Tue, 19 Oct 2010 - 22:00
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Fletcher to Gillard: I do not support your broadband policy

“Despite Julia Gillard’s strained efforts to verbal me in Question Time today with selective quotations from my book Wired Brown Land, let me make it perfectly clear: I do not support Labor’s $43 billion national broadband network”, Paul Fletcher, Member for Bradfield said today.

“Ms Gillard quoted a passage in my book expressing support for the structural separation of Telstra.” 

Mr Fletcher said that Ms Gillard might just as readily have quoted the following passage from a speech last week by the Shadow Minister for Communications and Broadband in which he said:

‘But in response we must recognise that if vertical integration is indeed the problem, then a structural or functional separation is the answer.

‘There have been numerous studies done within and without Telstra on the mechanics of separating out the network business. Many people have argued such a spin-off would be value accretive to Telstra shareholders and that the sum of Telstra’s parts would be more valuable than the whole.

‘On this scenario, such a separated network entity would become a utility providing wholesale access to all. It would operate under a regulatory regime which sets an access price to reconcile two competing objectives: to prevent the utility exercising monopoly pricing power, while providing it with clear incentives to upgrade, but not gold plate, its infrastructure. Where such upgrades are not commercial, because of geography, explicit government subsidies can be provided either to the network company or to would be customers.

‘In short – if vertical integration is the problem, the NBN is not the answer unless you believe in taking a sledgehammer to crack a nut.’

“In other words, the Coalition’s broadband policy recognises and is open to the functional or structural separation of Telstra,” Mr Fletcher continued.

“But we strongly reject the claim that you need to spend $43 billion of public money to achieve such separation. My book nowhere endorses such a profligate and ill-thought-out policy.”

Contact: David McCulloch 0402 354 384