Connected Research

Union policy research in the 21st century

Australian government issues draft broadband law

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The Labor Government in Australia yesterday published its draft ownership, governance and sale framework for NBN Co, the new company being established to fulfil a 2007 manifesto commitment to form a nationally-owned high-speed broadband company charged with rolling out major investment in a A$43bn (£25bn) fibre-to-the-premises network across Australia.

The plans go hand-in-hand with a proposed – and evidently controversial – plan to compel (albeit on a voluntary basis) the structural separation into wholesale and retail arms of Telstra, the former monopoly telecoms company. A bill detailing the break-up was due to be laid before the Australian senate this week, but looks to have been delayed as ongoing, and highly complex, government talks with Telstra continue over the valuation of telecom assets being folded into NBN (leaked, apparently by mistake last October, as being between A$8bn and A$40bn, depending on assumptions). [Edit 26 February: It was indeed delayed [registration required; limited viewing time] as a result of what the Labor Communications Minister describes as filibustering by the conservative opposition – a situation which he later decried in the following terms: ‘If the opposition is serious about improving competition in the market, they need to stop playing opposition for opposition’s sake and allow the debate to begin.’ So, a centre-left government launches a Bill designed to enforce the structural separation of the telecoms company in the name of boosting competition – but this is filibustered by conservatives. It’s an upside down world.]

Meanwhile, more on the union view on structural separation and NBN appears at the pages of the relevant part of the CEPU here.

The draft framework – which has also been controversial, not least because it appears at least partly to be being used as a tool in the negotiations with Telstra – outlines that the government will continue to hold a majority stake in NBN (i.e. at least 51%) until five years after the network is ‘built and fully operational’, scheduled for mid-2018, after which point it will essentially be privatised. The ultimate decision here, however, could be delayed annually, and perhaps even indefinitely.

The key part of the draft as regards the structural separation argument is that NBN will be a wholesale company, selling wholesale products on an open and equal access basis, and that, while private participation (up to 49%) in the venture is welcome, no retail operations are allowed (though the goverment does seem to be reserving the right for NBN to sell services on a retail basis to ‘certain end users, for example government agencies’). This therefore puts Telstra in the position of either agreeing to structural separation, and folding its assets into NBN (for which the terms of engagement have already been announced), or else taking the chance of competing with it via its own infrastructure build. Additionally, the right reserved to NBN to sell retail services to government agencies also adds pressures on Telstra as a result of its own government contracts, the loss of which would clearly undermine its commercial operations.

Comment on the plans – billed as an ‘exposure draft’ – is being taken until mid-March, with legislation due later this year.

Of interest to the UK? Certainly, as regards an alternative (albeit very difficult, given the structural separation aspects) model of rolling out a fibre access network – and one owned by the government, to boot (at least in the first instance). Secondly, there is evident interest from a UK perspective given the circumstances of the creation of Openreach in the UK – when BT was forced to separate itself functionally to avoid a Competition Act reference. Thirdly, the comparative scale of the investment needs to be noticed. Rolling out fibre-to-the-premises across Australia is an immensely significant project which, if the predictions about broadband investment are right (and these things can be subject to hyperbole), should deliver an enormous boost to the Australian economy. The population spread around Australia is important – most of Australia’s 21m people live around the coast – so this changes the dynamics of the investment. Nevertheless, this is a huge sum, both on an absolute and a per-head basis, on which, leaving aside the controversial aspects with which the plans are associated, it is good to see a government taking a lead.

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Written by Calvin

25/02/2010 at 1:59 pm

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