Telstra might stymie Labor’s plans for a fair tender process to build a broadband network by refusing to “hand over” access to its copper wire infrastructure to competitors such as the Optus-led G9 syndicate.

Yesterday afternoon Telstra spin doctor Rod Bruem told Crikey that Labor’s plan should be viewed as “essentially an upgrade to Telstra’s network”. Only Telstra could build the new Fibre to the Node Network proposed by Labor, he said, and the competing G9 proposal was “just a Government spin campaign” (see clarification below).

Telstra’s attitude is vital, because no matter who builds the proposed new network the Telstra-owned copper wire will have to be used to carry broadband from the “nodes” on street corners to individual premises.

The copper wire network was Telstra’s “key asset” and “Telstra isn’t about to hand that asset to anyone else”, said Bruem.

Telstra’s attitude underlines real potential problems for Labor’s bid to “call both G9 and Telstra’s bluff” as Shadow Communications Minister Stephen Conroy’s office put it yesterday. It highlights Telstra’s might and willingness to use its power.

Conroy’s office acknowledged yesterday that in order to succeed in a tender process for the new network, the G9 syndicate would have to convince a future Labor Government that Telstra would not succeed in a legal challenge to block access to the copper wire. “They will have to have good legal opinions,” a spokesman said.

Telstra’s obstructionist attitude echoes the rhetoric on its increasingly fevered campaign site, edited by Bruem, which has recently claimed G9’s FTTN proposal is an attempt by the Singapore Government to seize ownership of Telstra shareholders’ assets as well as describing ACCC head Graeme Samuel as “the great pretender” and Telstra’s competitors as “leeches”.

G9 has acknowledged that the issue of access to the copper wire may be “in need of legal clarification”. Meanwhile Telstra claims that the G9 proposal relies on “compulsory acquisition of Telstra property”. This is clearly a trigger for a High Court challenge.

Labor’s plan is largely a picking up off a scheme originally offered to the Howard Government by Telstra in 2005 but with the modification of an open tender process for the building and ownership of the network, rather than an exclusive agreement with Telstra.

In today’s media some commentators are saying that Labor has only just avoided being seen to give Telstra a free kick while others, including Terry McCrann argue that it is all bad news for Telstra.

Telstra’s attitude, though, raises the question of whether such a tender process could ever be fair, or whether the potential for legal challenge means that Telstra holds all the cards.

Regardless, it is clear that Telstra intends to catapult its control of vital national infrastructure into the future, which will put pressure on Labor to spell out exactly how they plan to regulate the country’s dominant telco, particularly since it is also likely to become our biggest media proprietor.

Telstra spinner Rod Bruem writes: I believe I’ve been misquoted in the story on Telstra’s response to the ALP broadband policy. The article says I described the Optus G9 scheme as “just a government spin campaign”. What I actually said was that it was a “PR campaign dreamed up by the regulatory and corporate affairs department to let the government off the hook”. Having the G9 “alternative” out there creates the impression somebody else will invest if Telstra doesn’t, so the Government doesn’t feel pressured to ease regulations that are preventing Telstra investing. In actual fact, while the ACCC Chairman Graeme Samuel is a cheerleader for G9, no members of the Government have offered it any public support as far as I’m aware.

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Peter Fray
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