opinion If there is one thing Australia desperately needs right now, it is for our elected representatives to stop making dramatic changes to our national telecommunications policy every few years and to come together around a set of universally agreed projects. The alternative is another half-decade worth of pointless wasted effort and industry chaos.
In this morning’s issue of industry newsletter Communications Day, seasoned telecommunications commentator Grahame Lynch raises a very frightening prospect for an industry which has just experienced half a decade worth of constantly changing telecommunications policy: More dramatic regulatory change.
Australia’s telcos and ISPs, Lynch points out, have over the current Labor Federal Government’s two terms, “totally re-aligned” themselves around the political priorities of a single man: Communications Minister Stephen Conroy.
Telstra is embracing its own separation as part of the National Broadband Network policy, other ISPs have started re-aligning their future network buildouts, sales and revenue plans to take the network into account and even vendors such as Ericsson, Cisco, Alcatel-Lucent and so on who sell products to the telcos have aligned their marketing priorities NBN-ward. In short, the entire industry is restrucuring itself from the ground up around the NBN.
“It is not too much of an exaggeration to suggest that a Stephen Conroy pixie stands on the shoulder of most telecommunications executives, whispering his cues into their ears about what their strategic priorities will entail,” writes Lynch.
And yet, as Lynch also notes, with the popularity of the Gillard Government hitting record uber-lows, it remains extremely likely that, come mid-2013, the NBN project as a whole will be cancelled, chopped in half, dramatically restructured, or in the absolute best case scenario, simply delayed significantly as a new Coalition Government carries out that cost/benefit analysis which Shadow Communications Minister Malcolm Turnbull has been talking up for a year now.
Taken in the context of the previous half-decade, what this situation represents is nothing short of remarkable. It represents the ground being cut out from under an industry which finally — after half a decade of debate about its future — was about to find its feet.
Let’s go into a little bit of a history lesson to give some context to why another dramatic shift in telecommunications policy at this point would be a debacle.
Most of the telecommunications regulatory environment which Australia enjoys today dates back to 1997, when the industry was substantially deregulated and a tranche of new telcos entered the market and ISPs such as iiNet started dramatically expanding their fiefs.
Although the Howard Government which held power for a decade after that point did make small adjustments to the structure set up in 1997, under Communications Ministers such as Richard Alston and Helen Coonan, it largely left legislation in the field untouched, preferring to focus on areas such as privatising Telstra and leaving much of the day to day jostling in the sector to the Australian Communications and Consumer Commission to work out.
Perhaps the Howard Government’s most substantial telecommunications project of the era was the ill-fated OPEL deal which had been slated to bring wireless broadband to the bush. The project was first proposed in March 2006, following pressure from Telstra and Labor (with then-Communications Minister Stephen Conroy doing much of the pushing) to ‘do something’ about broadband blackspots.
And it’s from here on in that things have become a veritable disaster area in terms of stable telecommunications policy in Australia.
Conroy of course, cancelled OPEL when the Rudd Government swept to power in November 2007. At the time, the move was fair enough; Labor had opposed the OPEL deal from the start and was committed to fulfilling its own election promise of a National Broadband Network strategy based on a nationwide fibre to the node rollout, inspired by a model proposed by then-Telstra chief executive Sol Trujillo back in 2005.
However, in hindsight, it is obvious that cancelling OPEL was a bad idea.
As the failure of Labor’s FTTN project became clear in the opening months of 2009, Labor was forced to revisit the idea of rolling out wireless to the bush, as part of its dramatically expanded fibre to the home (FTTH) NBN project announced in April 2009. This is the first example of a situation where both sides of Australian politics have agreed on a core telecommunications policy principle — that the only economical way to provide services to some rural areas is through wireless — but have never been able to agree on a common joint policy approach to the matter at the same time.
But there is also a much larger and more problematic example.
