By Malcolm Maiden
ANNOUNCED in April as a $43 billion certainty, the national broadband network was at the time little more than a plan for a network, and things are still fluid. The Rudd Government hopes, for example, that the eventual cost comes in well below that worst-case estimate: a number below $30 billion has been lightly pencilled in.
The NBN is a multi-year project, so it's early days, but events today should provide some clues about how the ambitious project might come together.
In Brisbane, the executive chairman of the national broadband network company, Mike Quigley, will publicly explain for the first time what the NBN will offer, and what he has done to get it started.
And today the Rudd Government will unveil legislation that will set the telecommunications regulatory framework for the next five to eight years, as the NBN is created.
The legislation will be a day of reckoning for the strategy that Telstra ran under the leadership of Sol Trujillo between July 2005 and February this year, when his decision to leave was announced.
The Government will say, of course, that it is purely about upgrading telecommunications regulation and setting the conditions for the successful construction and operation of the NBN (specific regulatory rules for the NBN are apparently not included in today's bill), and ideally the legislation will give Telstra reasons to want to co-operate.
But the legislation will contain initiatives that are negative for the telco. Changes discussed while the legislation was being drafted included strengthening the Australian Competition and Consumer Commission's power to set upfront terms for access to Telstra networks, adding to the ACCC's power to move against anti-competitive behaviour, clearer separation of Telstra's wholesale and retail businesses, and restrictions on Telstra's expansion into related industries, including cable television, where it is a 50 per cent shareholder in Foxtel and the owner of the hybrid fibre coaxial network that Foxtel uses.
Stronger powers for the ACCC are virtually certain, structural separation of Telstra's wholesale and retail businesses is probable, and it is at least possible that the Government will move to strip Telstra of its hybrid fibre network, or look to a deal that sees Telstra swap the hybrid fibre and other assets for a stake in the NBN.
And it is being handed down like tablets from the mount because Telstra walked off the mountain. Under Trujillo, Telstra baulked at joining with first the Howard government and then the Rudd Government in the construction of a fibre-to-the-node (street corner) network.
Trujillo argued consistently that Telstra would only agree to access and other terms for a new network that made commercial sense, and his successor, David Thodey, is also saying that shareholders' interests are paramount.
But the Government changed the rules in April when it decided to build a network to reach beyond the neighbourhood nodes into individual premises, bypassing Telstra's old copper network.
From that moment, the telco's negotiating leverage fell and the chance to be a dominant shareholder in the network to replace its copper was gone - ceded by Telstra in those earlier negotiations, for better or worse.
The legislation is part of a lengthy gestation for the NBN, and the Opposition is promising to extend the labour, by referring the bills to a parliamentary inquiry.
The Opposition's scepticism about the NBN was underlined yesterday when its communications spokesman, Nick Minchin, said statistics showing strong growth in wireless broadband undermined the business case for the NBN. Minchin is not right, yet.
Wireless is a retail network and it cannot support heavy traffic at high speeds over distance. The Opposition is right, however, to point to wireless as a long-term threat to land-based networks. That has to be factored into the NBN's business case, and factored into the design of the network, which will inevitably involve the use of wireless in remote areas.
Quigley was a one-man company when his appointment as executive chairman of NBN Co Ltd was announced on July 25, and he's not going to be laying down indelible blueprints for inspection in Brisbane today when he speaks, and takes questions at a Communications Alliance forum.
But he will have something to report. He has made some key appointments (some were confirmed yesterday and a new one, the appointment of former Alcatel chief financial officer Jean-Pascal Beaufret, was announced), and he has done the rounds and introduced himself to the companies that will use the NBN.
He has been told the NBN company should be wholesale only, and that it should run ethernet networking - the technology that supports most local area networks. Fast ethernet technology would be the digital version of Telstra's raw copper, providing a bare pathway for its users.
It would also allow customers to select multiple feeds. In a house, three different companies could be chosen to supply telephony, internet and cable TV down the NBN pipe, for example - a change that would complicate the bundling strategies that Optus and Telstra have deployed for years.
The Maiden family owns Telstra shares.