Labor's broadband plan breaks Telstra's squeeze on Australia's assets

By Adam Turner
Sunday, 25 March 2007 18:59

Opinion and Analysis

Telstra has Australia by the balls and the only escape is to break the telco giant's vice-like grip on the country's communications infrastructure.

Allowing the country's largest communications provider to also own the country's communications infrastructure has been an unmitigated disaster which has seen Australia fall further and further behind the rest of the world.

Telstra should have been broken in two before it was privatised, with the nation's communications infrastructure spun off into a separate company so all communications providers could compete on a level playing field. Instead Telstra uses its ownership of the infrastructure to throw its weight around and hold the country to ransom until it gets its own way. What's best for shareholders comes before what's best for the country. If Telstra is allowed to build a Fibre to the Node network under the same conditions it might break the "broadband drought" in the short term but it will condemn Australia to forever be at Telstra's mercy.

Labor created a stir last week when it proposed the government build a national Fibre to the Node network within five years - ensuring 98 per cent of Australians have internet access of at least 12Mbps. Should it win this year's federal election, Labor intends to contribute $4.7 billion of government money towards the project, with the private sector kicking in the other half. Around $2 billion of the government's contribution would come from the existing communications fund and the rest from the "Future Fund". The Future Fund is money put aside to cover the Federal government's superannuation bill for public servants. Labor wants to sell the Future Fund's Telstra shares and put the money into broadband infrastructure, putting the profits back into the Future Fund.

Labor has long wanted to separate Telstra into retail and wholesale businesses but officially dropped the policy as greater privatisation made the idea unworkable. This latest proposal is the next best thing. We can't put the genie back in the bottle and undo the disaster that has been the privatisation of Telstra, but we can ensure we don't repeat the same mistakes with the next generation of communications infrastructure.

So how has the government respond to Labor's plan? CONTINUED