Telstra makes play for bush funds

Should Telstra get access to more government funding to rollout bush broadband?

commentary Should Telstra get access to more government funding to rollout bush broadband?
Renai LeMay, ZDNet Australia

Opinions on the matter have been divided since March, when the federal government said it was considering allocating large chunks of the AU$878 million Broadband Connect package for rural infrastructure projects.

A key deadline for the proposal passed last Friday, with a large number of telcos and others submitting ideas on how they could spend the money.

Of course Telstra threw its hat in the ring ... but it also went public in a high-profile speech yesterday.

"It's a bucket of money and has generated a lot of interest," Telstra's managing director of Fundamental Planning (Network and Technology division) Lawrence Paratz told a Sydney conference.

"Telstra obviously has some strong views on the most effective way for the taxpayer funds to be used -- with benefits flowing to customers and the national interest -- not as commercial free kicks to telco and telco wannabes," Paratz said.

The executive went on to push for the removal of the 60 percent cap on government funding that is chafing Telstra.

And that's not all ... Telstra doesn't think providing wholesale services should be mandated, and the funding shouldn't be used in areas where it already has infrastructure.

The telco's competitors were quick to throw mud at the incumbent.

Under the heading of "The handout kings' obscene request for more", Competitive Carriers' Coalition boss David Foreman attacked Telstra in an e-mailed statement.

The CCC represents rivals like Macquarie Telecom, PowerTel, Primus, iiNet, Internode and so on.

"The government should be careful to look at the track record of companies seeking funding," said Foreman.

"For example, it might consider how Telstra received up to AU$90 million, to subsidise its CDMA network in rural areas ... and then decided to pull the whole network out."

"The government has already sunk several billions of dollars into rural telecommunications over the past decade, the vast bulk of which has gone to Telstra," Foreman continued.

"Yet the problem of the city-country digital divide has only become wider."

Now it's hard to say who is right or wrong here ... both camps obviously have chips on the table and are consequently pushing their own agendas.

Your writer prefers what appears on the face of it to be a more impartial argument ... from someone who uses telecommunications services rather than sells them.

In a letter published in a financial newspaper this morning, University of NSW vice-chancellor Fred Hilmer argued in favour of competition in the telecommunications industry as a means of driving end user benefits.

"From the [competition] regulator's and the government's perspective, the most important thing is the national interest -- in this case, the provision of widely available, high-speed broadband at the cheapest possible price," Hilmer wrote.

From this perspective, if the government wants to promote true, infrastructure-based competition in the telecommunications industry, it would be unwise to hand over a large block of the Broadband Connect funds to Telstra.

But it would be similarly unwise to hand out the funds to Telstra's rivals without careful consideration of who is actually prepared to invest in rural Australia out of their own pocket.

Not all of the CCC's vocal members have proven keen to pull money out of their own pockets for bush broadband infrastructure. Internode is perhaps a notable exception.

Who should get access to the Broadband Connect funds? Drop me a line at or post your comments below.