Incoming Prime Minister Kevin Rudd and his likely Minister for Communications Stephen Conroy will need more than a firm handshake if they are to avoid a battle with Telstra that could derail their plans for a national broadband network, according to one industry expert.
"Only very early and strong intervention on the part of the new government can prevent a war with Telstra -- which started with the last administration," said Paul Budde, managing director of telecommunications consultancy Buddecomm.
"There needs to be very decisive action otherwise we'll still be talking about this at the next election," he said.
Budde said that for Rudd's plans to work effectively and on schedule it would require a "massive turnaround" on Telstra's behalf, which he believes will not come willingly.
He suggested that the new government arm regulatory bodies with more powers to make the national operator "fall into line" if necessary.
"There's no way around the fact that Telstra has to be involved, it's a national network and it has to be made available for these plans to work, but not under Telstra's conditions," said Budde.
He believes that Telstra will have to undergo some degree of structural separation in order to get any national broadband infrastructure off the ground, voluntary or otherwise.
The new government has to engage with industry, which is what the previous one failed to do.
Paul Budde, Buddecomm
"Nothing less than very, very tough structural separation legislation will ensure Labor's capacity to execute its plans under such a scenario, but even this could take at least a year, which would again undermine Labor's promise to start rolling out in 2008," he said.
Budde said that Rudd's government must not only play a strong hand in dealing with Telstra, but step on the front foot with the ICT industry as a whole if it intends to fully realise its plans.
"The new government has to engage with industry, which is what the previous one failed to do; all the research is done, it's now a matter of achieving a consensus between the industry and government on how we're going to make this work," he said.
He told ZDNet Australia that the ICT industry is on the verge of presenting an "industry vision" to Senator Conroy, the man most likely to take over Helen Coonan's role as Minister for Communications.
According to Budde, around a hundred companies have been working on the proposal for a month. Describing it as the industry's "national blueprint", it is rumoured to include ideas for an infrastructure that supports e-health applications, smart-grid energy saving equipment and tele-education.
"This infrastructure can do far more than just provide faster Internet access," he said, going on to point out that far from being a stand-alone initiative, the Rudd government will need the network to implement a number of its other policies effectively, such as its proposed 'digital revolution' in education.
Despite being buoyant about the network's potential development, Budde is skeptical about Labor's timeframe for its completion, and believes there is very little possibility that the government will begin its network rollout by 2008.
"I'd be optimistic to be talking about a delay of three years, whichever way you look at it there's no quick fix, the government have to initiate significant structural changes with Telstra and reach a level of consensus with industry first," he said.
I believe that Paul is right in saying that the new Communications Minister will need a 'firm handshake' - not so much with Telstra and the other telcos, but more so with the private equity market - the shareholders. In effect, the government debit has been discreetly moved to the private equity market, and these shareholders are looking to increase the value of their investments - whatever it takes!
No matter which way we look at it, we in Australia now have a "Dog's Breakfast" telecommunications and IT industry, mainly due to the stupidity in selling off the Government Jewels to the private equity market - and 'truly believing' that the Competition Regime was actually going to reduce end user costs. Time has proven these fallacies - and they are bitter pills to swallow.
This short-term solution may well have temporarily balanced the government debit, but it has cost Australia far more dearly in lost (non-mining) business revenue, lost IT expertise and a population demography that is locked to major capital cities on the southeast, with housing affordability now at an all-time low.
Having worked in most areas in the PMG / Telecom Australia / Telstra and the IT industry for over 40 years, it is very clear to me that Telstra needs to structurally separated, so that the two diametric business arms can maximise their effectiveness without internal interference.
In practice, separation is rather simple - and the current Board needs to go with 'Bigpond' the reselling / retail arm, along with the shareholders; as this is where the money is made!
The infrastructure side (Telstra Wholesale) does not make money as all its revenue is returned to continually grow and replace network equipment. The Telstra Wholesale arm needs its own full-time Committee to efficiently manage its affairs - without the interference of the 'Bigpond' Board or the ACCC etc.
From my understanding, the current growth in the Broadband Inter-Exchange Network (IEN) is about half way and it has about another 30 months before this construction and integration will be near complete.
The real Broadband Customer Access Network (CAN) - using FTTH (with a little WiMax) has not even got off the ground. I agree with Paul on this and I believe that it will take another four to five years to roll out - so that needs to start ASAP.
Fast and cheap Broadband Internet is the catalyst for a whole range of medical, business and educational facilities, and these will be the 'content' that will provide the return on investment (ROI) for Broadband infrastructure - through the competitive resellers.
The above scenario is why the structural separation legislation will have to be drafted very soon, and be very tough. The shareholders will have to accept the bitter pill for some years so that the "Dog's Breakfast" of shifted debit can be cleaned up, including the structural separating of other telcos in Australia to stop the massive financial losses and equipment wastages caused by competitive infrastructures, thanks to the Competition Regime working in the wrong places.