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August 18, 2005
All the focus in Canberra this week has been on Senator Barnaby Joyce and the $3billion fund he was able to negotiate around the T3 sale, whilst Telstra was cut out of the deal. Suprisingly, some of the judgements about what Joyce has achieved with his resistance from within the Coalition ranks are quite harsh:
Leahy
I guess that Barnaby Joyce probably did the best he could in the circumstances. But they said nothing about Costello's Future Fund being weighted with Telstra shares and little about network separation. There was very little debate about the regulatory regime of the telecommunications market after the privatisation of Telstra.
Yet Telstra will still dominate the market, continue to frustrate competition in the delivery of broadband, drag its heels on upgrading its infrastructure and continue to act as a gorilla in the marketplace. And most of the $3billion ($2 billion of the sale proceeds to establish a fund dedicated to upgrading infrastructure in the bush, as well as $1.1 billion to plug gaps in services, above all, broadband) will be spent outside the cities.
Yet we still have no broadband access in the fringe suburbs of the capital cities---eg., Victor Harbor in Adelaide--due to a failure to upgrade its infrastructure. What is required beyond fair access for competitors to Telstra's network, is a modernizing of the network by competitors. Alternative networks will not be built under the current regulatory regime.
Telstra's recent tactics indicate that it has not changeditys strategy. It tried to leapfrog the Minister of Communications (Senator Coonan) cabinet submission with its "take it or leave counter-plan" for a $5.7 billion broadband rollout in return for greatly relaxed regulation; made a last minute assault before the cabinet decision to scuttle the government's reforms about operational separation between the operational and retail divisions; and made threats to stop investing if it did not get its own way. The sttrategy is to ensure Telstra's dominance is cemented.
Telstra got off lightly. It is difficult to accept that Telstra is really concerned about implementing a strategy to build wall-to-wall broadband in Australia. It's actions indicate that it is more concerned with making a profit, protecting sharholders' interests and throwing off what it sees as onerous regulation.
The big problem is that the $3 billion package is nothing in relation to to the long-term need for investment in the network to deal with the backlog of refurbishment; let alone make a world-class broadband internet service available to the cities, regions and the bush. That problem has not really been addressed by the Howard Government's telecommunications policy, even though it managed to tak a pro-competition stance.
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In the US the entrenched providers (copper wire, cable and even power lines) have opposed any creation of city WiFi networks. They have used federal, state and local legislation to get any city roll-outs of WiFi quashed. This appears to be what the capital intensive, "in the ground" communications providers fear most - data moving through the air.
It is probably time to open up some spectrum to the public in the same way that WiFi is. That would kick start innovation.