If the wireless component of Labor’s NBN policy owes much to the OPEL policy previously advanced by the Coalition, then it is also true that the Coalition’s new telecommunications policy advanced by Turnbull several weeks ago owes much to Labor’s doomed FTTN policy of the 2007 Federal Election.
“Inviting” companies like Telstra to bid for Government-funded contracts to roll out competitive infrastructure? Re-using components of the current copper network, augmented by fibre? A final recognition of the need to systematically separate aspects of Telstra’s operations so the company will be a fairer wholesale player in the telecommunications market? These were all aspects of Labor’s 2007 policy. Sure, Turnbull has taken them further, but there are still many aspects of similarity between the policy approaches taken by each side of politics.
Once again, however, much of the difference lies in the timing — the Coalition’s current broadband shares many aspects with the Labor NBN policy of 2007 — but not the Labor NBN policy of today.
Now in many industries, constantly changing Government policy would not be that much of a headache. People are still going to buy the same food, mine the same minerals out of the ground, deposit their money in most of the same banks and so on — regardless of what the specific Government policy of the day is.
Not so in telecommunications, where the objective fact of fast-moving technology development means that an unstable regulatory environment bedevils today’s infrastructure investments for fear of what may come tomorrow.
If the Coalition had successfully deployed rural wireless solutions through OPEL from 2007 onward, as it has pointed out, many rural Australian households would already have fast broadband. Alternatively, if competitive backhaul links had been deployed to the bush half a decade ago, as companies like iiNet and Internode were pushing for at the time, many towns would currently have access to upgraded ADSL infrastructure, where today they do not.
If a common policy approach had been agreed on a national Fibre to the Node network back in 2005 and 2006, when Telstra was pushing for a solution in the area, then Telstra’s copper would already be halfway upgraded today. Instead, as I have previously highlighted, many Australians will be waiting until the latter part of this decade — almost 15 years after Telstra raised the FTTN idea — for the NBN fibre to be connected to their premises.
And a third case is looming.
If the Coalition takes power in 2013, there is every likelihood that it will be forced into a compromise situation regarding Labor’s fibre to the home NBN policy. What happens, for example, if the Productivity Commission does conduct a cost/benefit analysis into Australia’s need for broadband, as Malcolm Turnbull has consistently requested, and comes back with a recommendation that the NBN proceed?
Much of Australia’s political and telecommunications community would then demand — with the NBN fibre already having been connected to an estimated 1.7 million premises by that point — that the rollout go on, in some form or another, with its larger policy structure remaining untouched. The populist appeal of ‘100Mbps broadband to the home’ will also play into this dynamic, as senior telecommunications analyst Tony Brown wrote in a detailed analysis of the Coalition’s proposal this week.
How embarassing, for a party which has opposed the NBN from the start.
Regardless, the common strain running through all of these events is that despite their protestations, in large part it is the ridiculously unstable telecommunications regulatory environment which Australia’s incessantly warring politicians have gifted the nation with which has held us back in so many different areas over the past decade, and will continue to hold us back over the next five years if the two pathetically similar sides of politics cannot come together on a joint proposal. One, perhaps, founded on bringing many of the aspects of Labor’s visionary NBN project and the Coalition’s more targeted policy (which, as we have already noted, has many positive aspects) together.
If Telstra had been separated five years ago, if the bush had received wireless broadband, if competitive rural backhaul links had been funded and if Labor and the Coalition could have agreed on a way in which to invest public money in broadband in a moderate fashion which would suit both sides of politics and stimulate competition in the sector, right now Australia’s broadband landscape would look very different than it does today.
The long-term nature of infrastructure investment and the squabbling of the past half-decade has made it increasingly clear that a bi-partisan approach to telecommunications policy is needed in Australia. The only difficulty may be convincing our arrogant, indecisive, stubborn and incredibly own-party blinkered political leaders that they should sit across the table from each other and discuss the issue like adults. At times they appear to forget that they are all employed by the same person — the Australian taxpayer.
