Testing Turnbull's NBN resolve

Industry analysts and corporate leaders have been quick to make public pronouncements, as they do after every election, highlighting their belief that the newly anointed  communications minister, Malcolm Turnbull, is going to be a great success and the new government’s pre-election policies are just what the industry needs.

The past two weeks have been steeped in déjà vu – is it 2013 or 2007 or 1996?

Hidden amongst the déjà vu is discussion of the Abbott government’s National Broadband Network (NBN) plan. Telcos have put their top analysts to work analysing the government’s plan to find out how they can gain an advantage during what will be a turbulent period of change for the NBN and industry competition policy.

The fibre silly season

There are signs the silly season has come early this year. Product and service announcements by the telecommunications industry started as a trickle after the election and have now become a flood. Some of them are little more than blatant attempts to pre-empt government telecommunications policy.

The telecommunications industry, which has been saddled by expectations that regional and remote customers should be provided with equal access to telecommunications products and services, has leapt on Turnbull’s statements that the NBN would take care of regional and remote areas and telcos would be free to build competing “open access” fibre networks in urban areas.

Anticipating the opportunity to cherry pick telcos have made a range of inner urban related announcements including TPG Telecom’s fibre to the basement plan which is likely to target the most lucrative multi-dwelling units (MDU) - high rise apartments – and extending existing fibre networks to high value premises on demand.

Time for a reality check

TPG’s announcement may have created hype and headlines but amounts too little more than a thought bubble until the government has put in place legislation and regulation necessary to support its telecommunication agenda.

Gaining support in the Senate will be vital for the success of the government’s plan for the NBN and competition within the telecommunication sector.

It should be anticipated the government will begin negotiations with the senators immediately in the hope of getting legislation through the senate sooner rather than later, however, the current Senate is unlikely to support the government’s plans for change for a variety of reasons including the fact that many of the minor party senators supported the current NBN, so the status quo is likely to remain until the new Senate begins sitting in July 2014

This delay should give the government time to meet its pre-election commitment to carry out three NBN related reviews before drafting and putting revised telecommunication legislation before parliament but the delay would place significant pressure on the government’s promise to provide a minimum of 25 Mbps to all household by 2016.

NBN and telecommunication policy reviews

The government has committed to completing three NBN and telecommunication policy related reviews including:

·         A rigorous review into NBN Co’s current commercial progress and options to meet the Coalition’s policy objectives.

·         An independent audit into how Labor’s costly NBN was designed with no cost-benefit analysis or any consideration of other options.

·         An independent review into the long-term structure and regulation of telecommunications.

The NBN Co review, to be completed within 60 days after commencment, will cover “rollout progress and costs, structure, internal capabilities, commercial prospects and strategic options.”

The independent audit into the previous government’s broadband policy and NBN Co’s governance will examine the “public policy process which led to the NBN and NBN Co’s governance” so that the “policy process or governance lessons arising from recent broadband policy are captured and made public.” There is no time limit provided for this audit in the government’s NBN.

Finally, the independent cost-benefit analysis and review of regulation, to be completed within six months after commencing, will “analyse the economic and social benefits (including both direct and indirect effects) arising from the availability of broadband of differing properties via various technologies, and to make recommendations on the role of government support and a number of other longer-term industry matters.

Turnbull’s real test

Having committed to completing the three reviews, Australians will get an early glimpse of Turnbull’s commitment to greater transparency and whether he will accept the review outcomes even if they support aspects of the Labor NBN plan.

One would hope that the reviews will be conducted using the open and transparent approach that Turnbull has advocated for NBN Co. As the terms of reference for the three reviews and the composition of the review panels are revealed in the upcoming weeks, it’s crucial that this exercise is done right.

There is a valid case for the panel members to be broadly selected from the telecommunications industry, business, academia and regional and remote communities. But will the government truly commit to independent reviews with independent panel members or simply pay the likes of KPMG or McKinsey and Co to provide a report that supports its policy?