…remove the provisions which would exempt any agreement between between Telstra and NBN Co from the provisions of the Competition and Consumer Act.

This means that should Telstra and NBN Co agree to disconnect or remove the internet from the coaxial cable network used to broadcast FoxTel the ACCC would be able to intervene on the grounds that was an attempt to limit competition.

The tactical games also encompass the Coalition introducing an “NBN transparency bill” which would require the Productivity Commission to do a cost-benefit analysis of the NBN. If the PC is honest, all this is likely to reveal is that while the costs can be predicted reasonably accurately, the estimated benefits depend on how much you believe in the “broadband as enabling technology” story.

Beyond the tactical games, though, the Coalition does appear to be sketching out something approximating an alternative vision for the Australian telecommunications industry. Martin’s report suggests that the Coalition seeks the “voluntary separation of Telstra into retail and wholesale arms” (rather than the gun-to-the-head approach that the government has used). The government would then impose a universal service obligation of 12 megabits per second broadband on the wholesale company, and would provide subsidies to achieve this in regional areas.

This is almost a reasonable alternative proposal if you don’t think a universal fibre rollout is justifiable at this point in time (as noted at length in past posts on the NBN, I’m not convinced that it is). Given Telstra’s history since privatization, however, why would we have any confidence that the company would voluntarily do anything other than exploit its monopoly power to the detriment of the rest of us, leaving the ACCC perpetually fighting the last battle?

If Turnbull proposed the enforced splitting of Telstra into two companies, with one owning the copper and coax networks, the other doing wireless and telco retailing, this might have been a workable proposal. Until that happens, it’s still a recipe for the forced and long-term transfer of money from the telecommunications users of Australia to Telstra’s shareholders.

The Australian has duly delivered.

I want to enter some further caveats, but I’d like to start by saying that the polling data stands aside from its misinterpretation by Newspoll’s owners (egregious comments from Dennis Shanahan implying that the three marginals surveyed in Queensland could be translated into a state wide swing are just the start). Nor is the conclusion drawn from it implied by the poll itself. We can set aside the questions about Kevin Rudd and Julia Gillard’s relative popularity, for instance, as meaningless given their lack of relationship to any probable set of circumstances between now and the election (and Peter Van Onselen must have finally recognised this, segueing into the next media narrative, a series of tedious and tendentious questions about whether Gillard will commit to supporting Rudd’s leadership in the next term).

But what does the polling actually tell us?

(a) As Possum suggests, we can set aside the Lindsay survey as undoubtedly contaminated by the concurrent Penrith campaign and by-election, and observe also that Labor’s primary in the poll of federal voting intentions is higher than that in the by-election;

(b) The 3 Queensland marginals do suggest that the swing against Labor is translating to a swing to the Coalition rather than The Greens in at least those seats (noting that the margin of error is approximately 4%). But, as Possum observes also, seats swing to greater and lesser degrees, as indicated by the result in Page.

(c) If some Labor MPs are right, it may be that the ETS issue is biting in some seats, and issues about asylum seekers in others. Of course, that’s not all that’s going on.

Having said all that, the polling wouldn’t bring any great delight to the government or to Labor supporters. But we should also beware of assuming that the political situation is static, and will remain so until the election. Of interest here is William Bowe’s point about the softness of The Greens’ vote. And Laura Tingle rightly observed in today’s Fin that the government is still the government and can get on with governing. Parental leave and the NBN-Telstra deal are no small matters, and nor is the signing of $10 billion worth of contracts with China, an event which tends to disrupt the narrative about the evils of the RSPT.

And unemployment and interest rates are low. Nor, as Tingle argues, can Tony Abbott continue his disappearing act for much longer. And Coalition supporters really should be asking what sort of leader they have when Abbott has to be hidden to avoid his unpopularity pulling down the party’s vote in the polls. That’s what they’ve been up to.

Nor am I sure that Abbott’s bouts of triumphalism when he does appear are all that helpful to his cause.

Elsewhere: Guy Beres’ take on the Lindsay poll.

The ministerial press release points out the key features: Telstra will allow the NBN to use its infrastructure, and will gradually switch its customers from the existing copper fixed-line network to the NBN, most likely becoming the NBN’s biggest customer. Rather than directly selling the infrastructure, Telstra will lease it to the NBN; Telstra will also receive a cash payment for every customer it transfers from its copper network to the NBN.

An interesting, though relatively small part of the deal is the creation of a new, government owned company, “USO Co”, which will take over Telstra’s universal service obligations (for universal basic phone access, emergency numbers and so on). In terms of financial aspects, the foot has been taken off Telstra’s neck in mobiles, where the government has given up its threat to refuse Telstra the chance to bid for next generation mobile broadband spectrum.