If the coalition win the election in 2013 and decide to halt the NBN roll out about a million premises will be covered by then (or so I’ve been told) They’ll have to explain why they are deliberately creating yet another digital divide in Australia just to satisfy their political agenda.
Very true.
“They’ll have to explain why they are deliberately creating yet another digital divide in Australia just to satisfy their political agenda.”
What is it about the Coalition plan that will create a ‘digital divide’?
Did you even pay attention to the first sentence in my comment? By halting the NBN roll out they will instantly be creating a digital divide because there will be 1.2 million premises covered by fibre by then. That means a great number WILL NOT have access to 100/40mbps and faster speeds. Then there is the FTTN patchwork plan that you have shoe horned into this argument, which come to think of it will create a digital divide of it’s own, the very nature of the technology used will ensure that. Some “lucky” people will get 5-10mbps up, others will have to be “happy” with much less than that. If you want faster speeds move. Digital divide.
“That means a great number WILL NOT have access to 100/40mbps and faster speeds.”
Doesn’t matter if they don’t want it.
“Then there is the FTTN patchwork plan that you have shoe horned into this argument, which come to think of it will create a digital divide of it’s own,”
Yes I was wondering when your ‘patchwork’ mantra would be used again, of course what you fail to mention is FTTN is much faster and cheaper to deploy as it uses mainly existing infrastructure and it was also cheaper to the taxpayer because it would have been a private/Government partnership, as distinct from the 100% taxpayer fed Labor FTTH which takes longer to deploy and requires ALL existing BB fixed line infrastructure to be shutdown so residences are forced onto it.
The digital divide is a figment of your imagination, as it promotes the myth that only a 93% FTTH solution is the sole answer, and there will be great uproar unless everyone has FTTH and not a mix of solutions.
Like the uproar that greeted Telstra and Optus when they stopped the HFC rollout in 1999 and it created a ‘digital divide’ between adjoining suburbs, that’s right the non HFC suburb residences didn’t give a stuff.
Digital divide. LOL
Correct because they are free to choose the speed they like be it 12/1mbps, 50/20mbps or 100/40mbps. Others will not.
You still whining about this?
Cheaper for who? No customers that is for sure, we will be paying the same price for an inferior service with the coalitions patchwork plan.
Apparently not http://www.dailytelegraph.com.au/news/national/bytes-on-but-no-one-at-home-for-national-broadband-network/story-e6freuzr-1226131744273
As I said yesterday I propose a 76% FTTH build for VIC & NSW plus wireless and satellite covering the rest. What are you proposing?
“FTTN is much faster and cheaper to deploy”
you know that wont be the case. for political reasons – the rollout will be suspended, then the PC report done , then the Telstra and leightons contracts will have to be respun and THEN you can get it started. and then the practical build reasons – sorting the node locations, resuming property where necessary, construction of the cabs.
assuming the tech inside the cabinet is ready to go the moment the cab is built (i expect delay) you then have the task of rejigging the copper – taking the run from the home to the exchange out and relaying at least part of it to the node instead. and i havent even considered local govt planning rules etc, and the work to power the cabinet, which presumably will require an underground line (cos aerial wont make residents happy) and so on and so forth.
and of course all the money to do that – even if the Coalition tear through the political aspects such that they can get started before the halfway mark of their tenure, you are seriously betting that it will *not* surpass the cost of the current build today? for an inferior service?
i know we wont agree on this but i really do think when you consider the FTTN is a limited lifetime item and incurs further costs to upgrade to FTTP down the track, over and above all the time and money costs as above (and probably more i havent considered) to get it set up, the best dollar spend for a network is on the FTTP build, as we have now.
put it this way alain: if you dont like the Labor build on a costs basis “it costs too much” etc, if the Coalition build costs blow out beyond what the Labor policy budgets for, would you junk that policy and accept the FTTP policy? or will you still insist that FTTN is the way to go over FTTP?
http://www.dailytelegraph.com.au/news/national/bytes-on-but-no-one-at-home-for-national-broadband-network/story-e6freuzr-1226131744273
Ridiculous article but already signs of a digital divide are appearing, this is in just one area, imagine what will happen after 1.2 million premises are passed and the NBN is stopped (Not that you’ll hear about it on the Daily Telegraph lol)
There is no digital divide if you pass 1.2 million homes and half of that number don’t want it.
