NBN to make 49% up for grabs but who wants it?

By Stan Beer
Tuesday, 07 April 2009 06:57

Opinion and Analysis

The just announced $43 billion Australian Government owned National Broadband Network would be open to up to 49% private investment, including from Telstra, the Government said today. The question is will there be any takers?

News of the network was announced by the Prime Minister Kevin Rudd at 8.30am with the revelation that no tenderer had been successful.

Instead the Government has decided to set up its own company and build the network itself funded through the Building Australia Fund, with the help of taxpayer funds, the issuing of Government Bonds and, it hopes, up to 49% of private investment from the telecommunications industry.

Mr Rudd claimed that the NBN project would add a quarter of a percent to Australia's GDP.

In his announcement address, the Prime Minister Kevin Rudd said the network would be structurally separated and wholesale only. He singled out Telstra for a special barb:

"This is the first Australian network that's wholesale only and not controlled by Telstra," Mr Rudd said.

The Prime Minister also alluded to the lack of competition that has existed under the dominant Telstra monopoly and hinted that the Government would separately look at further regulation in that regard.

Mr Rudd said that the Government will look into "reform for the rest of the telcommunications network."

According to Mr Rudd, once the network is up and running it will sell off its stake to the private sector.

Later, the Communications Minister, Senator Stephen Conroy, adopted a more conciliatory approach to Telstra, saying:

"The NBN corporation will be in partnership with the private sector up to 49%. We're inviting all companies to invest, including Telstra," said Mr Conroy.

However, Senator Conroy added that the NBN will be open access and wholesale only.

The big questions on the lips of journalists is whether the Government will be able to attract the necessary private investment in these cash strapped times.

An unasked question, however, what effect will this decision have on Telstra. The market doesn't seem to be worried. At the time of writing Telstra shares are up slightly. That being the case, is there any reason for the dominant carrier to be in a hurry to get involved with the NBN?