So, after years of delay, cash gouging by Telstra, and argy-bargy, it seems that Australia’s fixed-line telecommunications industry will be something akin to what many (including me) have thought would be best – a monopoly, government-owned supplier of the natural monopoly bit – the cables to everyone’s house, and a free-for-all in the other bits, including retailing and the high-capacity cables linking exchanges and whatnot. Joshua Gans is disappointed that Telstra’s existing networks aren’t going to be competing against the NBN. I’m not; duplicating telecommunications infrastructure to the home makes about as much sense as running multiple competitors’ power or water networks to individual homes and businesses. As noted here (let’s not rehash that debate), I’m not sure that that connection to the premises actually must be fibre, but if we’re going down that road the only sensible thing to do is to shut everything else down.

And, yes, this does amount to buying (or leasing) back large parts of the infrastructure that the government sold not so long ago, as John Durie points out in the Oz. Thank you, John and Peter. Whatever other idiocies Stephen Conroy is determined to inflict on us in the name of the fundie vote, he, and the government more broadly, deserve the credit for finally unscrambling the egg.

That’s assuming that the deal can actually survive the next federal election, the ACCC, and Telstra’s shareholders…

Elsewhere: Paul Budde’s initial reaction and follow-up. He likes it too.

Not only did Abbott take the obvious route, for a Liberal, of public service bashing, but he also affected a disdain for the public sector which would put even John Howard to shame. Amidst his paeans of praise for small business and lauding of the mining industry, he struck another related note -

(a) that the NBN would destroy Telstra, and that communications infrastructure was a task for the private sector;

(b) that private health was a public good, and that the rebate should stay as is;

(c) that Medibank Private should be sold, no questions asked;

(d) and the doozy of the night – that the government shouldn’t build GP Super Clinics because they compete with corporate healthcare!

Make no mistake, this dude is as right wing as they come. Leaving aside the ranting about the Resources Super Profits Tax, and the drumbeat of negativity, the one theme that did emerge from Abbott’s speech was a complete disdain for anything the public sector, and public spending can achieve.

Abbott’s protracted campaign against all and any stimulus spending, echoed by his fans in the press gallery, is cut from the same cloth. What we’re seeing is a brazen agenda to discredit public purposes in favor of corporate interests, and his conservative rhetoric about government eschewing worthy causes is only the tip of the iceberg.

Most Australians with “broadband internet access” at home use ADSL. This technology essentially uses your old phone line to send high-speed data. The latest incarnation, which these days most Australians have access to after Telstra finally turned it on a couple of years ago (after deliberately leaving it dormant in their exchanges for some time) is ADSL 2+, which tops out at 24 Mbit/s under ideal conditions. That is, an ADSL 2+modem can carry about 3 megabytes of data per second. That’s the rough equivalent of three books’ worth of text per second, or or a three-minute pop song in MP3 format. Theoretically, it’s enough to stream live about 1.5 HDTV channels, or, if you like, one HDTV and one SDTV channel. The practical capacity is somewhat lower; something closer to one HDTV channel is probably the practical limit of ADSL2+ under good conditions.

But is that the limit of what the copper network, with a few upgrades, might realistically provide? In a word, no.

The government’s original proposal for “fibre to the node” would have involved replacing only part of people’s phone lines with fibre optic cable; the last few hundred metres would have been left alone, and each “node” would have connected to individual buildings using a of a souped-up version of ADSL called VDSL.

So, how fast is VDSL? Considerably faster than ADSL2+, if you put in fibre links to an intermediate point, and just use VDSL for the last bit to individual homes and businesses. The latest version – VDSL2 can support speeds of around 100 megabits per second over a half-kilometer distance to the nodes. Yep, that’s as fast as the government is promising for fibre to the home, and it’s fast enough to deliver four simultaneous high-definition TV channels.

That’s with existing technology. What might we be able to do in the future? this academic paper suggests that, in many cases, it might be possible to do a whole lot better, by borrowing some technology, amusingly enough, from the latest generation of wireless devices. In some places, there are multiple unused wires in the “local loop” to people’s houses – provided in case people want to have second or third phone lines. Those lines are essentially sitting dormant. At a naive level, if you’ve got 4 lines available, you’d think you could increase the speed by a factor of four, right? Wrong. Through magic which I do not claim to understand but is now fairly standard practice in electrical engineering, you can take advantage of the interaction betweenthe signals on the lines to transmit much more information than you’d think – you can add one and one and get more than two. According to their calculations, it’s quite feasible to squeeze ten times the data on to four lines. That’s enough throughput to carry 40 HDTV streams simultaneously.

But there’s a further complicating factor. The unit of measurement I’ve chosen is a high-definition digital television stream, because that’s the most demanding type of data most people will ever try to send or receive on the internet. But, with video, what’s important isn’t how much data is transmitted, it’s that the picture you see looks good, regardless of how much data is actually transmitted. And depending on how you represent the information in the video stream, the amount of information required to make a good-looking picture varies greatly.