You do realise that not everyone is connected to the internet now with the current network. We still have a digital divide regardless. The other half of that 1.2 million you are claiming will be free to get connected anytime they choose the rest (8 or so million) DO NOT have the same option. That IS a digital divide.
Is that what you mean by the ‘digital divide’, you divide it by two.
Is that what you mean by the ‘digital divide’, you divide it by two.
What are you talking about? You said “half of that number” Not me. Are you hearing voices in your head?
btw I just noticed you mentioned 1.7 million premises. I was sure NBNco was estimating 1.2 million, not that I’m disputing your number but have NBNco revised this recently?
http://www.zdnet.com.au/17m-premises-connected-to-nbn-by-2013-339308110.htm
Cool thanks for that, 1.7million it is then :-)
Take out wireless and it’s only 952,000, and that’s 952,000 residences it passes, subtract from that those residences that said yes I want it connected then subtract from that figure residences that are actually using a active ISP NBN Plan.
The Coalition have not got a massive problem cancelling it in 2013.
oops I read the wrong table, forget all of that above, what I meant to say is take out satellite and wireless the prediction for a active fixed line FTTH service figure by June 2013 is only 511,000.
On that basis the Coalition have not got a massive problem cancelling it in 2013.
NO, it’s 1,269,000 total residences passed by fibre in June 2013.
1,717,000 is the total including wireless and satellite coverage by then.
You can subtract any number you think of, but it doesn’t change the actual number that Renai is talking about. Whether a person takes up a service in 2012, 2013 or 2014 is their decision – that number will always be fluid from day to day. It doesn’t have any relation to the completed rollout figures.
Thanks for clarifying that Gwyntaglaw, I was wondering where the 1.2 million figure fit into all of this.
Thanks for clarifying that Gwyntaglaw, I was wondering where the 1.2 million figure fit into all of this.
“Whether a person takes up a service in 2012, 2013 or 2014 is their decision – that number will always be fluid from day to day.”
Yes but the number taking a active service is a indicator of how popular it is, if you look at the predicted figures from the NBN Co Business plan and compare it to the premises passed figures, even the NBN Co are predicting about half don’t want it by June 2013.
Obviously the ‘popularity’ of the takeup depends on Telstra and Optus shutting down their infrastructure forcing residences onto the NBN.
It’s called compulsory popularity.
http://www.zdnet.com.au/17m-premises-connected-to-nbn-by-2013-339308110.htm
Stephen Conroy’s latest figures suggest the actual number of premises connected by the election will be 500,000 to 1m. The delays due to the Telstra agreement have pushed everything back.
Is that premises connected, that is they have a ONT box inside the house, premises that have it running past them in the street or premises actually using it?
Obviously Conroy and the NBN Co is desperately counting on the shut down of the Telstra CAN to bolster the figures, not even Telstra knows what exchange areas will be shut down and when, so by 2013 I am sure Conroy would not have a clue either.
Really if you look at it one way, its Labors NBN mk2 which created the massive shift, as its completely different to any approach that any other country in the world does its telecommunications policy
The coalitions policy of course has the massive difference in succeeding (where Labor failed with NBN mk1) due to Telstra being separated and becoming a government regulated utility much like electricity or power
After watching that four corners program, I almost face-palmed due to the fact that (or the way they told it), Labor only realized that they had to compensate Telstra for a FTTN after the whole tender process was about to finish. That sought of stuff they should have researched before even considering the FTTN, especially due to the fact that the only company that could actually win that tender was Telstra
I think it’s safe to say that Labor has been making policy on the run in a lot of cases here; however I also think it’s safe to say that there are few people expert enough in this field to say how this policy truly should be laid out. We are in largely uncharted waters.
