Paul Budde

May 2008

Telstra will roll out the NBN - but on what terms?

The NBN RFP has made people sit up and take serious notice of the current situation.

It is clear that the RFP very much favours Telstra; the majority of analysts and observers are agreed on that point. At the same time people like me have long been saying that it will be impossible to develop a national broadband infrastructure without Telstra.

We also warned during the privatisation process that if we did not develop a clear regulatory regime around a privatised Telstra the incumbent would pursue its shareholders interests, the goal of which would be to maximise its monopolistic position in the market.

So now you can’t really blame Telstra for doing precisely that.

True, I would have hoped that, in addition to looking after its shareholders, it would also have taken into account the interests of its customers (such as providing affordable access to high-speed broadband). But in the end that is a matter for the company.

This lack of cooperation from Telstra has been quite unfortunate for the government. It realised that it would not have an NBN without Telstra, and that making the RFP too tough would frighten Telstra off. The outcome of the RFP has certainly not scared it away, but most of the remainder of the industry is now probably feeling very much left out.

How to rein in the gorilla?

To compensate for appeasing Telstra the Minister has asked the rest of the industry to come up with innovative alternatives for an NBN, plus suggestions for the regulatory environment.

It is unlikely that anything much will be done about the first request, so the rest of the industry now needs to concentrate on preparing submissions aimed at reining Telstra in. However, several telcos have already indicated to me that their company strategists have been sent back to the drawing board to develop policies based on an expectation that we will have another 10-15 years of the same regulatory environment that we have suffered under for the last decade.

I am a born optimist and I also think we have no other alternative than, yet again, to become engaged in the discussion, and to begin preparing submissions aimed at the structural industry changes we need. The Minister himself has on several occasions mentioned that he sees a clear need for such changes, and he has very openly applauded similar developments in Britain, New Zealand, Singapore and the Netherlands.