In years to come Malcolm Turnbull will be remembered as the communications minister who, under instruction from then prime minister Tony Abbott, ‘demolished’ Labor’s 21st Century National Broadband Network. But another prominent politician had earlier inflicted enduring damage to any nascent aim of becoming an innovation nation and set us back as a player in an emerging digitally enabled world. Are we heading towards a repeat of this mistake in telecommunications policy?
John Howard’s privatising of Telstra led to what in Canberra they term “unintended consequences”. Not just unintended, it seems, but also unending.
The 500 pound telco gorilla kept growing in size and confidence and cemented its considerable market dominance. It now wants to buy the NBN it once refused to build.
Labor is not entirely blameless of course. Its failure, back in the 1990s, to take the advice of telecommunications experts and economists and structurally separate Telstra’s wholesale and retail arms set the scene for one of John Howard’s biggest policy blunders.
Added to the shenanigans that marked the tumultuous period when big talking American Sol Trujillo and his two hyperbolic amigos ran Telstra and look where all this has landed us!
Trujillo famously played ‘chicken’ with the Rudd Government and refused to submit a sensible bid for the role of building the NBN. This led Rudd and his communications minister Stephen Conroy to decide to build their own broadband network.
When Malcolm Turnbull subsequently took the fateful (and ultimately disastrous) advice of a bunch of his ‘techie’ mates and ditched a modern fibre rollout in favour of reusing its old copper wires Telstra took him to the cleaners. We, the hapless taxpayers, now hand Telstra more than a billion dollars a year so that NBN Co can deliver millions of us slow and unreliable Internet access.
Adding insult to this avoidable injury, Telstra is now doing what governments of both persuasions should have done and is undertaking its own structural separation – hiving off its fixed assets into the unimaginatively named offshoot Infraco. The reason for these corporate gymnastics is that Telstra as it is currently structured is banned by legislation from bidding for the NBN should a sale occur.
Of course, nobody expects Telstra to offer anything like the money that has so far been blown on this infrastructure lemon. It’s hoping to benefit from a fire sale by a government desperate to separate itself from a messy political issue. And banking on being the only player with the funding and the technical nous to fix the mess the business is in right now.
What Malcolm Turnbull was told would cost $29 billion has now well passed the $50 billion mark and the NBN bean counters are still doing their sums. Another $4.5 billion has recently been added to the tally – most of that to go on replacing dud copper connections with the fibre that should have been deployed in the first place.
Unsurprisingly, other telcos are expressing opposition to Telstra being allowed to buy the NBN. From the outset, Labor’s model envisaged a wholesale-only broadband service to be sold by multiple retailers. The expectation was that this would lead to more sellers and increased competition at the consumer level. To date, that hope has failed to materialise with the incumbent players retaining a high level of market dominance.
Allowing a retailer – especially the market leader – to own the wholesale component is hardly likely to benefit consumers.
However, with the company in charge of this debacle – NBN Co – massively in debt and predicted to need billions more dollars in order to replace its outdated technology the risk is the government takes the easy option and offloads the problem by selling it to Telstra at a massive loss. If that happens the ghosts of John Howard and Malcolm Turnbull will haunt us for decades to come.
Had Telstra remained in government hands it could have built a world-leading broadband network for considerably less than we’ve so far paid for what is now a debt-laden albatross around the government’s neck delivering a demonstrably second-rate service.
Even The Australian right-wing columnist, Terry McCrann, has wised-up and reckons the NBN “is now the single most important foundational infrastructure for the Australia of the 21st century. For that reason alone it must remain publicly owned”.
Labor’s policy was, and still is, to eventually privatise NBN Co. But giving the NBN to Telstra is hardly in the national interest so a rethink is inevitable if Anthony Albanese becomes prime minister sometime next year.
By the way, we can’t blame then CEO David Thodey for striking such a great deal for Telstra shareholders. That was his corporation’s law obligation. Nor can we blame current boss Andy Penn for wanting to do the same.
