OPEL Analysis – Minister raises the bar for himself
As we have been saying for many months, OPEL was always going to be a problem in terms of the new government’s plan for a National Broadband Network.
Unlike the previous government, the Rudd Government has taken a far more strategic approach towards broadband. And OPEL did not fit into that approach.
During the past months I sensed a lack of communication between the two parties, and this became obvious in the Optus press release. I don’t wish to place blame, but I strongly believe that, with effort, a solution could have been found.
But it’s too late now.
I agree with the government that we didn’t want yet another hopscotch approach to broadband, and OPEL was something that didn’t fit with their integrated vision. The problem was that for the preceding ten years the previous government had not taken a strategic approach to its telecom plans. In the case of OPEL, the decision arrived at by the then Department of Communications was ill-advised; the solution was based on politics rather than a sound strategy, and the outcome was a negative one.
Under the Wholesale Industry Group initiative I organised after the previous Minister announced her Broadband Connect plan we envisaged a different outcome. We were halfway through that process when the Department suddenly closed the door on us and then, from behind that closed door, emerged with a totally different animal, called OPEL.
I am very much in favour of the government taking a strategic approach to broadband, as opposed to the rather gung ho style of the previous government.
However, the Minister is taking a high-risk political route here. He could have had a rather easy win with some 900,000 broadband connections in regional Australia, but instead went for his more strategic plan. The buck now stops with him. Will he actually be able to deliver on his promises of open networks, competition and innovation? By eliminating OPEL he killed what could have become a formidable competitor to Telstra. Telstra was extremely worried about OPEL, and went to great lengths to badmouth the initiative.
Unless the Minister delivers on his promises, Telstra can clearly call this a great victory.
The Minister will need to come up with a damn good outcome to deliver on his National Broadband Network plan – it needs to be nothing less than serious structural changes to our industry, which will result in a separation of infrastructure and services. This is the only outcome that will enable the building of competition and innovation in Australia.
If these major structural changes do, in fact, take place it will still be a victory for Optus. It is the largest of the competitors and will be the largest beneficiary of a truly open network. Elders, also, would win, as an open network would allow them to become a key regional services provider on that network, independent of any telco interference.
In order to progress rapidly it is important that the Minister is prepared to follow the stepping stone approach proposed by the FttH SIG. Such an approach would still see a serious deployment of wireless broadband to solve the immediate problem, followed by a more gradual follow-up of fibre being driven deeper and deeper into the network. This would mean that the Austar/OPEL spectrum could still be used and that the majority of the 900,000 mainly regional users could still be connected by 2009.
It would be totally unacceptable in political terms if the OPEL cancellation were to lead to a waiting time of up to seven years for these 900,000 customers/voters. I don’t agree with the Department that WiMAX would have been unable to deliver on its promise – particularly in view of the fact that, after it had acquired the licensed spectrum from Austar, Optus was in a prime position to deliver on its promise of 900,000 connected homes. There is no other short-term solution for a regional broadband upgrade without the use of wireless.
So, on balance, I agree with a strategic approach to the National Broadband Network and, if implemented along the lines mentioned above, there could still be significant wins for those who are now seen as the losers.
At the same time, the pressure is now on the Minister to force Telstra to play ball and accept a truly open network approach, not just for the new network but for the rest of the national (Telstra) network also. These two will be intrinsically intertwined – there is no room for a halfway house here.
The hard reality is that this will lead to a significant loss in the monopolistic profits that Telstra collects from its Australian users, and no company in the world would accept this without being forced into it. And the only one who can force them to change is the Minister. Telstra is one of the last of the incumbents left in the developed world that is still able to extract these monopolistic rents.
Examples of how we can solve this can be found around the world, from New Zealand to Singapore to Britain. So, yes, it can be done, but is the Minister prepared to take these tough decisions – decisions that will most likely result in massive legal battles with Telstra?
The Minister has raised the bar for his own performance, and that of the Rudd Government. The next milestone will be June, when the Minister will release the tender documents that will reveal the parameters for his NBN.
Paul Budde
April 4th, 2008 at 7:36 pm
It is good to finally see a article that paints the true picture, that now 900 000 working class households in regional and rural Australia may have to wait seven years to get even basic internet access.
The biggest travesty in all of this is not that Opel was terminated but that no alternative plan has even been hinted at for the 900 000 households other than pray that you are included in the “98%”.
The hall is rented, the orchestra engaged, it’s now time to see if Senator Conroy can dance.