Relations in the Australian telco sector are going from the sublime to the ridiculous as the government's policy agenda drives fast-paced change. Simon Kearney reports.
Beaver Creek, Colorado, has some of the best and most exclusive skiing in the United States. The resort’s slogan seems almost Australian in its phrasing: “Not exactly roughing it.”
Australia’s Broadband and Communications Minister Stephen Conroy was found to be “not exactly roughing it” in Beaver Creek for his post-Christmas holiday at the home of Australian billionaire media owner Kerry Stokes.
That the two are pals is noteworthy enough as Stokes is about to be Australia’s first 4G operator with a data network in his home town of Perth, Western Australia.
But what got most noses out of joint, particularly the print media, was that shortly after returning to work Senator Conroy gave A$250million to free-to-air television networks, including Mr Stokes, 7 Network, in return for reclaiming analogue spectrum to sell to 4G operators down the track.
This sparked an almighty battle between rival news outlets, the free-to-air channels and newspapers owned by News Ltd, controlled by Rupert Murdoch, whose top-selling Sunday newspaper, The Sunday Telegraph, broke the story about Senator Conroy’s skiing trip.
Compared to India’s oft put off 3G auction, the regulatory manoeuvring in Australia appears to be moving at light speed - or at least that of a downhill skier. The draft legislation that governs the development of the country’s A$43billion National Broadband Network was released a couple of weeks ago. Its wording forced Telstra to issue a strong warning to shareholders and prompted the service provider’s shares to drop to a new all-time low.
Telstra, incorrectly it seems, read into the new legislation that the government had changed its policy that the NBN operating company would run the new broadband network as a wholesaler and opened the door to offering retail services. “We are very concerned about this potential change in the Government’s position,” Telstra chairman Catherine Livingstone and CEO David Thodey said in a joint letter to shareholders.
An incorrect letter its seems. Senator Conroy accused the telco of jumping the gun and misunderstanding the legislation the next day. “I know everyone has just naturally assumed that's what we meant but that's not what we said.
I'm not responsible for how people have been interpreting it,” Senator Conroy told The Australian newspaper.
Now everyone assumed that at least relations between the NBN Co and the government were all rosy. After all the NBN Co was being given an enormous sum to dig up the length and breadth of the country and lay optical fibre. Some even scoffed about why NBN Co would need to employ a government relations executive when it forked out A$450,000 a year for, Mike Kaiser, a former Labor MP (who had to resign in disgrace after admitting being involved in vote rigging) and long-time party stalwart. “It is absolutely outrageous that a spin doctor for Labor's NBN Co is being paid $450,000 per annum by Australian taxpayers to promote a company that generates no revenue, has no customers and provides no services to anybody,” Opposition Senator Nick Minchin said in November 2009.
But it appears there are problems between the Department of Broadband and Communications and the NBN Co over the takeover of satellite broadband capacity in the outback. It seems that NBN Co wants to take over the wholesaling of this service, said to be unreliable at best, which gets a hefty government subsidy as part of measures to give service equality to people in the bush.
According to reports, NBN Co had a particularly tense meeting with government officials two weeks and outlined that they thought the government’s business model was flawed. The service, for 90,000 people is subsidised to the tune of A$93million over the next two years and it’s believed – with an election coming later this year – Australia’s Prime Minister wanted to be able to announce that among the first Australians getting the benefits of the National Broadband Network would be those in the country’s farthest reaches.
Now that he’s got his skiing for the year in, Senator Conroy has got his work cut out for him at home. He announced last week some of the first spectrum renewals for service providers and said those - all the big players - that presented a public interest case would get an automatic renewal, subject to the payment of an appropriate fee.
There are more spectrum auctions coming up, the NBN Co legislation is due to be debated any day now and then there is still the thorny issue of what happens to Telstra. The government has mandated structural separation, something Telstra says will cost it A$1billion and take five years to complete.
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