A remarkable four-car pile-up is about to happen with the National Broadband Network; goodness knows what will emerge from the wreckage. Maybe there'll be no survivors at all.

It is an entirely different world now compared with 2007 when Rudd and Conroy announced their $4.7 billion broadband promise.

The four vehicles barrelling down the road are: Minister Stephen Conroy's impending decision on the three NBN bids, the Senate Select Committee inquiry now underway, Telstra's search for a new CEO, and the worsening global financial crisis.

It is an entirely different world now compared with 2007 when Rudd and Conroy announced their $4.7 billion broadband promise.

The world has changed even more since the bids for it went in last November. And it has changed again since the expert panel submitted their report on the bids to Conroy six weeks ago. In fact, it has even changed again since the Senate committee started hearings a few days ago.

Since the expert panel report was handed to Conroy in January and the minister began what has turned into six weeks of pondering, the global stock market has fallen more than 20 per cent, credit markets have become even tighter and the government's fiscal position has collapsed — both deliberately and accidentally.

The expert panel report went to Conroy on 22 January. On 3 February, Kevin Rudd announced a $42 billion fiscal package, as a result of which, along with the global recession, the government is now projecting deficits totalling $118 billion between now and 2012.

When the NBN bids were put in last November, the official budget forecast was sitting at surpluses over the estimates period totalling $18 billion. When the election promise was originally made, the government was going to be rolling in money forever.

But despite the collapse in its fiscal position, the government should not compromise on trying to achieve a competitive outcome for broadband, even if that means putting in more than $4.7 billion of government money to ensure that an alternative to Telstra gets up.

Alternatively, Conroy could compromise on the amount of fibre in the network. Wireless technology has developed since the NBN tenders were called, and could be used to bring down the cost (although as discussed below, there are political complications with that).

This is one of those things that must be got right no matter what the economic cycle is doing — the results will be with us through the next boom and bust.

This is one of those things that must be got right no matter what the economic cycle is doing — the results will be with us through the next boom and bust.

In any case, the investment by the government of $4.7 billion, or perhaps more, in the NBN could be seen as part of a third phase of fiscal stimulus, based more around infrastructure spending than direct payments to middle Australia.

If you're in for $118 billion debt over four years, another $4.7 billion won't make much difference. The pointier question now is whether any of the bidders will be able to finance the rest, especially those that have no money of their own — that is, Acacia and Axia.

And while Optus is owned by the powerful Singapore Telecom and has promised $2 billion of equity for the project, the Singaporean economy is collapsing as fast as any, so there must be a question mark over that $2 billion.

None of them has withdrawn their bid or, as far as we know, amended it in any way. We don't know whether all, or even any, of them are fully compliant with the rules (FttN to 98 per cent of Australia), or whether they put an uncomfortable amount of wireless into the plan to cut costs.

In fact, maybe the expert panel has ruled them all out seeing they were non-compliant because of too much wireless.

That would be uncomfortable for Conroy because more wireless would make the NBN look like the Howard government's Broadband Connect program, in which $958 million was given to a consortium of Optus and Futuris subsidiary, Elders Telecommunications.

Stephen Conroy simply cancelled that deal last April, saying that it wasn't going to cover the required 90 per cent of Australia and had too much wireless in it. Optus and Futuris immediately protested that it would, and that cancellation was unfair and illegal, but they have refrained from suing the government just in case Optus wins the NBN (which is pretty tough on Futuris, by the way).

Anyway, ending up with a $4.7 billion version of Helen Coonan's $958 million project would be pretty embarrassing for Conroy, so we can assume that avoiding it is his number one priority.

But the reason the Optus/Elders plan had lots of wireless, rather than fibre, is that it's cost effective. Conroy's promise was to build the Rolls Royce of broadband networks — fibre all the way, no wireless for him.

Telstra is the only organisation with the cash flow to internally fund a broadband roll-out, and the only one that could do it without litigation

But if the world has changed since the bids went in last November, and even since the expert panel report went to the minister in January, how much has it changed since the wannabe minister and his campaigning Opposition Leader, Kevin Rudd, made that promise in 2007?

The other thing that has changed is Telstra's management: CEO Sol Trujillo, who led the decision not to put in a bid for the NBN, is now in his lame duck period before returning the US in June, and a search is underway for a replacement.

Telstra is the only organisation with the cash flow to internally fund a broadband roll-out, and the only one that could do it without litigation (Telstra will undoubtedly sue over the others' requests to switch over all its last-mile copper to the new fibre, as well as their demand that Telstra be banned from building a second fibre network to compete, as it did with cable).

The trouble is that under Trujillo, Telstra's regulatory and ROI (return on investment) demands were too great, which would mean the price of access would be too high. Any of the three actual bids would result in lower access prices than Telstra and would establish a new competitive environment for telecommunications in Australia.

Maybe his successor will have a different view, and be able to persuade the Telstra board. Maybe he or she will have an entirely different vision for Telstra. Maybe there will be no NBN at all because no one can afford it now and ADSL2+ is working fine.

Or maybe the government will just decide to build the whole thing as a PPP (public private partnership) as part of its nation building agenda.

Now there's an idea.

This article by Business Spectator's Alan Kohler is reproduced on ZDNet.com.au courtesy of a reciprocal publishing agreement.