Sign it, or we'll shout 'sign it!' again

Despite 18 months of "we're working on it", Telstra still has not signed off on the deal that will enable the NBN to proceed — even though nearly everybody recognises it's the right thing to do. Is David Thodey stalling in hopes of torpedoing the whole project? And if so, what exactly should Stephen Conroy do about it?
Written by David Braue, Contributor

Jon Bon Jovi may be known for his big hair and gazillion albums sold, but fewer know about his US charity work and Soul Kitchen, a restaurant where it's entirely possible to eat for free. Such pay-what-you-want ventures have emerged around the world as a way of serving the needy, playing on the law of averages to build a self-sustaining business that lets customers pay what they want for their meals — or nothing at all.

It appears this approach can be made to work in the restaurant business. But it's not always so easy in other settings: witness Tony Abbott's latest shallow and opportunistic attacks on the NBN and flood levy, in which he is appealing to whingers who complain about having given to flood charities and then facing a compulsory levy on top.


In subduing Telstra, should Conroy walk softly or carry a big schtick? (BobbyPalace image by Schlauwiestrumpf, CC BY-SA 3.0)

Get real, folks: Queensland and other flood-affected areas need billions to fix this kind of destruction. Australians are a generous sort and recovery efforts have brought out admirable qualities, but the kind of money needed here is only going to come if everybody chips in. After all, the government really is little more than a way of redistributing wealth to ensure the country benefits from our collective success. And sometimes, hard decisions need to be made even if they're unpalatable to some. You just can't eat for free forever; someone is paying to keep the restaurant's pantry stocked.

The telecommunications market is little different. As we have so painfully seen over and over again, leaving the progress of the industry in the hands of the well-meaning results in less progress and far more stalling. Witness the apparent inertia within Telstra, which is about to blow through its third self-imposed deadline for completion of the company's $11 billion copper-network deal with the government.

I'm not a professional negotiator of contracts, and I certainly recognise that this stuff is very, very complicated. But Telstra and the government had committed to wrap this stuff up by the end of 2010. Then Telstra said it hoped to have completed negotiations by Australia Day. You know, so it could bring the proposal to shareholders for its half-year results announcement on 10 February. If it misses that deadline, it will be months before Telstra can properly take its deal to its shareholders. And that, as we already know, would cause major problems for the NBN's timeline, which is predicated on the deal coming into effect by mid-year.

If Telstra misses its deadline, it will be months before it can properly take the deal to its shareholders ... that would cause major problems for the NBN's timeline.

And we just know David Thodey would never want to cause problems for the NBN, and to delay the sacrifice of Telstra's copper network.

One imagines Conroy and his people sitting at a table with unopened bottles of champagne and ceremonial pens at the ready, tapping fingers on desks and glancing nervously at the clock as January rolls into February; it was only last month, after all, that Conroy confidently declared the deal would be signed in January. And as weeks of delay slip on into months, it's getting harder and harder to believe that this lack of interest on Telstra's part is an accident.

After all, Telstra has a long and storied history of using its market weight to delay progress: remember a decade ago, when it kept doing one trial after another of amazing new ADSL technology but held off deploying it for years as it argued that dial-up internet was a more cost-effective service than ADSL?

Or when it sat on its ADSL2+ equipment, saying it would only roll out the technology in exchanges where its competitors went first? Or when it had to be formally warned back in 2005 not to sabotage competitors' ADSL roll-outs? Or when it flaunted the ACCC's paper-tiger powers — over and over and over and over and over — because the theoretical penalties were less expensive than the revenues to be reaped?

It all seems to be happening again. Heck, back in September 2009, analysts were warning Telstra to move quickly to secure a favourable position in negotiations. Yet the only real progress we've had so far is a Heads of Agreement that last year formalised the terms of the negotiations but, in real terms, committed Telstra to absolutely nothing.

I've previously lauded David Thodey's leadership and vision, if not his execution. But there are a lot of other people sitting at his table; the way Telstra seems to be dragging its feet in finalising the contract, it looks like Thodey is talking out of both sides of his mouth to satisfy both shareholders and the government.

Telstra — with the support of opposition figures who lamented Labor's "gun to the head" approach — was happy to complain, loudly and angrily, against the possibility that it might be excluded from 4G spectrum auctions and forced to divest its Foxtel holdings. It's acting like the loudmouth charity-restaurant patron that gorges itself on lasagne, then complains about the quality of the food and goes back for sixth helpings.

Without some concrete good-faith action on the telco's part, Conroy may well need to put some force behind those threats. Right now, he's changing Telstra with all the success of someone trying to convince a sleeping 40kg St Bernard to get up and go for a walk with him: he can pull and pull on the lead, but if that dog doesn't want to get up, it's not going to get up.

Suggestions that removing the threat of onerous restrictions will get Telstra to become a willing accomplice in the NBN transition are optimistic.

Suggestions that removing the threat of onerous restrictions will get Telstra to become a willing accomplice in the NBN transition are, how do they say, optimistic. In the end, a gun to the head — or a kick to the behind — may be exactly what's necessary to get Telstra playing ball. But with the Opposition crying out on Telstra's behalf and Thodey continuing to conveniently miss key deadlines, Telstra can continue building out its own network while squeezing every last dollar out of its copper network. One almost imagines Liberal policymakers cheering Telstra's policy of civil disobedience from the sidelines — or, possibly, even the front lines; who knows what goes on behind closed doors?

Many people may see Telstra's inertia as payback for Conroy's heavy-handed behaviour in the past. However, just as the flood damage won't be repaired simply through people's generosity, this sort of major industry change doesn't come without a bit of heavy-handedness. The key is figuring out what form of heavy-handedness will get Thodey to sign on the dotted line — and mustering the political will to ensure Telstra doesn't keep spoiling the meal for everybody else.

Raise your hand if you think the Telstra-government deal will be finalised by 10 February. And if not, what should be done about it? Or will Telstra end up torpedoing the NBN simply through its foot-dragging?

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