Cabinet is considering something – we know not what – to try and get a decent broadband policy on the road, despite the determination of the Australian Competition and Consumer Commission not to crumble to Telstra’s demands for a relaxation in regulation.

There is a queasy feeling in the industry. Telecommunications users generally believe that lots is possible under the present regulatory settings, yet it seems that both the Government and Labor are ready to make vague promises about “relaxation”, and the Government may be trying to side-step the regulator altogether. All this is very dangerous.

Broadband policy touches on just about every other area of importance — health, education, media and the economy. It is important to get it right. Yet we have a policy from Labor that is visionary but vague on costings and regulations, and the Government meanwhile is giving the impression of not knowing what to do , except that it needs to be able to issue a media release saying “Broadband fixed”.

It is true, though useless, to say that we shouldn’t be starting from here. The struggle to get decent broadband speeds at competitive prices when Telstra holds all the cards is a very pointed example of an old debate: if you have a service which is naturally a monopoly, is it better to have it in private or public hands?

In the case of Telstra’s infrastructure – the wires that snake under our feet and over our heads – the answer is surely that it would be better in public hands, at least for the moment.

The Government could then make the big investment needed in new infrastructure – in a public private partnership if need be – and recoup the money by selling wholesale access to all comers, including a retail version of Telstra.

The alternative, as we see, is to have a beefy regulator trying to shoehorn competition into the system, and all the resulting difficulties and paradoxes involved in asking a private company to let its competitors use its main infrastructure asset.

I can’t stand Telstra’s bullying, but it has injected a dose of reality to the debate: Telstra is now a private company like any other, and can’t be expected to do anything other than pursue the best deal for its shareholders. It is doing this with particular ruthlessness.

All this was foreseeable. Indeed people warned the Government of the problems involved in selling Telstra at the time. Too late now.

Instead we are likely to see this vital piece of public policy determined by political spin, instead of substance.

Peter Fray

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