Australia gets new Minister for Broadband

Australia now has a minister for broadband under Kevin Rudd’s new cabinet lineup. Senator Stephen Conroy will be the minister for broadband communications and digital economy.

Prime Minister Elect Rudd announced the new cabinet in Canberra this morning.

Senator Conroy will now be tasked with implementing the Labor Government’s plan of spending $5 billion to build a national fibre-to-the-node network in partnership with private funding provided by a telco.

For the first time in years Telstra has stopped attacking the government with the company’s pugnacous policy chief Phil Burgess posting a blog comment endorsing the Labor government in glowing terms.

“Labor Party leaders fully understand and appreciate the direct link between the deployment of open-access high-speed broadband and Australia’s future economic prosperity” Burgess writes.

“This is all good because that is also the way we at Telstra see it” he says.

Burgess’ use of the words “open-access” is interesting given Telstra’s whole emphasis for its fibre build has been on restricting competitor access as much as possible – or at least making it financially unviable for them to use it.

When Telstra technology chief Greg Winn launched plans for the fibre network on November 17 2005 he said “We’re not building the network for Optus SingTel or any other competitor. We’re building the network for Telstra’s use with Telstra’s customers.”

Clearly the company has softened its stance since but its ongoing dispute with the former Howard government was over regulation that it claimed required the company to give access to competitors at a cost that did not allow it to earn a ‘competitive return’ on its investment.

“When prices are set below cost Telstra’s shareholders pick up the difference” the company says.

However independent economic consultants employed by the competition regulator to assess Telstra’s costs in access disputes frequently disagree with Telstra about its real costs.

In reality Telstra will be hoping to lobby the Labor government to scrap or reduce regulations to allow it to charge whatever it likes for access to its new fibre network.

Given that a central part of conservative political theory is light-touch non-interventionist government and letting the free market operate it speaks volumes that the former conservative government thought it so important to strongly regulate Telstra.

New Broadband Minister Stephen Conroy will need a steely resolve to keep Telstra both on-side and under control while finding a balance that allows Australia to get the promised fibre network at acceptable pricing.