Conroy promises a Telstra-free NBN very soon.

Stuart Corner
Friday, 13 March 2009 09:36

IT Industry - Market

Conroy was adamant that last year's High Court decision against Telstra had removed from it any ability to use legal recourse to block the NBN. He said: "Telstra took the access regime to the High Court and got spanked seven nil. They were told that when the bought the network they bought it with an access regime in place. Any argument about whether we can access their ducts, their exchanges and their nodes has been predetermined by the High Court. "

And if Telstra tries to bend the law to delay things? "We will do whatever we need to do in terms of a regulatory process to ensure the success of the NBN process," Conroy said.

So that just leaves one hurdle, and it's a biggy: funding. Conroy's response was less than convincing given how tight he capital market is. He conceded that it "has always been one of the challenges," but suggested that: "capital markets will usually respond to a regulated financial outcome...[and] we have always said we will deliver a regulated outcome in terms of prices...a viable proposition is still a viable proposition."

There is however one funding possibility that in the current climate is looking extremely likely: total or greatly increased government funding. And a close reading of Conroy's comments could be interpreted as hinting at this. He reminded journalists that the NBN had been a "core promise" of the ALP and "Labor's commitment to nation building" and he noted a report from Telstra which had demonstrated that "You will get more bang for your buck today because the economy is under a lot of pressure so you get a lot of economic stimulus as well as productivity and social benefits."

Right now the government is very big on economic stimulus, and in particular is looking at what infrastructure projects can be used to stimulate the economy. The economic benefits of broadband have been widely promoted and in the US broadband funding is a key part of Barack Obama's economic stimulus plans, so increased government funding should be relatively easy to 'sell'.

Such a move would to absolutely nothing for investor confidence in Telstra. So what about all the mum and dad voters who have bought Telstra shares and seen them head south?

Well, Conroy reckons the Rudd Government's vision is bigger than worrying about the votes of Telstra shareholders and he reckons they know who to blame for their woes. He reminded journalists that "Today under existing management every Telstra shareholder is under water," and said that "the NBN is bigger than one company this is about the national interest."

Conroy seems extremely confident that a comprehensive Telstra-free NBN plan will be unveiled very shortly. This would likely send Telstra shares even further south. Meanwhile, in just over three months the chief architect of Telstra's exclusion from the NBN, CEO Sol Trujillo will depart these shores no doubt enjoying the kudos of his internationally recognised achievements in building Next G. The matter of Telstra's exclusion from the NBN will likely do little to diminish his reputation being too parochial, too complex and too open to different interpretations (blame the Government) to excite overseas interest.