Telecoms & Broadband Business Newsletter - August 2010

Editorial - Trans-sector commitment to NBN is one step closer

The Australian Government has produced a TV commercial highlighting the benefits of the National Broadband Network (NBN) to the areas of healthcare and education. The commercial also highlights the government’s vision that the NBN is more than just a network to deliver high-speed internet access. However, serious commitment is still not forthcoming from government sectors to use the NBN for a range of new services in the various sectors, particularly in healthcare.

The government held a trans-sector conference at the University of Sydney in December 2009, at which delegates made it very clear that leadership is required to provide the social and economic benefits that the NBN has to offer. This approach was also supported by Prime Minister Rudd. Strong government policies, not money, are the keys to launching a successful NBN. BuddeComm has mentioned previously that a minister or assistant minister be appointed to coordinate the trans-sector activities. The OECD has calculated that such an approach could deliver an NBN and still create a net 0.5% saving on national GDP, meaning that the cost of an NBN would be more than offset by the social and economic benefits.

Once a serious commitment is made by the various government sectors to participate in the NBN, it will then be possible to start creating good business models around it. Such a commitment will allow telcos and their investors to model what sort of investments they can expect that will flow from these sectors towards telecoms facilities and services. Companies such as Telstra have indicated their support of such policies as they see this as an opportunity to divert their income stream away from traditional telecoms services (telephony and basic access) towards new telecoms services based on developments in the digital economy.

The progress being made in Australia is now reverberating around the world. BuddeComm is currently engrossed in writing a report for the United Nations on this topic, and the British Government has invited BuddeComm to present a report on the Australian developments at a conference which it is organising in London. This of course is in addition to developments already taking place in the US, New Zealand and the Netherlands.

The Tasmanian network, the technical pilots and cooperation between both the telcos and the smart grid industries are all contributing to this progress. There is positive response from the industry in Australia to their commercial participation in these developments, as well as through investment repositioning plans (M&A) around companies such as AAPT and Amcom.

Despite a lack of strong government leadership on trans-sector issues it is heartening to see that the ongoing attention, information and discussions that are taking place around the NBN are already having an effect. The education sector is the most enthusiastic, but the utilities industry and some of the healthcare sectors are also showing signs of interest. Obviously the commercial sectors are already voting with their feet, with ongoing investments in e-commerce and e-entertainment.

During my visits to the investment houses in Europe all but one recognised that structural changes to the telco industry could be positive, as the value of the parts could be higher than the whole. This restructuring is of course essential if we want to unleash the social and economic benefits mentioned above.

It will be very difficult for the Opposition to simply discard all this progress if they do win the next election. It is highly unlikely that anybody in the industry would like to see the clock turned back three years to start from scratch again, obviously requiring new plans, policies, submissions, legislation and more than likely another term of government before any progress on a new plan will start to show results. The current plans can be finetuned, reprioritised and changed to fit a new political face, but to start the whole process again from scratch would be detrimental to the industry and indeed to the Australian economy as a whole.