Stand-off in Rudd telco plan


KEVIN Rudd's plan for an $8 billion broadband joint venture with Telstra could be stillborn, after the telco giant ruled out any financial co-operation with the federal Government yesterday.
But the Government confirmed last night that its intention to invest in the network, and seek a commercial return, remained unchanged.

A key plank in Mr Rudd's policy plan for Australia's future is by way of either a public/private partnership, or equity investment with either Telstra or another telecommunications company or consortium.

Mr Rudd has committed a taxpayer contribution of up to $4.7 billion to a national fibre-to-the-node network that Telstra was the frontrunner to build.

But at an industry conference in Sydney yesterday, Telstra's public policy chief Phil Burgess ruled out Telstra's participation in any financial joint venture.

"It won't be with us, it will be with somebody else," Dr Burgess said. "We're not going to do consortiums, or equity or things like that. It's not the way we do things."

"The Government's policy remains as announced," freshly sworn-in Minister for Broadband, Communications and Digital Economy Stephen Conroy told The Australian.

Dr Burgess claimed that Telstra's position on the issue "is clear and we have not changed that position since July 2005 and it remains the same".

"And that's to build an advanced communications network in this country as rapidly as possible, as cheaply as possible.

"And it should be an open- access high-speed broadband network. That is what we want to do.

"But what we have also made clear is we're not going to do it in a consortium, because consortiums don't work. We're not going to do it in partnership with some other provider. We're not going to do it if the Government is going to be an equity holder and decision-maker."

Under Mr Rudd's plan, Labor has said it will create a new panel to scope the broadband project, disbanding an existing panel created by the previous Government for a tender for a metropolitan-only broadband network.

Senator Conroy said he was working on the panel and was in the midst of departmental briefings on a range of matters.

Optus, which is leading the G9 consortium's rival bid to build a structurally-separated FTTN, said Telstra's should reveal its wholesale access pricing to industry before the Labor government considers its bid.

Pointing to pricing for wireless broadband services on Telstra's Next-G network, which is the only one of its kind in Australia, Optus regulatory director Paul Fletcher said pricing should be critical to Labor's assessment process.

"The lesson that it sends to us is clear - that where Telstra has the only network you're going to see exceptionally high prices," Mr Fletcher said.

Dr Burgess refused to reveal how much the carrier would charge for access to its network, but said that the "new Telstra" would pursue premium service business model.

"The new Telstra will be a premium provider charging premium prices and we make no apology for that," he said.

"If someone starts undercutting us and people start wanting to do, then we'll start working out how to deal with that competitive situation. But the fact is we don't want to be the low-cost producer."

Mr Fletcher argued Telstra's pricing position justified public spending on alternative infrastructure. "If you've got an incumbent saying we're going to be charging these kinds of prices, then it's a very good thing to be allocating public money to subsidise the rollout into areas to give new choice, new alternatives and new pricing. That's competition working," he said.

Dr Burgess said if the Government wanted to continue with its investment policy "they can go in that direction. They have Optus ... and all kinds of other companies around here they can do consortiums and joint ventures and PPPs and ... whatever else they want to do."

He added that if another provider begins deploying a new broadband network, Telstra would follow with its own.

Dr Burgess referred to what will likely take place under Labor for the telco industry was a "pretty massive renovation" rather than "cosmetic repaint" or a "tear down" or "demolition".

"We need to see whether the post-election rhetoric matches the election rhetoric," he said.

Prepare to be enthusiastically screwed by business all ye taxpayers