Conroy's finest hour or depth of despair as NBN decision looms

Stan Beer
Tuesday, 10 March 2009 19:03

Opinion and Analysis

There is a growing feeling that the coming week could well shape up to be one of the most significant turning points in Australian telecommunications history. The Federal Government, represented by Communications Minister Stephen Conroy, has a monumental decision to make and an equally monumental problem on its hands.

The decision of course is which bidder will be chosen to build the National Broadband Network (NBN), estimated to cost $15 billion. The problem is that none of the bidders in the race has the necessary credentials to build it.

Under the present telecommunications regime, the only organisation with the necessary capital, resources and infrastructure to build a FTTN network that will reach 98% of Australia's population is Telstra. And of course Telstra is not in the race.

The Government knows this, Telstra knows this, the public knows this and even the NBN bidders know this. Whoever is named the winner or co-winners of the NBN tender have not got a ghost of a chance of building a FTTN network without the cooperation of Telstra in some shape or form.

Looking at the bidders - Axia, Acacia, Optus, TransACT or the Tasmanian Government - none has access to the necessary risk capital to chance its arm against Telstra, not even with the promised $4.7 billion Government backing. It's not just a matter of raising the extra $10 billion cash.

Building the NBN will require access to Telstra's copper - something Telstra will fight. It will require Telstra not to build a competing service - something Telstra will almost certainly try to do.

It will require the backing of capital prepared to risk huge sums against a powerful incumbent which already has much of the needed infrastructure, human resources, expertise and capital in place.

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