Telstra reforms by end of month: Conroy

James Riley
Wednesday, 06 October 2010 10:21

IT Policy - Regulation

The Gillard Government will introduce crucial telecommunications reform legislation to the Parliament during the two-week sitting period at the end of the month, Communications Minister Stephen Conroy has told the Bloomberg news service.

The legislation is underpins the future regulatory rules in the coming National Broadband Network environment and provides the framework for the deal between Telstra, Government and the NBN Company.

Senator Conroy said the deal between NBN Company and Telstra should cut the cost of building the NBN by $4 billion to $6 billion - about ten per cent of its expected $43 billion total price-tag.

The deal would include the acquisition of parts of Telstra's infrastructure and the orderly transition of Telstra customers to the NBN infrastructure. It reduces cost because the NBN Co won't have to duplicate Telstra infrastructure and will get more customer on the fibre network sooner - guaranteeing bigger revenues sooner.

A non-binding agreement has already been reached and it is hoped a full agreement may be signed by the end of the year.

Senator Conroy told Bloomberg the NBN Co was finalising its business plan that took into account the in-principal agreement with Telstra.

"NBN has been finalising its business plan that will get to us in the very near future and there will be a lot of information we can put in to the market place that will deal with the financial viability," he told Bloomberg.

"When you see those final figures, people will take a deep breath and say it is good news."

But shadow communications spokesman Malcolm Turnbull has called for government to "urgently undertake" a cost-benefit analysis of its NBN proposal, saying the telecommunications sector "was a notoriously difficult area of investment."

Writing in the Sydney Morning Herald today, Mr Turnbull said two of the biggest mistakes that can be made with infrastructure are to build large projects based on overly-optimistic estimates of demand and to neglect the on-going maintenance and upgrades to existing infrastructure.

"Unfortunately for the taxpayer, politicians are particularly prone to make both of them," he wrote. "Attracted to glamorous ribbon-cutting opportunities, politicians love investing taxes in big new projects. And if anyone says 'cost-benefit analysis', it is brushed away with a call to 'nation building.'

"Neglecting ongoing maintenance and investment enables governments to increase their dividends and keep the prices lower until the day of reckoning when systems start to fail and massive reinvestment is needed."

"The Gillard government must urgently undertake a thorough cost-benefit analysis of the network. Its stubborn failure to do so can only lead us to conclude that it does not want to know what that analysis will reveal," Mr Turnbull said.