National broadband has been a hot topic of discussion recently. Leader of the Australian Labor Party, Kevin Rudd, has promised to partner with the private sector and invest up to $4.7 billion in government money toward creating a new national Fibre to the Node (FttN) broadband network if elected. In response, prime minister John Howard replied by asking "why should we use that (money) to fund the provision of something that the private sector ought to provide in a normal market situation".
The private sector, unfortunately, is completely dominated by Telstra (now privatised by majority share after the Howard government sold off its T3 shares in November 2006), who some claim are "holding the country to ransom" by controlling the national infrastructure, with no future in sight for any competition to emerge. Telstra themselves were in a deadlock with the Australian Competition and Consumer Commission (ACCC) about unfavourable regulatory conditions in regard to the construction of a new national fibre network for over a year. The results of these talks were for Telstra to scrap their plans for a $4 billion national high-speed broadband network in late 2006 after reaching an impasse over the terms under which the network would be built and how to charge rivals for access. It has recently been revealed that Telstra has presented a new proposal to build a $400 million broadband network, but whether their requests are still considered too greedy remains to be seen.
Meanwhile, the G9 -- a rival consortium to Telstra comprising Optus, AAPT, Internode, iiNet, Primus, Macquarie Telecom, Powertel, Soul and TransACT -- have come up with an alternative plan for a national fibre network that they say will help improve competition whilst giving Australia the broadband it needs. A formal proposal will be lodged to the ACCC soon.
So, back to Labor's plan. To help fund this five-year plan, they will draw on $2 billion of the existing communication fund (originally set up in 2005 to improve telecommunications services in rural, regional and remote Australia) with the rest coming from the sale of existing Telstra shares from the government Future Fund -- money put aside to cover the federal government's superannuation for public servants. By the end of this, the nation (98 per cent of us, at least) will have access to a 12Mbps broadband network.
The Federal Government has also recently introduced new national broadband plans -- the Australian Broadband Guarantee and Broadband Connect. At a cost of $162.5 million, the former aims to give subsidised access to users who cannot currently access broadband (with tender application results yet to be announced). Broadband Connect, on the other hand, is a $600 million program designed to give broadband access to rural and regional areas of Australia.
During a speech in March 2007, communications minister Helen Coonan said that "Australia now ranks number two in OECD tables for growth in take-up of broadband services, and with an insatiable appetite for both broadband and bandwidth, we cannot afford to leave consumers stranded without access."
Paul Budde of Paul Budde Communications -- an online Telecommunications research service -- says of the above plans, "All those plans are basically fine. However, every single one depends on a sound regulatory framework which needs to be based on operational, and eventually, structural separation of the infrastructure from the retail arm of Telstra."
It is certainly in Australia's best interests for Telstra to separate its retail and wholesale business units -- an idea that was, until recently, also endorsed by Labor. This would mean all telecommunications companies could compete on a level playing field enabling fair competition without dominance (from Telstra).
Budde continues; "The structural separation outcome is inevitable -- countries already on this path include New Zealand, Britain, Sweden, the Netherlands and Italy. If we don't join this development now we will again run at least five years behind the rest of the world during the next five to 10 years."
So where does this leave us, the consumer? It looks like, one way or another, Australia will indeed get its new national FttN broadband network at some point in the near future -- presuming all parties can come to a satisfactory agreement. But in saying that, it does also appear that Telstra will have to be involved in any future plans, as access to their copper wire network will be required to carry data from the nodes (located on street corners) to the individual premises.
