After the State Government’s startling back-flip in December 2002 it was obvious that a business case no longer existed for Downer to run a fibre-optic telecommunications network in Tasmania. The construction company had run the cable next to its gas pipeline across the island, and the State Government had committed to extending the network to businesses and residents alongside the reticulation of the gas network. Out of the blue, a few days before Christmas, the government cancelled the plan and went for a significantly smaller version of the gas plan, as proposed by New Zealand-based electricity utility, Powerco – a plan that did not include any plans for the broadband network. Subsequently the government had to bail Downer out, at a cost of $23 million.
In May the government announced it would make this stranded asset available to parties willing to broadband Tasmania in competition with Telstra, and they indicated they had secured the rights from Powerco to utilise their trenches to extend the cable to the areas where Powerco was taking the gas network.
However, without the original broadband plan (rapid roll-out of gas pipelines throughout a very large part of Tassie) the government will find it difficult (impossible) to come up with a business model that will work.
They will have to make some serious commitments before anybody is likely to show any interest in commercialising their ‘big pipe’. Broadband infrastructure is an expensive business and deployment will not happen without significant government involvement. This will need to include:
A timely roll-out agenda – if it takes too long Telstra will fill the gap and it will be extremely difficult for the new company to win those customers back.
Extensive coverage – the broadbanding of some business centres alone will not warrant the $23 million investment. Large commercial and residential areas will need to be covered.
The government has to become an anchor tenant on this new network. It will need to give its whole-of-government telecoms business to the new player and it should also fund broadband access to schools, hospitals, libraries, council offices, police stations, etc.
This will necessitate the development of a Broadband Agenda for Tasmania. Without such an Agenda nobody will be able to build an economically viable broadbanding plan for Tassie, in which case the $23 bailout will simply go down the drain.
It is to be hoped that the government will work out a more sustainable plan.
For a comprehensive overview of the Tassie situation see: Australia – Regional Projects (VIC, TAS & SA)
Australia – Government Markets (NSW, Tasmania, WA, Local Govt)
Australia – Broadbanding Regional Australia
Australia – Broadbanding Local Communities
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