We’re not very consistent on the whole issue of infrastructure in this country.

Getting infrastructure right in Australia is hard. It’s easy to bag politicians but the maths is always against them. 20 million people, living in a country maybe two-thirds the size of the US, expecting high-quality roads, railways, telephone lines. A lot of it is natural monopoly territory, except in the cities, and, driven by the logic of privatisation, we flogged off natural monopolies like Telstra, leaving one hell of a regulatory problem behind.

And when we build roads and railways, no one seems to ask whether it’s commercially viable. Motorists — you and I — and freight companies are getting a massive free ride on government-funded infrastructure because politicians are too scared to ask us to pay an appropriate price for it.

When it comes to broadband, though, everyone wants to know whether it’s commercially viable.

As a digression, if implemented as promised, the Government’s network will be commercially viable. In fact it will be one of the hottest tickets in town for content deliverers of all shapes and sizes because it will provide a mass audience in an era when mass audiences are vanishing at a rate of knots. Get onto this network and you can reach every household in the country with your content.

It will also generate significant non-commercial benefits. It will enable every household, school and community body in the country to upload content and interact with other people and groups online. New communities will be created, existing communities will be reinforced.

But both Kevin Rudd and Malcolm Turnbull are guilty of wanting it both ways here. The Prime Minister is pretending that, despite taking us back to the future with a massive government intervention in telecoms infrastructure, the Government is only helping out because the private sector is temporarily unable to do the job. According to the Government, nearly half the funding will be from the private sector and the Government will sell off its half down the track.

I’ll bet good money the level of private participation is well below 49%, and that when it’s sold off, the network value will be treated as a sunk cost and there’ll be no return for taxpayers’ money beyond the NPV of access charges for retailers.

I suspect the Government expects that as well but is reluctant to be honest and say this is solely about nation-building and digging their way out of a massive regulatory problem bequeathed to them by Kim Beazley and John Howard.

And in complaining about the commercial non-viability of the project, Malcolm Turnbull might usefully explain how the Alice-Darwin Railway that John Howard built was commercially viable, or how the massive expansion in middle-class welfare the Coalition presided over left us with infrastructure of any kind, or how the pork-barrelling presided over by the Nationals was considered “viable”. Politicians and commercial viability of infrastructure tend to be mutually exclusive.

Turnbull seemed to be careful yesterday to avoid outright rejection of the announcement, which was wise given Barnaby Joyce and Fiona Nash (who has ten times the brains of her Senate leader) promptly emerged to say it was their idea anyway and they’d support it. If Steve Fielding was thinking of using his Senate vote as a way to encode internet filtering into the very fibre itself, he might need the Liberals to convince the Nationals to stay on the reservation. But blocking the NBN in the Senate would, along with blocking the Budget, provide a very tempting double-dissolution trigger for Rudd. He wouldn’t go to the people on alcopops, and maybe not even on climate change — but a visionary nation-building proposal? That’s another thing entirely.

Telstra is every bit as checkmated as the Opposition. Alan Jury’s Chanticleer piece today is right on the money. Those who bought into Telstra yesterday are seriously confused. Telstra’s options are to either watch as the new network renders out of date its existing fixed-line network and offers its competitors a better access deal than it could ever bring itself to provide for its own fibre network, or it can play on the Government’s terms, clipping the ticket on a fraction of the new network’s revenue through a small equity share. And meantime the Government has floated a whole discussion paper aimed at fixing the problem of access to Telstra infrastructure — a problem that it is in Telstra’s interest to perpetuate.

How any of that is good news for Telstra isn’t at all clear. The Government wins no matter which way Telstra jumps. But because it is now in a position of strength vis-a-vis Telstra, the Government can afford to negotiate with the hitherto-recalcitrant company. Yesterday Telstra chairman Don McGauchie was briefed by Treasury Secretary Ken Henry and the rest of the Telstra board was briefed by PM&C Secretary Terry Moran, demonstrating the Government’s enthusiasm for trying to bring Telstra onside, particularly once that unpleasant American chap leaves. If Telstra plays along, the new company will get a flying start in building its network. The Government is cleverly supplementing regulatory compulsion with commercial incentives in managing access to Telstra infrastructure.

The other media company to keep an eye on is News, which will see enormous possibilities in a high-capacity delivery mechanism into each Australian house and business. The Australian editorialised strongly in favour of the proposal today. You can bet that directly reflects the enthusiasm of its senior executives for a means of achieving their long-standing goal of converting News’s massive content inventory into a product for Australian consumers.

Like any other big change in media policy, bear in mind the interests of all proprietors when reading and listening to what they say in their products. And this is one of the biggest changes of all.

It’s time to book your next dose of Crikey.

Through the week, news comes at you fast. Every day there’s a new disaster, depressing numbers or a scandal to doom-scroll to. It’s exhausting, and not good for your health.

Book your next dose of Crikey to get on top of it all. Subscribe now and get your first 12 weeks for $12. And you’ll help us too, because every dollar we get helps us dig even deeper.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
12 weeks for just $12.