Would the Coalition really buy Telstra's copper?

Summary:One hopes that Malcolm Turnbull was deadpanning when he recently referred to the possibility of buying Telstra's copper access network, because if that's what his alternative NBN policy is based on, then the industry can kiss 15 years of hard-fought progress under deregulation goodbye.

The NBN debate has taken on quite a different (read: relatively sedate) tenor in the past few weeks, shifting from limbo to all-forward largely in the absence of the usual attacks by the likes of Malcolm Turnbull and Paul Fletcher.

That lull may be because they're busy hurling barbs in parliament; because the ACCC's recent approval of Telstra's separation has helped the NBN over its last major obstacle; or because Turnbull is desperately hoping that by keeping quiet, he can outlast the memory of those who might otherwise call him to task about one of his most absurd pronouncements ever.

I refer, of course, to his suggestion to the Australian Financial Review that it might be in Telstra's interest — and Australia's — for the government to buy the company's entire copper access network (CAN) back from the company.


Could the Coalition's long-simmering alternative NBN policy really involve the long-dismissed nuclear option — buying Telstra's copper network? (Castle Bravo blast image by US Department of Energy, CC BY SA 3.0)

Yes, seriously.

Correct me if you read it differently, but Turnbull's statement — made in the context of a conversation suggesting that it would be no problem to wind back the NBN as part of the Coalition's secret-squirrel alternative policy — was followed by a non-sequitur that would, from anyone else, be laughed off with a slap on the back and the serving of a subsequent beer or six.

"The copper network belongs to Telstra, so you would have to reach an agreement to either buy it or have access to it, but I think that it would be in Telstra's interests to do that," he is quoted as saying.

Buying Telstra's copper network back has always been the nuclear option — the one thing that the government was trying to avoid. It is the telco equivalent — if there is such a thing — of Barack Obama's recent refusal to rule out military options when asked how he would deal with the Iranian nuclear program.

Buying Telstra's copper network back has always been the nuclear option — the one thing that the government was trying to avoid.

The Telstra debate, of course, has far less significant geopolitical implications, but it's still a central and ongoing issue as the NBN starts to stretch its legs and run for — and, it hopes, past — the line marked by next year's election.

Not only would Turnbull's nuclear option be extraordinarily expensive, but it would also nullify the value of the entire Telstra privatisation, and, in real terms, be a concession that Australia's entire telco privatisation exercise has been nothing more than 15 years of sad, unrecoverable farce. That said, privatisation was originally engineered by Turnbull's own party, which adds an extra dose of irony.

You could even go so far as to say that the entire point of the NBN was to avoid such a purchase, which would bury anywhere up to $20 billion of taxpayer capital in an ageing, decaying infrastructure that would, if it were purchased by the government, become a disaster in asset management.

Surely, even the biggest critic of the NBN and its fibre infrastructure would not support the payment of double-digit billions to Telstra to acquire an overburdened copper network — especially one that even Telstra admits will be worth nothing a decade from now.

Surely, even Malcolm Turnbull would realise that this would be an even worse way to spend taxpayer money than the fibre NBN against which he has so vehemently fought. At least if you spend billions on fibre, you end up with a new and future-proof network, rather than inheriting the problems and idiosyncrasies of 15 years of Telstra's architectural ambivalence.

Telstra truly would be laughing all the way to the bank if its contract with NBN Co were cancelled and Turnbull tried to drag it back to the negotiating table. Turnbull has made much of his apparent plan to encourage Telstra to play nice by ironically accelerating payments to the telco, but Telstra would not be viewing such negotiations in terms of the net present value of that deal, compared with that under its current NBN Co payment structure.

Telstra would not be viewing such negotiations in terms of the net present value of that deal, compared with that under its current NBN Co payment structure. It would be viewing such negotiations in terms of its ability to stall any substantial change...

No, Telstra would be viewing such negotiations in terms of its ability to stall any substantial change in the local-access network (LAN) for the indefinite future. Turnbull might think that he has a tasty carrot to offer to our ex-monopolist telco, but Telstra has never really, truly been interested in change unless it's dragged to it; as soon as he sits down to talk with Telstra and puts his carrot on the table, I suspect that Telstra will decide that it wants oats instead.

And with a few ill-conceived pen strokes, we would be back in 2000, with the remains of a fledgling national fibre-to-the-premise infrastructure in the ground, a totally confused private sector that has only recently had the certainty to even know whether ADSL is a viable long-term investment and a new government whose only real promise regarding the NBN is that it will change what's already underway.

It's always easy to watch from the sidelines and say, "I could do that better", but statements like this do nothing to support the suggestion that the Liberals' evolving alternative NBN policy is nothing more than a wayward fantasy.

Heck, it took the current government several years and heavy-handed threats before it was able to negotiate access to Telstra's copper network, but if Turnbull thinks that he can do better by buying Telstra's CAN, or even by trying to negotiate a better deal for facilities access, I submit that he will be sorely disappointed. And so will the rest of the industry.

What do you think? Is the purchase of Telstra's CAN a viable element to the opposition's alternative NBN strategy?

Topics: Broadband, Government, Government : AU, NBN, Telcos, Telstra

About

As large as the US mainland but with a smaller population than Texas, Australia relies on ICT innovation to maintain its position as a first-world democracy and a role model for the developing Asia-Pacific region. Award-winning journalist David Braue has covered Australia’s IT and telecoms sectors since 1995 – and he’s as quick to draw le... Full Bio

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