The failure of the National Broadband Network tender to find a sensible and willing private sector company is not surprising. But the failure cannot be blamed on the global financial crisis — the economy may look pretty dismal, but the government’s broadband policy was never very good anyway.

Partly this is because technological change has boxed the government into a corner. Earlier this year, while the NBN expert panel was dithering about looking for a firm to make good on the Labor Party’s election promise of a 12Mbps network, Telstra announced that it was planning to upgrade its already-existent cable network to 100Mbps, without a scrap of government support or subsidy. Even the firm’s mobile Next G service — which right now covers far more of Australian population than any future fixed-line network could hope to — is being upgraded to 42Mbps. And it’s not just Telstra — Optus has been periodically upgrading its cable network to match the speeds of its competitor.

Simply put, it would have been humiliating for Communications Minister Stephen Conroy to trumpet a 12Mbps network while there are superior products in the broadband marketplace.

And these are just the private sector’s plans for the next twelve months. The government intends to roll its network out over eight years — who knows what we will expect from our internet connections in 2018? There’s a very good chance that the new network will be long obsolete by the time it is finished.

While the Prime Minister announced that the network will cost “up to” $43 billion over those eight years, it has only committed to an initial $4.7 billion investment into the project. This cost is, at least on the face of it, a drop in the bucket. Since coming to office, the Rudd Government has increased the size of government by a massive 21%. And the Commonwealth Government’s contingent liabilities have increased ten-fold in the last year. Nevertheless, the new NBN plan opens the door even wider to future financial obligations, especially if the fundraising and rollout doesn’t proceed as smoothly as the government is hoping.

So far no government has been willing to treat the cause of our broadband problem — the long outdated access regulations which compel Telstra to share its network at a regulated cost. Today’s announcement just maintains the fiction that the government can buy its way out of a long-term regulatory mess.

Peter Fray

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