Cliffhanger poll fractures NBN consensus

David Kennedy/Ovum
03/09/2010
News
Commentary

On 21 August 2010, Australia went to the polls to elect a national government. Earlier this year, the ruling Labor party seemed almost certain to be returned, securing the future of its NBN project to extend high-speed broadband to 100% of the population at a cost of up to A$43 billion using FTTH, wireless, and satellite.

But after a bruising year Labor has lost its majority in the lower house and the opposition coalition parties have drawn roughly level. Which of them will form the government depends on a single Greens party representative and four rural independents. The NBN project, closely identified with Labor, is now under serious threat.

The NBN was a political "football" during the campaign, with Labor criticizing the coalition for a lack of vision and the coalition proposing a much cheaper wireless-based alternative. During the campaign, the telecommunications industry seemed firmly behind Labor’s plan. The earlier doubts about the cost of the project had been put to one side; the likelihood of a Labor victory made the NBN a fait accompli.

The industry consensus fractures

The fragility of this apparent consensus has been exposed by the election result. This week, a group of industry critics of the NBN have publicly called for a rethink of the project, citing the lack of demonstrated demand for high-speed broadband. They have proposed a number of new, cheaper approaches, including greater emphasis on wireless. Financial market critics have also been emboldened, with one describing the NBN business model as a “recipe for disaster.” On the other side, some operators have placed newspaper advertisements in support of the NBN! Press commentary has concentrated on the political implications. However, the main implication is that the NBN consensus has fractured.

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