Global recession fears to put pressure on NBN: Turnbull

Turnbull concedes turning Telstra Wholesale into a broadband utility will create a "practical monopoly"
  • Tim Lohman (Computerworld)
  • 08 August, 2011 10:43

Unstable global financial markets will put more pressure on the government to cut the cost of delivering its National Broadband Network (NBN), according to opposition communications minister, Malcolm Turnbull.

Speaking on Sky News, Turnbull claimed instability caused by flat US, European and Japanese economies will intensify the pressure on the government over the NBN.

“The big issue is [the government is] spending tens of billions of dollars more to achieve the objective — i.e. better broadband — than they need to,” he said.

“The cost of this project is not going to get less; it’s going to blow out. That’s almost invariably the experience with all public infrastructure.

“There are no reasons to suggest this would be any different and there are plenty of well-qualified people in the industry who are on the record saying the capital cost is less likely to be $37 billion, as forecast by the government, and more likely to be between $60 and $80.”

Commenting on the coalition’s alternative broadband plan — which includes the proposal to separate Telstra and establish the telco’s wholesale arm as a regulated utility — Turnbull conceded that another wholesale broadband monopoly would be created.

“[The regulated utility] ... wouldn’t be a monopoly in a legal sense, in the sense that nobody would be able to compete with it, but it would be in many areas a practical monopoly,” he said.

The admission follows comments in March that rather than focusing solely on the NBN, the federal government should allow other networks such as the Telstra hybrid fibre coaxial (HFC) cable network to co-exist and compete in the market.

“HFC networks are being deployed overseas for broadband and it provides facility-based competition," Turnbull told attendees at the Commsday Summit.

"The [NBN] legislation means there will be no competition and it will prevent alternative networks competing with the NBN.”

Turnbull also used the Sky News appearance to reiterate his claim that speeds of 100mbps available on the NBN were unnecessary and of limited use to retail service providers.

“There’s no application or service you could use that requires that,” he said.

“The problem telcos have everywhere is that they cannot up-sell people to those very high speeds with any serious premiums because the services and applications aren’t available.”

Turnbull also said that the coalition’s plan to operate Telstra’s wholesale arm as a utility would not exclude other commercial providers from offering wholesale broadband.

In addition, the lower cost of running Telstra’s wholesale arm as a utility — which the coalition is yet to release costings on — would encourage further competition and lower broadband prices.

“We’re also not going to stamp out competition,” he said.

“See this is the other thing, you build, you have a massively overcapitalised Government monopoly, what is that going to do about prices? You can’t suspend the laws of economics ... and that means prices would go up.”

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