Fears over fee hikes in Labor’s ambitious broadband plans

Shadow Communications Minister, Bruce Billson, claimed there were fears that consumers across Australia will be forced to pay substantially higher prices for broadband services under the Rudd Labor Government's "one size fits all" plan for a national fibre-to-the-node broadband network.

According to Billson, amid the lack of “clarity from the government”, speculation regarding wholesale prices upward of $75 a month for Labor’s planned network, will result in significantly higher retail prices across all service offerings.

“Adding to the price fears are the wild variations in costings surrounding Labor’s proposal. First Labor said the network will cost $8 billion, then it could be $10 billion, yet, just six months away from Labor’s promised construction start date, we have key industry figures such as Telstra saying it will cost $15 billion and Pipe Networks $20 billion or more,” said Billson.

Independent telecommunication analyst, Paul Budde, told CRN these concerns were not just scaremongering from the opposition and were legitimate.

“If Telstra wins the new broadband contract, it has indicated it would charge premium prices for what it considers as a premium services. Telstra has said this could be as high as $85-$90 per month and broadband services will not be economically viable for 60 percent of the Australian population,” he said.

According to Billson, Telstra recently said it had estimated $4.5 billion to $5 billion for the "big cities", i.e about 50 percent of the population and “you could assume the other 50 percent would cost twice as much to cover, bringing the grand total to about $15 billion”.

Budde said Telstra will treat the new broadband network as a premium service and not as a utility. "In order for the broadband network to be accessible to markets like health and education, the service has to be based as a utility. There will be lower monetary returns than a service provider would want, if it was using the service to a profit," he said.

Although Budde acknowledges that this was speculation based on Telstra winning the contract – and it’s not certain Telstra will be getting it - Labor is leaving the telecommunication industry to set broadband prices and this means another three-four months before a solution is reached.

“Labor is saying charge what you want and then come back to us and this could well lead to another round of court cases. Telcos like Telstra are not interested with working with the Government and prefer to go to court rather than solve the problems that we are facing,” said Budde.

Billson said the only clear costing is Labor’s determination to spend up to $4.7 billion of taxpayers money to claim credit for a network the private sector is already investing in where it is commercially viable to do so.

“The problem is who is paying for the cost of the Government’s very ambitious program, which has to be linked with affordability. It’s going to take some time before we see real action and real information,” said Budde.

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