Whilst it might be different from any other plan in the world, no other country has the Telstra ‘problem’ that we do. Very few countries have the urban sprawl we do also, which hurts the business case for FTTN.
Most countries had the “Telstra” problem, Japan’s NTT, NZ and America’s Bell are prime exampels of vertically integrated telecommunications companies that have been split up to solve these issues
Stop implying that Australia is “unique” regarding Telstra, and that the only way to solve this problem is the NBN
Really if you look at it one way, its Labors NBN mk2 which created the massive shift, as its completely different to any approach that any other country in the world does its telecommunications policy
The coalitions policy of course has the massive difference in succeeding (where Labor failed with NBN mk1) due to Telstra being separated and becoming a government regulated utility much like electricity or power
After watching that four corners program, I almost face-palmed due to the fact that (or the way they told it), Labor only realized that they had to compensate Telstra for a FTTN after the whole tender process was about to finish. That sought of stuff they should have researched before even considering the FTTN, especially due to the fact that the only company that could actually win that tender was Telstra
Damn it Renai .. stop making sense! This is Australia you know!
Great article BTW and echoes my thoughts on the whole telco mess.
Heh no worries, cheers :)
Killing off the Telstra and G9 consortium FTTN proposals, cancelling OPEL, cancelling the FTTx Labor RFP all led to massive delays on what was was going to be a less of a burden on the taxpayer, a private/Government partnership build.
Why the majority of the population of Australia is not on at least FTTN in 2011 instead of ADSL/ADSL2+ is the direct failure of that Government process and the election cycle, Labor’s current solution of going it alone which looked like a hasty face saver solution after the cancelled RFP process is only as current as long as Labor remains in Government.
Labor have decided that this ‘Government process’ is so good despite the appalling history that they are to be trusted with the total build and replacement of the Telstra CAN by replacing it with the Government sanctioned fixed line infrastructure competition eliminator monopoly, the NBN Co.
Roll on 2013.
Hang on mate! You are pretty quick to jump up and down and claim that Labor is at fault that we’re not all on super fast broadband by now….did you read Renai’s article???
I quote:
“Although the Howard Government which held power for a decade after that point did make small adjustments to the structure set up in 1997, under Communications Ministers such as Richard Alston and Helen Coonan, it largely left legislation in the field untouched, preferring to focus on areas such as privatising Telstra…”
Howard was in power for a decade and Coonan and Alston (arguable some of the worst Communication ministers in many decades and completely clueless in the field….Google “Richard Alston broadband” and see!) left broadband and the industry in general to rust away, only interested in fattening up Telstra for the ultimate sale so they can claim they added “xx billions” to the surplus…
Everyone also seems to keep praising the OPEL project. While yes, some rural areas would have broadband by now, at what cost? OPEL was based on an expensive, proprietary and poorly upgradable technology that has virtually already outlived itself. Fibre and LTE may be more expensive and take longer to deploy but they are FAR more upgradable, something that is CRUCIAL when billions are being spent and when a nation’s long term communications infrastructure is laid.
The classic response is now to claim fibre has no future and we are spending over 50 billion dollars on it. no wait, 80 billion dollars on it because its like, the government or something.
Government projects do have an almost certain chance of running overbudget and/or time
Except liberal ones amirite?
Liberal government is not building the telecommunications infrustructure, they will just subsidize other companies to do so
So, in a sense you are right, this problem doesn’t apply to Liberal government regarding telecommunications, because they are simply not asking the government to build it
Except liberal ones amirite?
Except liberal ones amirite?
“You are pretty quick to jump up and down and claim that Labor is at fault that we’re not all on super fast broadband by now…”
I didn’t say it was Labors fault, I said it was a failure of Government process no matter who is in power that we are not on at least FTTN currently.
