Starting point for Coalition NBN? Anywhere but here

It’s not often I agree with Malcolm Turnbull on broadband policy, but one of his comments at the press conference launching the Coalition’s alternative to Labor’s NBN was spot on.

 

Turnbull was asked: “The Coalition has made a great deal of the fact that the Australian Government is the only government globally to be rolling out fibre to the home, but won’t a Coalition government be the only government rolling out fibre to the node globally?”

He replied: “You are right… We are in the position of the guy that is going touring in Ireland and gets lost in one of those little country lanes and goes into the Irish pub and asks for directions and the barman with the generosity and helpfulness and kindness for which the Irish are famous says to him, ‘Well, sir if I were you I wouldn’t be starting from here’ and the truth is we wouldn’t be starting from here either.

“So, the Government shouldn’t be building this. Every other country in the world that I can think of has taken the approach of getting the industry, the private sector to do it and provide some degree of subsidy for the non-commercial, non-economic areas. That was the choice the Government should have taken. It was actually their original policy, remember, in 2007. They abandoned this for this great scheme.”

He’s right up to a point, but the point depends on where the ‘here’ is from which the tortuous journey to some sort of National Broadband Network started. How about 1982? Seriously.

On 28 October 1982 the report of a government enquiry into telecommunications was tabled in Parliament. It had been set up to examine “the extent to which the private sector could be more widely involved in the provision of existing or proposed telecommunications services in Australia either alone or in conjunction with [Telecom],” and “The consequential change that might be necessary in statutory function duties, financial objectives and monopoly provisions of [Telecom].”

The Davidson enquiry recommended an end to Telecom’s monopoly. Its recommendations were rejected. Fast forward to 2009 when Labor, as Turnbull correctly states, abandoned its 2007 FTTN plan for the FTTH NBN. But not so fast. Take that journey more slowly and you will see hand of the monopoly Telecom, later Telstra, on the wheel at every turn.

1992 is a good place to stop and look around. It’s February and Paul Keating is prime minister having ousted Bob Hawke the previous December. He makes a promise to the Australian people: “We will establish an expert group which will include representatives of AOTC [the newly merged Telecom and the Telecommunications Corporation], Optus, industry and the unions to develop a technological blueprint for a fibre optic network serving a significant number of homes and businesses in Australia.”

A government source told me at the time that, in the Government’s view, the fibre optic network was one of the best ways to stimulate industry development, technology exports, and employment growth throughout the 1990s.

What was to have been the Fibre Optic Expert Group eventually saw the light of day as the Broadband Services Expert Group (ie with a focus on services not networking technologies). I heard suggestions that the original intent had been subverted by Telstra. This would not be surprising given the lengths it went to in the mid 1990s to defend its access network monopoly against Optus’ HFC network rollout.

By the time the BSEG produced its interim report it had travelled even further up the value chain focussing almost entirely on content. In its final report, delivered in February 1995, the BSEG had retreated considerably from the content-obsessed recommendation of its interim report to a set of recommendations which it believed would stimulate demand for broadband services, and hence the development of networks

It also called on the, then Coalition, Government to formulate "a National Broadband Strategy," and to "establish a National Broadband Strategy Implementation Group to oversee implementation of the actions in the national strategy and to review and evaluate its progress."

Successive Coalition Governments came out with broadband strategies and broadband blueprints, none of which amounted to anything. So having killed off the Optus Vision for broadband Telstra was able to watch Australia drifted aimlessly though the latter part of the nineties and the first five years of the 21^st century in the absence of any coherent policy on broadband.

Remember those were the early years of the Internet and, later the early years of ADSL, a synergy that did much to focus the nation’s attention on broadband and the need for some sort of ‘broadband policy’.

In 2005 Telstra, under its new CEO, Sol Trujillo put a proposal for an FTTN to the government. Technically and economically it made a great deal of sense, but the big stumbling block was the gulf between what the ACCC and the Government wanted in terms of access by third parties, and what Telstra was prepared to offer.

It was in this climate that Labor really made broadband an election issue with release in the run-up to the 2007 election of its FTTN plan. Regardless of the merits or otherwise of the plan there was no doubting its scale and the clarity of the vision, and it received an enthusiastic welcome from many industry players.

The Labor government went through the motions of calling tenders and setting up an expert task force to assess bids but Blind Freddy could see that no proposal that did not have Telstra’s participation or co-operation would have any chance of being feasible. The whole thing was seen as a way of, to put it simply, getting Telstra to build the FTTN network it had proposed to build, but under the Government’s terms. It didn’t work.

The exact truth of what happened might never be known, but there was probably too much brinkmanship on both sides. The build up to the expected announcement of the FTTN network builder had been enormous. The government needed a face-saver, and a big one. Hence the $34b, and counting, FTTH NBN.

So Malcolm, I wouldn’t be starting from 'here', either, and neither would the ALP have started from ‘there’ from choice, but you can’t rewrite history, only strive to not repeat it.

In its press release announcing its broadband policy – but not in the document itself - the Coalition promised to undertake “An independent review into the long-term structure and regulation of telecommunications.”

What again! Telecommunications regulation was reviewed in 1982 without change and again, with significant changes in 1988, in 1991 and in 1997. The shortcomings of that regime have been all too evident and it has undergone several major ‘tweaks’ since then.

Just last week ACCC chairman Rod Sims mused on the telecoms history of the past 20 odd years in a speech to the Australia-Israel Chamber of Commerce in Brisbane.

“The communications industry could have looked so different from what we have today. In the late 1980s there was only one domestic telecommunications provider, and it was government-owned… Those of us championing microeconomic reform back then had many successes with, for example, tariff reductions and reform in the electricity, aviation, rural water, road and rail sectors.

"In telecommunications we lost some big debates as the Telecom unions, in particular, were very powerful. The most important debate was trying to separate Telecom’s copper network from its retail activities. We succeeded with structural separation in electricity, but lost in telecommunications.”

And he concluded: “Just imagine how different the communications industry would look today had we won that debate. Telstra would never have been vertically integrated and, I believe, our industry would be more competitive than it is today.”

Negotiation with Telstra has already set back the timetable for Labor’s NBN by at least 12 months. With its copper network now an essential component of the Coalition NBN plan Telstra will certainly play hardball and extract as much shareholder value from the deal as possible. By the time that agreement has been locked own, what will be left to review and re-regulate?

The words of Sims’ predecessor, Alan Fels in 2003 – five years after the supposed introduction of full network competition – still ring true today "Telstra owns the only ubiquitous customer access network… [and] it will retain control of critical inputs for many services for the foreseeable future."

This article first appeared on iTWire, Australia's leading independent IT&T news and information source.