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Nick Minchin

Leader of the Opposition in the Senate
Shadow Minister for Broadband, Communications and the Digital Economy
Liberal Senator for South Australia
Nick Minchin

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Senator the Hon Nick Minchin

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Conroy should go back to the old drawing boardEmail this pageBack

Wednesday, January 07, 2009 Printer Friendly Version

Source: The Australian

The Government must review its plans for a national broadband upgrade, insists Nick Minchin

THERE are occasions in politics when an embattled minister is forced to put on a brave face, hold the line and try to sound tough and decisive, despite deep down knowing the decision they are announcing will lmost certainly lead to tumultuous and more worrying times ahead.

Communications Minister Stephen Conroy recently experienced one of those moments when, ashen-faced, he fronted the media to advise that Telstra had been excluded from the national broadband network tender process for the most trivial of reasons.

To those who heard Conroy in the Senate and on radio soon after bids closed on November 26, this announcement would have come as quite a surprise, because he had given a very good impression of somebody who not only hoped Telstra's proposal would be formally accepted by his expert panel, but expected it.

On November 27, Conroy told Macquarie Southern Cross Media that "obviously Telstra have put in a proposal" and the expert panel "will
now consider the proposals ... will seek information. will seek clarification ... They've got eight weeks. They'll then make a recommendation."

This enthusiasm came at a time when many were questioning the validity of the Telstra submission, considering it was just 12 pages and the company had declared it was not in a position to lodge its full 5000-page bid because of unresolved issues with the process.

Not the least of these was the lack of fundamental clarity from the minister on whether the Government would impose further separation on the company, whether structural or otherwise.

Common sense suggests Conroy would have wanted Telstra in the running, considering most objective observers, including leading analysts, concede that Australia's biggest telco is overall the best-placed company to carry out what would effectively be a fibre-to-the-node upgrade of its own network.

The minister's political instincts would also have been telling him that Telstra would be able to provide an increasingly anxious Kevin Rudd with the earliest possible photo opportunity for a project that is already running well behind schedule.

While few have questioned the ability of the other national bidders Optus, Acacia and Axia to physically roll out fibre, the reality is Telstra, which owns the copper that will almost certainly be required to connect the new fibre to Australian homes and businesses, will have to be involved in some capacity.

This realisation no doubt left Conroy feeling he was between a rock and a very hard place, as he had little alternative but to accept the advice of his expert panel and declare Telstra out of the contest. The company was given the boot not because it was unable to demonstrate a capacity to build or finance a multibillion-dollar project, but because it did not submit a small-business participation plan with its proposal. Telstra maintains there was nothing in the tender documents that said the smallbusiness plan had to be submitted at the time of bids, and it was subsequently lodged on December 4.

According to the minister, wasn't the panel going to seek information and additional clarification from proponents before providing its recommendations? Apparently not, and the expert panel reportedly based its advice to the Government on five pieces of legal advice it had sought.

For a tender process that has been trouble-plagued from the beginning, it would have been extremely difficult for Conroy to overrule his handpicked expert panel and keep Telstra in the contest. To have done so would have destroyed any remaining credibility or public confidence in this process and also heightened the immediate risk of legal challenge from the other bidders.

The minister may have won some immediate plaudits for standing up to
a belligerent Telstra, but it is highly likely that the Rudd Government's
broadband problems have only just begun. Despite this, Conroy again put on a brave face and managed to keep a straight one when he told Sky News that he hoped to sign a project contract towards the end of March. It is possible the minister will try to cobble together some regional projects from the bids he has received, in order to deliver that all-important sod-turning photo opportunity, however it is difficult to see how a rollout of a core national network will commence this year.

That would be disastrous for a government that promised construction would start before the end of 2008, with new services coming online near the beginning.

On January 21, the expert panel is expected to provide recommendations to the minister regarding the five remaining proposals, two of which are regional, one from TransAct in Canberra and the other from the Tasmanian Government.

For the so-called NBN to be realised, an all-important regulatory framework will also have to be established and this will almost certainly require legislative change. If Telstra doesn't simply roll over and allow a winning bidder full and open access to its infrastructure, including the total "cut-over" of its copper sub-loop, the Government will be obliged to try to make it comply.

Unless, of course, the minister backflips and reopens the door to it at a later date, in what would be yet another major embarrassment. And if telecommunications services that are offered over the existing copper network are bypassed and made redundant by a one-size-fits-all fibre-based network, the pressure exerted by affected telcos for compensation could be immense and also difficult and extremely costly for the commonwealth to deal with.

The Rudd Government's bungling of a glib election broadband promise
has led it into very dangerous, uncharted waters and with it goes $4.7 billion of taxpayers' money.

Before it is too late, Conroy should go back to the drawing board, sit down with all key relevant players and plot a more sensible, practical and realistic course to upgrade our nation's broadband capability.

Nick Minchin is Opposition spokesman for broadband, communications and the digital economy.

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