More questions about Telstra and the NBN

Whether it is through superannuation funds and future bonds or as either customers or shareholders, there are many millions of Australians that have an interest in the future of Telstra.

For a great many people the future of Telstra, the Australian telecommunications giant, is something that they are wondering about.

The development of a state-of-the art fibre-optic broadband network by the Labor government was something that Kevin Rudd promised prior to the federal election in 2007.Around 18 months ago the Federal Government investment of $4.7 billion would help to fuel the beginning of the building of a National Broadband Network by the private sector. This has now been changed by the announcement of the building of a broadband network at a projected cost of $43 billion, which is nearly 10 times more than the original plan, by the government. Public infrastructure bonds and direct Government investment will be used to fund the plans.

The new policy will be targeting the monopoly of broadband into homes currently held by Telstra as it will put the telco in competition with a fibre-optic network that is state-funded and vastly superior and will also make the existing copper-wire network redundant.

The possibility of new legislation that would see Telstra being split into a company that operates and runs a network that gives 2.5 million businesses and homes broadband and a wholesale retailer has left the telco facing regulatory uncertainty. Complicated governance issues and compensation would ensue if Telstra were to be broken up because it is a huge publicly listed company.

The inability of Canberra, the Rudd Government and prior to this the Howard Government, to reach any kind of accommodation over the significant upgrading of the national broadband network with Telstra appears to be sole driving force for the surprising and radical turn in Government policy.

The problem was always that Telstra didn’t want to give up its monopoly at the same time as having to spend huge amounts of cash, even though it was considered to be the most logical and cheapest option to do the job.