I agree the Howard Government sat on their hands for 11 years and pulled the OPEL project out at the last minute before the 2007 election, but remember it wasn’t the NBN FTTH that got Rudd in at that election, that came later.
Policy in a picture.
lol
a lot of ‘ifs’ there, Renai :)
In the case that the Coalition do indeed get elected next time around, given there is a whole bunch of local area governments beating down Quigleys’ door asking him to ensure their community gets NBN, i would expect there will be a very visible divide between those who have the NBN as Labor have envisaged it and those who will be left with the NBN as the Coalition currently envisages it. i know which of the two i would be asking for….
Also agree with Renai on the fact theres a fair chance that if the Coalition does win there will still be a big problem for them…. If a PC report stating the Labor model *IS* the one to go for, the whole last few years of drumbeating anti NBN rhetoric will make them look pretty silly. and i will indeed still be demanding 100mbps service ability – something Malcolms current policy doesnt have a hope of delivering me.
The best thing the coalition can do is continue their (slow!) trajectory of coming closer and closer to the NBN plan. there will be tweaks, they wont be able to help themselves; but the less there is of the consumer and business upset caused by the gap between the two policies the better.
Just on OPEL. Don’t forget this was WiMAX ‘d’. A total dead-end technology. So, even if it did get rolled out, it would have condemed those areas to absolute maximium 6Mbps for many many years because it was not upgrade possible and would need an entire replacement to… wait for it… LTE just like NBN.
i think what you’re going to see happen is that, unless Turnbull puts the foot down on the ACCC and allows Telstra to structurally separate in a manner that’s “value-preservative” to the same degree as the $11bln NBNco deal, Telstra’s going to come out vocally in support of the continued roll-out of the NBN in 2013/14.
basically, Conroy has Telstra very well boxed-in in terms of its choices. it basically only has one at present, which is to collaborate fully with NBNco. Telstra can’t avoid structural separation because while the CCS Bill technically offers them the choice of functional separation (to avoid the Fed Govt getting sued for “forcing” structural separation), they would be deprived of wireless spectrum at the late-2012 ACMA auction.
also, while the NBN remains operative as a competing national fixed network to the CAN, Telstra is unable to independently spin-off the CAN as a separate entity because while this NBN project is still alive and kicking, investors will be very reluctant to invest in the CAN. at the very least, the value of the CAN will be heavily discounted because potential debt/equity investors face the potential risk that the NBN will progress to completion in some form and possibly subsidised in a manner that allows it to undercut the CAN.
even if this wasn’t the case, Telstra is constrained in its ability to upgrade HFC to compete with NBNco because the cherry-picking provisions effectively trigger an open access, regulated regime for HFC, if Telstra upgrades it, that forces NBN equivalent access pricing. and aside from this, you have the separate provisions which abolish the negotiate-arbitrage model and massively strengthen the powers of the ACCC to unilaterally impose pricing and access outcomes on Telstra without administrative review. this is clearly designed to limit the attractiveness of any consideration of even competing against NBNco using copper/HFC.
the only redeeming feature of this whole forced divestment of copper monopoly for Telstra is probably the fact that Telstra’s getting as good, if not better, a deal as they will get from the ACCC if they have to spin-off the CAN under the future Liberal Govt. most likely, a separately negotiated (compensation) deal with the ACCC for CAN divestment would result in an even worse financial outcome for Telstra than the $11bln NBNco deal.
according to the GS report, the imposition of the “excluded regime” for wireless spectrum is not automatic even if Telstra doesn’t structurally separate. so, there’s a possibility that Telstra could come into an agreement with the future Govt to implement functional separation instead while still allowing it to participate in the ACMA auctions. this wouldn’t require any immediate changes to legislation. bottomline, this CCS Bill is a completely contrived piece of legislation specifically designed to box Telstra into a corner and force it into only one remaining option to collaborate with NBNCo.
and even if presented with the option of functional separation, if the regime is too harsh and destroys too much shareholder value, Telstra may still prefer the $11bln NBNco deal.
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