The $4.7 billion fibre to the node “broadband for all” idea is one of the main planks of the ALP’s election platform and the leader of the ALP talks about it every day, in every way, in every shopping mall.
Broadband was part of the education policy ($100 million for fibre to the premises (FTTP) to schools) and it will be part of Wednesday e-health policy launch (probably FTTP to hospitals, although this is unconfirmed).
But what, exactly, does it all mean? How will the $4.7 billion be spent? Who will get it? And what about the $958 million that the government has already committed to Singtel Optus and Elders Telecommunications for regional broadband?
One thing we can say for sure, I think, is that Optus and Elders will be voting Coalition on Saturday. If someone other than them gets $4.7 billion to build a fibre to the node (FTTN) network to 98 per cent of Australians, their slower wireless proposal will be in trouble – not necessarily because it won’t work (although that’s possible too) but because under the Howard Government plan they would have had a bush monopoly, but under Labor they will have subsidised competition.
Kevin Rudd has said a national FTTN network will be one of his top five priorities upon taking office, so we can expect tenders to be called within weeks.
Communications spokesman Stephen Conroy says a future Rudd Government would be “flexible” about how the $4.7 billion might be spent.
For example, it might be a public private partnership (PPP) or just a loan. The ALP’s estimate on the cost of an FTTN network to 98 per cent of Australians is a bit more than $8 billion, but most industry people I speak to reckon it will cost much more than that.
If the ALP's $8 billion estimate is right, then $4.7 billion would buy the government 58 per cent of a PPP, but when it comes to how the arrangement might work after that, the Labor Party is “flexible”. That is, it seems possible a Rudd government might not require ownership to revert to the government as it usually does in a PPP, which would be an interesting and important piece of information for the tender document.
Conroy says one of the tenderers might propose cheaper or more expensive technology, in which case the percentages would move around (the $4.7 billion stays the same). And there is also talk that one or more tenderers might bid to use the money to finance a nationwide fibre to the home (FTTH) network, which would be many times faster than the 12 Mbps the Labor Party is talking about at this stage.
Conroy says he and Kevin Rudd would be “very interested” in that sort of idea.
The other thing that is unresolved is whether the money would be debt or equity. Conroy says it could be either, as long as commercial rates of return were earned – so it could be a $4.7 billion loan at LIBOR +2% or something, or an equity investment.
But a fundamental and important issue that Conroy is still refusing to clarify before the election is whether a Labor government would favour an FTTN network that permitted competition from copper wires, or whether they would allow a regulated monopoly.
This should be cleared up right now in my view.
The two current FTTN proposals – one from Telstra and one from the so-called G9 led by Optus – both require that all copper wires would be cut at the node, so that only their fibre would run from the exchange to the node and then reconnect to the copper for the last mile.
That would mean no household would have a choice – it would be FTTN or nothing. Australia would return to having an absolute monopoly in telecommunications and would rely on the ACCC to keep prices reasonable. As even the ACCC acknowledges, competition is far better.
Bevan Slattery, CEO of Pipe Networks, says there is no technical reason for cutting all copper wires at the node to allow fibre to run from there to the exchange – it is simply done to improve the economics of the project by removing competition via copper.
A lot of firms are currently delivering fast ADSL2+ broadband via copper, but their equipment would be stranded in the exchanges if the copper were cut at the node.
It can be expected that all tenderers for a FTTN subsidy from the government will try to block competition by saying they have to cut all the copper for “technical reasons”. Why wouldn’t they? After all, that’s what Telstra and G9 have both done.
The government, whoever is running it, should clearly state that it would favour proposals that leave most of the copper intact and give people a choice between the FTTN or copper-based ADSL.
The two FTTN proposals that we have now seem likely to mean retail prices of more $75 a month (G9) and up to $100 a month from Telstra. Compared to current prices of around $30, that is a serious increase for not much extra speed.
So while “broadband for all” has been a big campaign winner for Kevin Rudd, any new Labor government will need to be very careful not to lock us into an expensive communications monopoly once more.
Autor(en)/Author(s): Alan Kohler
Quelle/Source: Business Spectator, 19.11.2007
