This was the first of the three major investments that have been made in Australia’s fixed line telecommunications infrastructure.
The second was made just after the end of WW2, when the PMG committed £42 million to rollout today’s copper Customer Access Network. In today’s dollars this was a commitment of around AU$10 billion. Even more extraordinary is the fact that in 1950 Australian
Government public debt was at about 80% of GDP, more than 10 times the level of today’s public debt.
The Overland Telegraph and the copper CAN, built using public funds, were great public investments that have paid for themselves many times over in social, economic and productivity benefits.
Let’s have a look at what was happening 60 years ago, when this decision was made. This is compliments of the Telstra History Museum.
The third major fixed line investment was attempted by the private sector. I am referring of course to the investment in HFC technology by two private companies.
We all know that the infrastructure was duplicated as the two companies chased each other up and down streets until they both called a halt to their rollouts. In terms of the utilisation of scarce capital, this multi-billion dollar duplication of access assets was not an ideal outcome.
As Optus itself noted almost a decade ago:
Building-out the HFC cable is not an economically viable option. Other broadband technologies are more economic, particularly DSL.
So, of the three fixed line infrastructure builds in Australia - two were great successes and were built by the public sector.
This is why when it comes to telecoms infrastructure investment we should not accept the simplistic mantra of “private markets good, public investments bad”.
I want to be clear at this point that except for the last 12 months, I have lived my professional life in the private sector in a large commercial telecoms company. I am a great believer in markets and the ability of competition to drive innovation.
But that does not mean that I believe there is no place for public sector investment in telecommunications infrastructure. In some cases it is the only way to make the big investments that are critical to our future prosperity.
No commercial entity will provide good telecommunications services to everyone across this vast nation of ours without Government intervention of one sort or another.
No purely commercial company can take the long term view that is required to build the next fixed line platform that Australia now needs.
The Overland Telegraph that Charles Todd built using public funding lasted more than 50 years, the copper CAN that was built using public funds has now lasted more than 60 years.
The fibre infrastructure on which the NBN is based, and which the Australian public is now in a position to build, will last for the next 50 years.
If you are an executive that has to face the pressures of quarterly earnings calls, it is simply not possible to put the long-term public good as your number one priority. You are paid to represent the shareholders interests.
But a publicly funded Telco such as NBN Co can take a very different view.
Our very “raison d’etre”, in NBN Co, is to execute the Government’s policy for broadbanding Australia in the most cost effective way possible – taking a long term view of the national interest.
And I would like to stress that we are a Telco. We are not a Government department.