RURAL INTERNET BROADBAND SCHEME NIXED

UNCLAS CANBERRA 000375 SIPDIS SENSITIVE SIPDIS STATE PASS USTR E.O. 12958: N/A TAGS: ECPS ECON AS SUBJECT: RURAL INTERNET BROADBAND SCHEME NIXED REF: 07 CANBERRA 449 ¶1. (SBU) Summary: The former Howard Government's rural broadband scheme was jettisoned by Communications Minister Conroy, who was critical of its technology and inadequate coverage. The main reason for the decision is simple: it duplicates in part the ALP national broadband initiative. End summary. SCRAPPING A POLITICAL DEAL -------------- ¶2. (SBU) On April 2, Communications Minister Stephen Conroy announced the Government was scrapping the A$960 billion rural broadband deal, announced by his predecessor Helen Coonan last June. Conroy cited the failure by the Opel consortium (Optus and Elders) to hit the mandated benchmark of reaching 90% of underserved premises, saying that Department of Broadband, Communications, and the Digital Economy (DBCDE) analysis showed it would only reach 72% of those premises. ¶3. (SBU) Industry insiders and analysts were not surprised by the decision. The rural broadband deal was seen as a hasty and primarily political response by the Howard Government to the Australian Labor Party,s (ALP) massive A$4.7 billion national broadband initiative, announced with much fanfare (and to the surprise of the Coalition) in March ¶2007. Further, the grant of the contract to the Opel group was seen by many as Coonan and the Howard Government getting back at telecom giant Telstra, which had been involved in vicious public battles with the Government over the direction of telecom policy and regulation. CONROY CRITICAL FROM BEGINNING -------------- ¶4. (SBU) Conroy, then the ALP,s shadow communications minister, opposed the Opel plan from the beginning. He was in particular skeptical about the plan to use WiMax wireless technology, and was critical of both the award procedure and the coverage claims Opel made at the time of the contract's awarding. A representative of a telecom industry association that does not include Optus, Elders, or Telstra in conversation with econoff was "not disappointed or surprised" by the decision. He agreed that the whole process as run by Minister Coonan was non-transparent, and said that the competition elements were inadequate, noting that Opel had never come forward with wholesale arrangements. REDUNDANT -------------- ¶5. (SBU) Comment: The media immediately dubbed Telstra (who crowed over the decision publicly) the winner of this decision, on the assumption that they are the likely winner of the ALP broadband sweepstakes. But DBCDE insists they want a competitive process with as many submissions as possible, and that no winners have been selected. Minister Conroy's concerns about the award process, coverage, and the wisdom of using WiMax wireless technology were real, according to DBCDE officials. And in a cost-cutting budgetary atmosphere, the chance to slash A$960 from the budget by nixing the former government's "me-too" broadband plan was too good to pass up. However, the primary reason for tossing the Opel scheme overboard is a quite simple one - with the election of the Rudd Government and the planned implementation of the ALP's national broadband plan, the Opel rural broadband project had simply become redundant. End comment. MCCALLUM