Commsday: Stephen Conroy's Five Years of Broadband Failure

Stephen Conroy's Five Years of Broadband Failure

From Federal Liberal MP Paul Fletcher

Five years ago, on March21 2007, the then Labor Opposition announced its broadband policy. Opposition communications spokesman Stephen Conroy was scathing about the Coalition’s record. He told reporters the Howard Government had ‘comprehensively bungled its responsibility’ to facilitate the rollout of a fibre to the node network.

According to Conroy – who announced the policy together with two people who have now disappeared from Labor’s leadership team, Kevin Rudd and Linsday Tanner – Labor had a much better plan. They would build a fixed broadband network delivering 12 Mbps to 98 per cent of the population – and it would be rolled out across Australia over five years. What has Stephen Conroy actually achieved in broadband policy in the five years since that date? He has certainly splashed a lot of taxpayers’ money up against the wall. The government owned National Broadband Network Company, set up by Conroy, has been a financial black hole. NBN Co’s latest annual report says it has received $1.36 billion in equity – funded entirely by taxpayers - and racked up losses exceeding $400 million. Yet according to the most recent disclosure from NBN Co, in January this year, a grand total of 2,315 homes are receiving a service on its fixed broadband network.

Five years on, there is a stark contrast between what Conroy promised and what he has delivered. He promised the new network would be substantially private sector funded, with public funding capped at $4.7 billion. Conroy is now building a one hundred per cent taxpayer funded and government owned network – the total cost of which looks likely to balloon well in excess of $50 billion. He promised a competitive selection process - but this was hopelessly mismanaged before it was abandoned in early 2009.

He promised a fixed network to 98 per cent of the population – but NBN is now rolling out wireless and satellite in rural and remote areas, with only a smaller percentage to get a fixed connection. Perhaps most starkly, Conroy told us that his plan would end Australia’s ‘broadband backwater’ status. In October 2006, for example, Conroy fulminated that ‘The latest OECD broadband statistics (June 2006) show Australia’s ranking in the use of broadband remains mired at 17th out of 30 surveyed countries.’ Yet on the most recent version of the same OECD survey, in June 2011, Australia ranked twenty first in fixed broadband penetration (that is, the number of broadband services per 100 population).

Stephen Conroy’s broadband plan has failed to deliver on the very metric he said was most important: increasing Australia’s broadband penetration ranking. It has also brought some very nasty anticompetitive side effects as Conroy has tried to shore up NBN Co’s hopeless business case. He has legislated to ban any new entrant from building a new high speed broadband network to serve the consumer and small business market unless the operator adopts NBN Co’s wholesale only business model. This is a restriction on competitive entry the like of which has not existed since telecommunications was deregulated in Australia in 1997.

He has also legislated to sanction anticompetitive deals done between NBN Co and Telstra on the one hand, and NBN Co and Optus on the other. Under those deals NBN Co will pay $11 billion and $880 million respectively to Telstra and Optus in exchange for them agreeing to cease serving consumers and small businesses over their fixed line broadband networks.

These deals would be illegal under Australian competition law – as agreements between competitors to reduce competition – were they not specifically sanctioned by Conroy’s legislation. In 2007, Labor’s broadband policy document promised that the party was “committed to turning around Australia’s broadband performance and putting Australia back into the fast lane of the information
superhighway.”

Labor has fallen very far short of meeting this lofty ambition. For all the money it has spent, fixed broadband development and take up has stalled and the private sector has largely halted fixed broadband investment in the shadow of NBN Co.

Stephen Conroy has delivered five wasted years in Australian broadband.

Paul Fletcher is a Liberal MP. He serves on the Parliament’s NBN Oversight Committee