Updated: “You do it once, you do it right, you do it fibre” - NBN survives

Updated: Re-elected Prime Minister, Julia Gillard, has confirmed regional Australia will receive uniform wholesale pricing as part of the rollout of the National Broadband Network.

The Labor’s $43 billion National Broadband Network (NBN) has survived a gruelling six weeks, but after a Federal election and a fortnight of negotiations with the three independent MPs, the fibre-to-the-home (FTTH) project will go ahead.

Broadband emerged as a key negotiation topic and, although missing from the list of priorities released by Member for Kennedy, Bob Katter, was described by Tony Windsor as the “most critical” issue.

“There’s an enormous opportunity for regional Australians to engage with the infrastructure of this century, and to pass up that opportunity and miss that opportunity for millions of country Australians I thought was too good an opportunity to miss,” he told media in announcing his support for the Labor party.

“My advisors in relation to the broadband technology, and there are a number of them, suggest that you do it once, you do it right and you do it with fibre. That has been one of the major influences that I’ve had in terms of making a decision.”

Though general consensus has indicated the three independent MPs would back the Labor party for some time, Katter’s support for the Coalition prior to Windsor’s and Rob Oakeshott’s announcement once again suggested the project might not pull through.

While Katter sided with the Opposition and didn’t mention broadband as a priority, he told media in a press conference that the Labor party’s broadband plan was the better of the two options.

“There were issues like broadband where I didn’t think they were all that far apart. I think there was a better broadband deal from the ALP but it was very flaky and I’m not an expert in that field,” he said.

The project hung in the balance throughout the election process, as Liberal leader, Tony Abbott, pledged to scrap the project, labelling it a “white elephant” and “reckless”. While the Liberal’s $6.25 billion alternative would utilise some of the existing infrastructure and staff included in the NBN project, planned future contracts would be forfeited in favour of a market-based solution.

However, it is not certain yet whether the project will go ahead as originally planned. In announcing support for the Labor party, Oakeshott and Windsor said broadband would see some reprioritisation with a greater emphasis on regional locations over metropolitan areas.

“There’ll also be equity in terms of wholsale pricing across country areas,” Windsor said. “That’s a significant value-add to the arrangements for broadband.”

“It’s a broadband roll-in now,” Oakeshott added. “Bingo.”

Gillard confirmed uniform wholesale pricing in a press conference held after the Independents' announcements.

"We will also ensure that the National Broadband Network offers the benefit of uniform wholesale prices to end the difficulties of telecommunications and regional prices for regional Australia and we will ensure priority is given to regional Australia as the NBN is built," she said.

In relation to whether the independents would force Labor to a different rollout schedule for the NBN, Oakeshott said it wasn’t the independent’s choice — their support for Labor was really just based on the fact that they would not support no confidence motions or block supply — all other legislation was up for debate.

However, he said, if Labor dragged its heels on the NBN, the independents would raise their voices on the matter.

A spokesperson for NBN Co wasn’t sure if the company would comment on the election until after Labor leader, Julia Gillard, was sworn in as Prime Minister.

What’s next?

Research director at analyst house Ovum, David Kennedy said that by the time the next election rolled around, the NBN should be in full speed.

“We would expect substantial fibre roll-outs to occur around the country over the next 3 years,” he said. “They have 8 years to roll out connections to about 10 million households. Now obviously there will be a ramp-up phase, but by the end of that parliament would we would expect them to be going at full speed.”

Kennedy said Labor’s policy was much better for the industry and that the Australian civil works companies that would be tendered to actually roll the network out would also benefit from the go-ahead of the NBN.

“Under Labor’s policy, where we’re clearly heading is a structurally separated industry,” Kennedy added. “While both of them agree on the need to tighten competition rules on Telstra, they don’t agree about whether — Telstra in particular and the industry in general — should be structurally separated. Labor would take us strongly in that direction.”

“I think it would be business as usual it seems,” Kennedy finished. ”They would simply proceed with the plan that’s been unfolding over the last year or so.”

The Coalition has repeatedly slammed Labor’s policy as the “white elephant” during the election campaign. But the claim was rejected by the other side of the political fence — including NBN Co chief executive Mike Quigley, who will now maintain his position alongside the other NBN Co staff.

“Far from being a ‘white elephant’, the NBN can provide an acceptable return for the government,” Quigley said in a speech several weeks ago, where he openly slammed the Coalition’s broadband policy. “Taxpayers will get their $27 billion investment back with interest and they will get a network they can use for decades. This is, I believe, a much better option for the Australian public than giving billions of dollars of taxpayer funding to subsidise commercial companies to marginally improve today’s broadband networks.”

Prime Minister Julia Gillard stated at the official launch of the NBN in Tasmania recently that 27,000 future jobs will be created during the roll-out the NBN. With the Gillard government domination over the Coalition, those jobs — along with the 700 people currently working on the NBN rollout — now have the chance to flourish.

Other technology policies

Other Labor technology policies such as its $466.7 million e-health health identifier project and its telemedicine tie-in to the NBN will also now go ahead. However, Ovum analysts Jens Butler and Kevin Noonan noted in a research note recently that things would be tight in other areas. “There is no doubt that funding will be tight for government agencies over the next three years. The Labor Party has signaled it will be removing funds for a number of strategic improvement initiatives”, they wrote, listing them as:

  • Government IT managers will see the loss of the Gershon Reinvestment Fund for delivering underlying improvements to the whole of government IT.

  • Both the Public Service Commission and the Department of Prime Minister and Cabinet will lose funding for strategic government projects.
  • Labor will continue with the public service Efficiency Dividend pegged at the higher rate of 1.25%. Currently it is due to fall back to 1% in 2011.
  • The e-health and NBN projects offered hope. “However, without greater clarity, we are unable to see anything more than the IT industry (within the government sector anyway) being an election loser,” the pair wrote.

    “In any future government, both parties will not have the luxury of surviving any significant problems with policy delivery. This can present quite a burden for IT managers, as IT system delivery is frequently at the pointy end of new policy initiatives. The key message for the next three years will be to step carefully, and to diligently stay on top of all risk management.”

    With additional reporting by Renai Lemay

    Copyright © 2010 IDG Communications, Inc.

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