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The NBN is a complex problem for the new government

By Paul Budde - posted Friday, 22 November 2013


NBN ‘Under New Management’

There has certainly been a flurry of activity around the NBN since the Coalition took over government. As foreshadowed before the election the government has set up several reviews that should provide the right basis upon which to take decisions regarding the future of the NBN. It also announced that until the reviews were finalised it would be ‘business as usual’ for NBN Co in regard to all work that was presently under way.

It appointed Ziggy Switkowski as the chair and interim CEO of NBN Co, as well as three other high profile industry experts

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It had also indicated that it did not accept the inclusion of the design phase of the NBN as appears in the previous government's definition of ‘NBN areas under construction’. So that saw half a million houses scrapped from their ‘guarantee’ of receiving an FttP connection.

It also took the very unusual step of issuing a letter from the government to accompany NBN Co’s annual report, in which it questioned some of the elements of the report.

Most of this was expected in one way or another; and, while it all happened within the context of a barrage of attacks on NBN Co, its leadership and its strategic plans in the run-up to the election, it makes total sense conducting reviews at certain intervals of such a significant program as the NBN.

But the question remains – how much of the review will be truly business and how much will be political? Given the very harsh words that have been spoken in the past there is a fear in the market that the new government is conducting the review on the basis of what they see as the negative elements of the work done so far. The hope however, is that it will not be a witch hunt but instead that the review will build on the positive work done by NBN Co so far.

If the negative approach is taken the question will then be how much of the review will, in fact, be independent – if everything is perceived as negative then any review that is conducted will mostly likely confirm that position. An approach like that would make it very difficult to conduct a truly independent review.

Also there is no agenda for industry participation, submissions, etc. While it is understandable that the government wants to move fast – as it has promised – this should not be done at the cost of transparency.

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There are, however, some balancing factors that indicate a more impartial outcome. First of all, the NBN is now this government’s problem; and, secondly, 70% of the population is in favour of it. So if they make a mess of things – creating a digital divide, delivering a sub-standard infrastructure, not delivering on their promises, etc – then the government will have a problem at the next election, which will take place only three years from now.

Also Telstra, the industry and the ACCC will all have to agree, in one way or another, with the direction the government proposes to take. Any major changes to the current arrangements are going to create major challenges for the government in getting approval for its version. So they will probably try to stick as closely as possible to the current arrangements – not necessarily from choice, but because major changes will result in major delays.

Another positive is that the Minister is one of the most telecommunications-savvy politicians anywhere in the world. He has also confirmed on several occasions that FttP is the best solution, and that it is the end solution. He is one of our most reputable politicians and has proved himself to be someone who can be trusted, and someone who is prepared to stand up for issues he believes in.

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About the Author

Paul Budde derives income from consulting to the telcommunications industry as in independent adviser. He has no shareholdings in the sector.

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