http://www.timeslive.co.za
Australia's planned fast broadband network will cost up to A$43 billion to build and will be viable even without the involvement of phone giant Telstra, a government commissioned study says.
Shrugging off criticism that the massive network would be too costly and outdated when complete, the report said the fast fibre services would reach 93% of the continent and be affordably priced.
"It will put affordable genuine fast broadband within the reach of every Australian," Communications Minister Stephen Conroy said at the release of the report which put the cost of the network at between A$38 billion and A$43 billion.
The faster network was a key election promise that helped propel Rudd to victory in 2007, painting the then-ruling conservatives as telecommunications luddites opposed to infrastructure that would boost national productivity.
Australia has slower and more expensive Internet services than many developed nations, raising concerns on competitiveness, and communications access will be central to elections later this year, which most surveys indicate Rudd is expected to win.
The study recommended the government strike an eventual deal with the former state-owned monopoly Telstra to sell its fixed-line assets into the government-controlled NBN Co operating the network, saying that would lower the cost further.
The government is still in talks with Telstra, which is concerned at the cost of being part of the network and the cannibalising of its ageing copper-based system as customers migrate to the new fibre.
"We are in lengthy and very complex negotiations with Telstra. They are ongoing. If both parties felt there was no point in those discussions continuing, we would terminate them," Conroy said.
"I wouldn't imagine that we could keep talking through to the end of the year, I wouldn't imagine we could keep talking until the end of June. At some point you have got to make a decision. either we are going to get there, or not, and then shake hands." The study said state backing for Australia's biggest proposed public-private partnership yet would be necessary in the early years and would peak at A$26 billion after seven years, with full privatisation due five years after the network launched.
Investment returns would outstrip long-term returns on government bonds, at around 6-7%, and the government would recoup around A$40 billion by the time of privatisation, the study by KPMG and McKinsey & Co. forecast.
Telstra shares slid sharply after the announcement the project could push ahead without its involvement, with the company's price dropping 1,28% by mid-afternoon, although still better than the broader market's 2% fall.
Failing to strike a deal with Telstra would make the roll-out more costly and would force the public-private NBN Co to compete with the country's biggest phone company, the report said.
"We will not be deterred, despite the opposition of some of the largest Australian companies, from this occuring. We believe it is in the national interest for this important piece of national infrastructure to get out there," Prime Minister Kevin Rudd said ahead of the report's release.
Australia's conservative opposition Leader Tony Abbott has nominated the project as prime target to curb spending if he wins elections later this year.
Conservative communications spokesman Tony Smith said thee network would be dumped in favour of a cheaper rural and regional network using wireless and wired technology.
The political uncertainty over the network's future has weighed on shares in phone companies including Telstra and Singtel.
The government last year rejected bids by firms that it said failed to offer value for money and said it would ask private firms to join the country's biggest infrastructure project.
Rudd said the new network would be built with money from a A$20 billion national infrastructure fund and the sale of bonds, following an initial government investment of A$4,7 billion. Private sector investment would be capped at 49%.
The study ruled out allowing the network to compete for retail customers, easing concerns at Telstra and rival SingTel Optus that NBN Co could go beyond its original remit to provide wholesale services on equivalent terms to all retail service companies.
COMMENT: If the Liberals win the next Federal election and hold good on their threat to scrap the NBN Project, it will be the most-cyncial and disgraceful decision witnesed for many decades in Australia. Urban Australia is crying out for a high-speed, national fibre network servicing 93% of Australian homes yet the Opposition is threatening to scrap this ambitious, internationally-acclaimed project.
