Communications Minister Helen Coonan says that private industry will build faster broadband without Government intervention, and Labor says that shows she just doesn’t get it.

So who is right? They both are. And they’re both wrong as well.

And regardless of who builds the network, Telstra will necessarily be both part of the solution and the biggest part of the problem.

The pressure should be on both Coonan and Shadow Minister Conroy to drop the rhetoric and give us some detail on what they plan to do with regulation, and particularly what they will do to force Telstra to separate its infrastructure from its retail business.

Whether or not building a fibre to the node network is economic for the telcos depends on the regulatory environment, and Labor hasn’t given any detail at all on what it plans to do, other than vague promises to review and relax.

Meanwhile the Government has said there will be no changes until 2009 – but given the length of time any fibre network would take to roll out, that really isn’t so far away.

The head of the Australian Telecommunications Users Group, Rosemary Sinclair, puts it well when she says that without the detail on regulations, trying to compare the Government’s and Labor’s claims and counterclaims is a bit like comparing apples and oranges when you can’t even see the fruit properly.

Sinclair is wary of any plan to relax regulations given the obvious potential for Telstra to use its muscle to destroy competition and raise prices. She would prefer to see more attempts to get the network built with the current regulatory framework, rather than rush into junking the present settings.

Telstra, Sinclair points out, began by wanting to roll out an FTTN network and exclude its competitors, then having dropped that stance took up its bat and ball when agreement couldn’t be reached on pricing. Meanwhile the G9 consortium has also failed to put its cards on the table. It says it wants different regulation – perhaps to prevent Telstra “overbuilding” its network – but hasn’t released the detail.

It is common ground that Government subsidy is needed in rural areas, where fibre to the node will not be economic. The present Government’s focus has been on providing targeted programs to these areas.

Independent telecommunications consultant Paul Budde says that the regulatory environment is key – and that what is needed is a strong Government prepared to stand up to Telstra and enforce a separation between the infrastructure part of its business, and its retail arm.

The Government has been too weak to enforce Telstra’s separation, and have left it largely up to Telstra, Budde says. This is although the Government has had the legislative power to enforce separation since 2005.

Yet Labor has been relatively silent on this in recent days. Is this because it is cosying up to Telstra, hoping to benefit from its vehement anti-regulation campaign? Anyone who doubts the dangers of making Telstra too powerful should have a look at the tactics they are already prepared to deploy. Telstra argues that “integration” is essential to its success, and that the only real aim of operational separation is “to appease competitors who piggyback on Telstra’s infrastructure”.

Budde says Telstra will vehemently reject any political party that wants to enforce separation, because “it will do everything it can to get a monopoly.”

So would Australia get a fast broadband network within three years without Government investment? Probably, says Sinclair, but at the same time there are big benefits to the scale, scope and vision of Labor’s approach.

Meanwhile Budde says that with the right regulatory settings, either the Labor policy or the Government policy can succeed, but without strong regulation both are doomed to fail.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey