Over land
There is one, all-consuming focus in landline broadband: who will get the $1.5 billion that our new government has allocated toward building a fibre optic network to the home?

The only possible answer is Telecom (for reasons we’ll get to shortly), but despite the inevitability, don’t expect a quick decision from new IT and Communications Minister Stephen Joyce and Infrastructure Minister Bill English.

Our dynamic duo will be looking to avoid the entertaining chaos that has surrounded the Australian government’s similar project. Events there are worth a brief recap, because they could anticipate what is to come here – or what Joyce and English should be looking to avoid – and are instructive of the political jockeying that can result when everybody knows, at heart, that there’s only one telco with the resources to build a network.

It took a full year to decide which consortium would be named the ‘preferred vendor’ to build Australian’s National Broadband Network (NBN), following an intensely controversial bun-fight of a tender process. Dominant telco Telstra attempted to bully the government into providing it with guarantees of no organisational separation and a return on its investment of 20% a year, amongst other perks.

Telstra also asked for a cheap government loan of A$5 billion to top up the A$4.6 billion in taxpayer funds Prime Minister Kevin Rudd has promised for the project. In these credit-crunched times, funding is no small issue.

In December last year, Communications Minister Stephen Conroy shocked the industry by throwing out Telstra’s tender. The Minister’s ostensible reason was that Telstra had failed to fulfil a tender requirement to identify how it would feed ancillary work on the NBN to Australian and New Zealand small and medium companies.

Wider opinion had it that Senator Conroy had simply had enough of Telstra’s bolshy attitude. As I write, an expert panel assembled by Senator Conroy has decided (but not published) its preferred bidder for the NBN tender. Regardless of which consortium is named, it will still only be ‘preferred’. Speculation remains that, having softened up Telstra (whose share price fell 12% on news Conroy had blocked it from the preliminary tender process), Senator Conroy will bring Telstra back to the bargaining table, assuming it’s now ready to play on his terms.

Market researcher IDC says, between appeals and counter appeals, it will be at least another year before any ground is broken on the NBN. That’s assuming there’s no labour trouble, although the unions have promised plenty.

What can we learn from the Aussie mess? Ministers Joyce and English will surely have noted the extreme aggression of Telstra’s behaviour. While the Optus-led consortium (and others) submitted tenders running to more than 1,000 pages, Telstra chairman Mark McGauchie submitted a 13-page letter, briefly outlining a Telstra-version of the project. The media also had a field day with McGauchie’s often outrageously abusive comments about competitors’ bids. Is this a man Joyce and English want to do business with, as they consider any local bid from fully-owned Telstra subsidiary TelstraClear?