term we see, globally, no demonstrated mass requirement for the “up to 1Gbps” speeds to homes and SOHO,” the letter said. “We believe… markets are better managers of capital and technology risk than government.

“In Australia, you might expect to cover 98% of our 22 million people… for $3 billion or less with a large part of this delivered by private investment.”

Ovum research director, David Kennedy, said the open letter made some very good points and that the division in the industry was in part caused by the lack of research-based analysis.

“I think the reason this is starting to happen is because the Government hasn’t clearly articulated a rationale for the NBN and the current implementation approach,” he said. “Because they haven’t adopted a research-based approach the NBN has now become a bit of a political football.

“The situation we’re now in is that because Labor has lost its majority in the Parliament the entire project is up in the air. This announcement today reflects that underlying lack of consensus about the way forward.”

Although Kennedy acknowledged the timing was good for the Coalition, he said he didn’t think it was a partisan statement at all and claimed the ideas expressed were “probably as good as anyone else’s.”

“We’re heading into what will be an extended debate about the NBN and how Australia’s future broadband needs will be met,” he said. “There are a lot of complexities underlying what’s proposed by the NBN that aren’t addressed by the current policy.

“Sophisticated thinking about how the market will work in the new arrangement and what the investment incentives are and so on has been absent from the debate so far,” Kennedy added. “There’s a lot of cost here, not just to the taxpayers but also to the industry in terms of disruption and writing off of old infrastructure.”

Telco analyst, Paul Budde, said he was happy to see the telco executives support the concept of a national broadband network. But he also claimed the telcos involved were not representative of the industry as a whole and that the major players all backed Labor’s NBN.

“The only real large scale operator [on the letter] is AAPT, which we know is also in disarray,” he said. “It’s not that these are the leading lights in the industry at the moment. They’re good people, but if [AAPT CEO] Paul Broad had it all right, why is his company in such a bad shape.”

“These are industry players so… they think about themselves,” he said. “Obviously, they have their own agenda regarding the future of their businesses and I think that’s part of it.”


Analysts explains why some telcos don’t want an NBN