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Posted by Mike Cansfield on June 25, 2010
The current Australian government was one of the first governments to articulate its vision of a national broadband network (NBN). But since its election in 2007, it has been locked in a struggle with the incumbent operator Telstra on the role it should have in the NBN and, if so, what this should be. For much of the past two years, the two parties seem to have been determined to not work together on an NBN, but then suddenly agreement was announced earlier in the week. How come?
The answer is, whichever way you look at it, neither could do without the other. For Telstra, the last thing it wants is a national network that competes directly with its own. In the cities this is no big deal, but in the rural areas (and there are a lot of these in Australia), this would have been economic madness for both. So Telstra needed a deal.
The same is true for the government. Over the past decade, the relationship between the government (of whatever party), the regulator (the Australian Competition & Consumer Commission [ACCC]), and Telstra has been fraught with acrimony. But if the government is to deliver an NBN to rural areas, the only workforce with the skills to install, operate, and maintain this is located in Telstra. So it needs Telstra support to make an NBN happen in practice.
What made the deal possible was a mix of things — the appointment of a new CEO at Telstra, a recognition in government and Telstra of their interdependence, the willingness to negotiate a deal, and an impending election that forced the hands of both. The result is a Heads of Agreement on a way forward. It is inevitably a compromise, but it is also a way out of the impasse that is good for both.
This is important not just for Australia; the principle of an NBN is attracting interest in many countries of the world. An NBN is in the interests of customers (both consumer and enterprise), governments (for general economic efficiency and specifically the delivery of public services), regulators (to ensure rural areas are not left out), and telcos (to maximize revenues and save on costs). Whilst the debates/arguments that occurred in Australia will not be repeated elsewhere, the recognition that governments and incumbents need each other to make NBNs happen still holds true. So when the NBN debate comes to your country – think of Australia.