No practical digital video system (except for some scientific applications) tries to transmit exactly what the camera sees to the end viewer. What you see on the screen is an approximation. The methods for making those approximations – known as codecs – have improved a lot over the years, and the latest ones can squeeze a video that looks just as good into a lot less space. The standard used for terrestrial digital video transmission known as MPEG-2, is 15 years old. Later schemes, such as MPEG-4, can squish a picture that looks just as good to you, the viewer, into half the space. So our standard ADSL2+ can carry two HDTV streams using MPEG-4, VDSL2 can carry eight, and the super-DSL of the future might conceivably carry 80 or so.

So, in a nutshell, I reckon that we could have gotten enough capacity out of a moderately souped-up copper network, in large parts of Australia, for the medium term future. And we could have done it at much less than 43 billion dollars.

The experts advising the government presumably know this, but they’ve still recommended replacing Telstra’s copper network entirely with fibre optic. And, in my view, the key reason isn’t technical. The expert report on the broadband tenders is concerned the upgrade path from the kind of FTTN network I’ve examined here to the Rolls-Royce FTTP, but the key objection is as follows:

The proposals have also demonstrated that rolling out a single fibre-to-the-node
(FTTN) network is…

…likely to require exclusive or near-exclusive access to Telstra’s existing copper sub-loop customer access network (CAN), the so called ‘last mile’, thereby confirming that strong equivalence of access arrangements would be essential. As well, providing such access to a party other than Telstra runs a risk of liability to pay compensation to Telstra. The Proposals have this risk remaining with the Commonwealth but they have not addressed the potential cost to the Commonwealth of any such compensation. In any event, the Panel considers that no Proponent could accept the cost risk and continue to have a viable business case.

Of course, if Telstra had never been floated, or the network itself had remained in government hands and just the retail part had been sold, this wouldn’t have been an issue. How many billions of dollars will that little mistake cost Australia?

There’s a discussion paper here on the regulatory reforms that might be necessary.

My initial take is that this might just undo the historic stuff-up of creating and then selling, intact, the Telstra behemoth – a stuff-up that involved both the Hawke-Keating and the Howard governments. Then again, if takeup of wireless broadband continues at its present rate, it might be Australia’s biggest-ever white elephant.

ELSEWHERE: Paul Budde at New Matilda likes the announcement, noting the implications for e-health, amongst other things. The Whirlpool forums are running overtime, and seem mostly enthused. Joshua Gans “fell off his chair in delight”.

Update: [by Mark] A round up of blog reaction at Polliegraph and Swinburne academic Jock Given has an interesting historical perspective at Inside Story.

The share market hasn’t received Telstra’s strategy benignly, though, to understate the point, with 12% of its market value being wiped out yesterday.

But Telstra has one friend – “free market” thinktank the IPA. IPA Research Fellow Chris Berg writes:

Governments are going to have to step back from micro-managing the telecommunications sector. Market forces need to determine the shape of such a quickly developing industry, not regulators.

Apparently that translates into support for a quasi-monopoly keen to destroy its competitors, avoid structural separation and gouge its customers. Intriguing.

Elsewhere: Gary Sauer-Thompson and Paul Budde in New Matilda.

Update: Bernard Keane in Crikey.

Update: Peter Martin on Telstra’s “war on everything”.

Julia Gillard outlined the results of consultations and more of the shape of the policy which will be embodied in legislation soon to be introduced into Parliament in an address to the National Press Club yesterday. The transcript is here. Commentary is largely focused on the unfair dismissal changes for small business, and there’s a sample of the reaction in a good article summarising union and academic views in The Age. But equally important are the machinations going on in the Industrial Relations Commission over “modern awards”, where employers have been presenting what are basically award-stripping ambit claims, and some odd interventions from Gillard herself [the process was examined in a previous LP post by Senator Rachel Siewert of The Greens] and the rather weak protections for collective bargaining that have been outlined.

It’s all very well to say that Fair Work Australia will be able to make good faith bargaining orders, but if they’re only weakly enforceable, and if there’s no power to arbitrate in the face of, well, bad faith, then it seems somewhat of a fig leaf. The ongoing legal maneouvring Telstra have engaged in, which has just had a setback with employees rejecting a non-union collective agreement in a Commission ordered ballot, is a case in point. Differential pay offers (which have nothing to do with rewarding merit and performance and everything to do with de-unionisation), legal stalling, failure to recognise bargaining agents and “wait them out” negotiating are all weapons in the armoury of management strategy, and it’s far from clear from what Gillard had to say that these tactics couldn’t be employed by business under the new laws.

Many Labor MPs aren’t happy campers at the moment, among others. Kevin Rudd’s cosy meetings with Fairfax management have not gone down well, and MPs are concerned that their constituents have been let down. IR is going to be back on the political agenda in a big way in the very near future, and the sentiment in the community for employment rights and the union’s third party campaigning skills now represent as much of a political danger for Labor as they were a political plus in the 2007 federal election.