Conroy's subsea cable plans 'a real worry': Hackett

Conroy's subsea cable plans 'a real worry': Hackett

Summary: Internode founder and iiNet Director Simon Hackett has said that the Communications Minister Stephen Conroy's plans for a government-owned subsea cable are a real worry.


Internode founder Simon Hackett has said that Communications Minister Stephen Conroy's plans for a government-owned subsea cable between Australia and the US is "a real worry," because he said it isn't where there is a price bottleneck.

Two weeks ago, Conroy told an audience at a telecommunications conference in New York that if prices for capacity on subsea cables between Australia and the US do not go down, he would seek for the government to build its own.

Speaking at the Communications Day Summit in Melbourne yesterday, Hackett said that the statement was a worry, because the market failure wasn't in the subsea cable market, where prices are being driven down. He said that NBN Co's pricing model for the National Broadband Network (NBN), where wholesale customers pay an flat access charge and a connectivity virtual circuit charge, based on the capacity required, was the bottleneck.

"It's the NBN that is the disturbing one. It's the cost model that drives against greater data take up," he said.

The panel — including Alcatel-Lucent Australian MD Sean O'Halloran, NBN critic Kevin Morgan, Communications Day publisher Grahame Lynch, and telecommunications analyst David Kennedy — broadly discussed whether Conroy's comment, that he had "unfettered legal power," was accurate.

Morgan said that it was a function of how the Australian Labor Party works, where only a few at the very top ever make decisions for the party. He said that Conroy had pursued telecommunications policy within government, and while he didn't agree with it personally, he said it was a credit to Conroy.

"He has sold this policy, so if his other colleagues had pursued their policy, the ALP wouldn't be trailing the way it is," he said.

Kennedy said that Conroy only has the power that the parliament chooses to give him.

"As it is, the Senate gave him a hell of a lot of power when it passed legislation in the last three or four years," he said.

He said that there were upsides to unlimited power, because having centralised decision making over the last four years, shifted the policy where both major political parties are now in favour of the structural separation of Telstra's wholesale and retail arms. This was a major shift from five years ago, he said.

He said that the difference between Coalition and Labor policies on the NBN essentially now came down to addressing market failure versus installing future-proof technology across the board. But he said that, due to the slow roll-out of the NBN, he wasn't sure whether it would be the major election issue in 2013.

"[Labor] have opted for the interventionist approach, and the electorate has seen neither the benefit or the bill for this, at the moment."

O'Halloran said that the Coalition's reluctance to release its own fully-costed NBN policy before the election is because the party wants to avoid another Fightback!, where the Coalition's extensive economic policy document was widely criticised, and was seen to ultimately cost then-opposition leader John Hewson the election in 1993.

Hackett said that if government changes, then NBN policy changes; but the question will be around how quickly policy will change. He said a comprehensive review of the NBN would take no less than two years, and he questioned whether the Coalition would "hit the pause button" on the NBN in the meantime.

Yesterday morning, Shadow Communications Minister Malcolm Turnbull said that much of the existing contracts for the NBN would be honoured if the Coalition wins government in 2013. This would likely lead to the fibre construction contracts continuing for a number of years, and the completion of the fixed-wireless and satellite roll-outs.

Topics: Government, Government AU, Telcos


Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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  • It's now acceptable to question the great faith

    and, of course, the alternatives.

    Hackett's insight into the pricing model issues and the resistance it presents against future failing prices (in a market that has seen massive falls) is excellent.

    Much better reporting on the issues surrounding this massive project. Thanks Josh.
    Richard Flude
    • You aren't listening again...


      I actually mentioned to you before that the CVC issue had been a worry to us all (you see we can admit problems - whereas you are unable to admit positives - most telling eh). I believe the issue has improved be honest I thought it was pretty well done and dusted, but apparently not (I say this this simply to show that unlike "some", I don't claim to know "everything about everything" ;)

      It seems Simon (who incidentally was the catalyst probably about 12 months ago in first highlighting the issue iirc) is still concerned about CVC.

      And forgive me Richard, but if I have to choose between input from Simon Hackett who can prove his credentials and your unfounded internet claims, well, sorry bud.

      But without knowing, I'd bet Simon would be more concerned about the alternative of completely handing everything back to Telstra (imagine the prices - you even told us previously how bad things were when Telstra had control...) on a silver platter and using obsolete copper for FttN, though...!

      As for the rest of your comment, I have 7 letters for you SAU ACCC.

      Lastly I agree, Josh is doing good work :)
    • Actually

      The CVC thing is a ACCC issue, ACCC decided that is how it will be, not NBNCo.
  • Subsea cable woes?

    You'd think somebody of Hackett's stature would know what he's talking about, shame he doesn't. If he knew what he was talking about he'd know that Conroy's comments were a threat that the government would build their own cable if the US forced the prices up. The "unfettered legal power" comment was also related to this - it was a comment that communications policy was held completely at the federal level so such a policy would be quite easy to deploy, unlike in the US where the state governments also have power which complicates the process.

    Really, Hackett has never struck me as uninformed, so you have to wonder what angle he is playing by misrepresenting Conroy's statements.