(Laurie Patton is a former CEO / Executive Director of Internet Australia, the NFP peak body representing the interests of Internet users, and until recently the Vice President of TelSoc. This article first appeared in The Lucky General.)
Laurie Patton is a prominent public interest advocacy and marketing/communications practitioner. He is a former political advisor, journalist and media executive. He is the NSW regional convenor for the Australian Republic Movement.
Comments
7 responses to “NBN update. Let’s not compound a history of poor policymaking by people who claim to be good economic managers”
I respect Laurie’s opinions. However some are subject to debate. Telstra prior to NBN was top and middle management heavy. With this burden it would not have been possible for them to bring to market a superior internet product at a reasonable cost to their target audience. With Andy Penn at the helm they are definately initiating good moves – however, this was a bow to necessity. Maybe more credit should be given to Telstra financial advisors who forced the heavy cost reduction strategy, before they became another Covid legacy. I can see Telstra, not alone, but as a valuable member of a competitive consortium of existing major ISPs being appointed to take over the NBN concept. Each consortium member could invest in growth by ‘buying ‘ the existing Government debt(supported by Australian banks with a Govt guarantee). The responsibility and burden would be shared by successful Industry major participants. Those companies like Telstra who have years of experience , have invested in their own infrastructure, overseas cables, and top level knowledgeable Internet/IT staff who are already on record for providing world standard expertise and service to the Australian people. Govt. may even be able to replace the current continuing NBN debt with recurring income from a new and ‘properly managed’ NBN consortium.
Thank you Laurie for a concise and accurate assessment – “had Telstra remained in Government (public) hands it could have built a world-leading broadband network”. But no the morons decide to enable the private finance capital leeches to siphon off their percentage and suck the public benefit dry. Neo liberal economics is a failure for the 99% and an unearned bonus for the 1%. The sooner the Thatcherite morons who enabled these thieves are evicted – the better. At least the NBN is functional unlike the ramshackle affair in other ‘elite’ nations.
Some interesting background info can be had from this article:
“Vested interests won when the NBN was ‘destroyed’”
[ https://thenewdaily.com.au/money/finance-news/2017/10/24/kevin-rudd-nbn-turnbull/ ]
“When Malcolm Turnbull subsequently took the fateful (and ultimately disastrous) advice of a bunch of his ‘techie’ mates and ditched a modern fibre rollout in favour of reusing its old copper wires”
I doubt anyone’s ‘techie’ mates would have given any such advice. Even Turnbull’s. Nobody outside the coalition with a shred of valid evidence or expertise would have supported the Mess Turnbull Created. No, the destruction of the NBN was entirely the Liberal Party’s doing. You were right that Abbott told Turnbull to destroy the NBN. We’re lucky he didn’t say ‘destroy the internet!’
Another weakness of Australia is the absence of historians who uncover precisely what occurred and by whom.
The current situation demonstrates beyond reasonable doubt the economic irrationality of privatisation. Plutocrats (Parliamentarians and their appointed public service directors especially the trained economists, lawyers, and financiers) and oligarchs (corporate directors represented by the plutocrats) who led and continue to lead privatisation and its associated policy such as outsourcing, public private partnerships, corporatisation, and deregulation, must stand trial for the wilful destruction of Australia’s current and future economic situation. Notwithstanding the widespread, maladministration, fraud and corruption associated with this dogmatic economic program, the program has also led and shall continue to lead to grose economic inequality where corporations either wilfully extort ecomic rents by charging citizens excessive prices on public services or in fact wilfully deprive or campaign to deprive citizens of these public services. This programme of economic destruction, extortion and deprivation is repeated in health care, aged care, water, electricity, education, gas, banking, social security, defence and so on. Yet we cannot rely on so called democracy to extinguish this economic and political dogma for the oligarchs that are this dogma have and will continue to entrench plutarchs within Australia’s parliaments and public service to sustain the tradition, plutarchs who themselves at the end of their term will assuredly join the ranks of the oligarchs.
We, the Five Blind Eyes, are repeating this with 5G. We are on track to have the latest-deployed, most expensive, thinnest 5G deployment in the developed world.