It seems to me that one of the worst things that could happen in the broadband debate is that it could become an election issue. With the government under real threat for the first time in a decade, policy announcements during the election are likely to be haphazard and unconstrained by fiscal discipline. We will likely suffer from too many decisions made too quickly for it to be good policy.

Broadband has all the hallmarks of this sort of issue. First, it has a measure of “progress” that can quickly targeted — broadband availability and speeds. Second, the main interested incumbent, Telstra, supposedly fresh from its government shackles, lacks no shame in calling for government subsidies and protection. Third, left to itself, the market will evolve to a decision but we won’t know what it is until years from now. Add all this together and you have a scenario whereby the government wants the issue resolved prior to the election in order to shut up the incumbent and have a measured outcome. The Opposition will be forced to counter with its own plan and that will be that.

And what is this likely to be. On the government side, to shut up Telstra it will either have to amend the Trade Practices Act, intervening in the independence of the regulator, the ACCC, and/or provide a massive subsidy to broadband investors — most likely Telstra. The opposition will counter this by going the other route and backing a proposal like the G9 — giving them a subsidy and protecting them from potential over-build by Telstra. So we will end up with a new network, hastily constructed in major metropolitan areas with lots of government money and a regulatory regime overlaying it all.

It seems to me that a better alternative would be for the government to do the whole thing itself. First, it will employ the same workforce as the construction will have to be contracted out. Second, it will avoid the need for a regulatory regime as the government can just provide access to the network for virtually nothing. The only downside would be the usual issue that such public provision can mean a poor technical choice but this downside also exists for the subsidised private investment route we appear to heading down. So we are left with the ironic situation that when politics makes outcomes poor, rely on government provision to fix the mess!