The National Broadband Network (NBN) is being costed at between $10 and $15 billion, but will this massive outlay, the biggest infrastructure project in the nation’s history, mean a better deal for bush broadband users?
That’s by no means guaranteed. The NBN will provide a communications superhighway, but if the road rules—in this case the Universal Service Obligation—aren’t favourable, it might be a highway driven by only one operator.
“Giving the NBN to a non-Telstra player might ensure that a open access FTTN network gets built to 90-98 per cent of the population, but it doesn't guarantee that there will be retail competition in those areas,” said Grahame Lynch, editor-in-chief of the online telecommunications publication CommsDay.
“Open access only works if ISPs turn up to take advantage if the access. Right now any ISP can offer a rural DSL service with their own DSLAMs and pay Telstra just $2.50 a month to use the copper line. But they choose not too.”
It’s “wishful thinking” to believe that this will change if an organisation other than Telstra wins the NBN contract,” Mr Lynch said.
“All speculation is moot until the government tells us how the USO will work under the NBN regime.”
The major NBN hopefuls, Optus/TERRiA and Telstra, have protested that they will provide full competitive access to all service retailers if they win the bid—but both want a monopolist’s grip on terrestial broadband.
If it wins the contract, the Optus/TERRiA bid wants legislation to ensure no “overbuild”: that is, rules to ensure that a vengeful Telstra can’t go out an build a rival network that sucks profit from the NBN.
“In a country the size of Australia, with a relatively small population, if you’re going to roll out a network across the whole nation at affordable and uniform prices, you can only have one network,” said TERRiA chairman Michael Egan.
“If you have competing networks—and Telstra’s argument is that you should have unregulated competing networks—only one will survive. You may as well recognise right up front that it is a natural monopoly and regulate from the start.”
Telstra already has a fixed-line monopoly, and a de-facto monopoly on bush mobile communications through its Next G network, built with the help of taxpayer dollars.
Adding the NBN to this portfolio would strengthen Telstra’s already entrenched position in the bush, allowing it to bundle mobile, landline and broadband services in a way that competition would be hard-pressed to match.
But with Next G, Telstra already has a handy foil should a rival win the NBN contract.
“We’ve got fallback options all over the place,” said Geoff Booth, managing director of Telstra Country Wide.
“The Next G network is about to go to 21 megabits per second in January, and 13-14 months from now we think we’ll have it cranking out at 42 megabits per second. But I think regardless of this great fallback that fibre is the right play for Australia to have, and I hope we get a chance to build it.”
For many rural Australians, however, Next G or satellite may be the only broadband service they ever have available to them, regardless of the fanfare around the NBN.
Telstra has said its $10 billion proposal will only cover 90 per cent of the population, which effectively leaves farms and small communities outside its scope. To push out further would be prohibitively costly, the telco argues.
However, Mr Booth argues that at least Telstra is up-front about the cost of building the network.
"You can pretty well bank that,” he said of the $10 billion/90 per cent coverage equation. “When Telstra does its sums it's pretty conservative.”
“(TERRiA) is saying it needs $15 billion to build something. TERRia is putting up $1-2 billion, the government has $4.7 billion, so they still need to find somewhere between $9-10 billion.”
“We're asking the question, where is this money going to come from at a time like this?”
That’s not a question that Mr Egan, citing confidentiality agreements, was prepared to answer.
A committee appointed by Federal Communications Minister Stephen Conroy will spend about two months deliberating on the bids from Optus/TERRiA, Australian consortium Acacia, and Canadian Axia—and on whether the 12-page proposal submitted by Telstra last week warrants consideration of the bid it has prepared but not yet submitted.