Can Labor’s broadband proposal be saved?

Terry McCrann points us to the idea that there are lots of free variables in Labor’s broadband plan. While the rhetoric about why we need this and why we need to spend vast amounts of government money eludes me, if all this is a commitment to high speed broadband with government facilitation, then there might be hope.

The issue for me is this: to get a cost effective network we need competition. To get consumers to actually use it, we need competition. And to make sure we only really build it where people and businesses might value it, we need market forces. A plan that put out a tender for one network operated by one firm and just to the node, would not do it. But what if we localised it? 

Labor wants high speed broadband to be available to small businesses and to households but for different reasons. Suppose that instead of the money being a public-private partnership between a firm and the government, it was a partnership between the end user and the government. The government would specify an amount based on an establishments distance from the relevant exchange. If the end user is connected to the exchange for high speed capabilities then they or their provider gets that lump sum. If they are not, they don’t get anything. They have 5 years to take advantage of this (and so can choose to wait). After that period of time, there is an access regime imposed on the investment and they can switch provider.

Using the variation in the lump sum, the government can cross subsidise rural Australia or small businesses (based on say, employee numbers). They could even allow the subsidy to ‘earn’ interest to encourage investment smoothing. There is potential for competition for each customer — rather than the government stepping in for one solution fits all. There is potential for local governments to step in and facilitate provision. Finally, that competition could mean that providers find it worthwhile to put in even faster broadband. If they do this, then the access regime might be suitably relaxed but we might end up with broadband speeds closer to world’s best practice.

Think about what this means. More choice, more competition and where is Telstra? Well they are one of the competitors with some installed infrastructure but also with the cost of a hard access regime at the exchange (something that will have to be done anyway under Labor’s plan). This starts to look like what I proposed last year. Maybe there is hope for sense to prevail.

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