A top Australian telecommunications official waded into the heated political debate over the nation's digital future Thursday, saying a government plan to invest tens of billions of dollars into a new national fiber network would offer homes and business vastly faster connection speeds than originally promised.
NBN Chief Executive Mike Quigley. right, at an event in July.
.The debate concerns plans by Australia's ruling Labor party to spend as much as 43 billion Australian dollars ($38.6 billion) to make Australia's data and mobile-phone connections among the world's fastest, transforming Australia from a relative technology backwater to high-tech modern economy. The plan has been targeted by the opposition Liberal-National coalition, which has said it would replace the plan with a less costly alternative that gives the private sector a greater role if it takes power in an Aug. 21 election.
Mike Quigley, chief executive of state-owned NBN Co., which will oversee the network buildout, said the network will now be able to offer speeds of one gigabit per second. That's 10 times faster than the previously announced top speed of 100 megabits per second, and well above the baseline 12 Mbps pledged by the opposition.
Mr. Quigley told reporters Thursday that NBN has always maintained that the network had the potential to offer faster speeds. He disputed suggestions that NBN's announcement was politically motivated.
He also told a business lunch that offering such speeds will not have any impact on the cost of building the network, which he said "certainly won't cost over A$43 billion."
The Liberal-National argues the plan amounts to a nationalization of Australia's communications infrastructure, which was privatized with the initial public offering of Telstra Corp., the country's biggest telecommunications firm, under the previous conservative administration of Prime Minister John Howard.
"It's very easy... in the midst of a very difficult election campaign for the government to pluck figures out of the air and say, look isn't this going to be fantastic, but too many people have been too disappointed for too long by this government," Mr. Abbott told reporters Thursday. "I would counsel people against taking these kinds of airy promises, airy assurances at face value."
Separately, Telstra said Thursday that its net profit for the fiscal year fell 4.7% from the year before and warned that its earnings would fall further in the current financial year, as it battles declining revenues at its fixed line business and tough competition in its mobile operations in Australia and Asia. Macquarie analysts said the guidance suggests downgrades in the order of 15% to 20% for consensus market forecasts. Its shares fell 9.5% to A$2.94.
"Today, the greatest asset that Telstra has is our customer base and we have been losing too many customers. I cannot allow it to continue," Telstra Chief Executive David Thodey told analysts. Melbourne-based Telstra said net profit for the year to June 30 fell to A$3.88 billion from A$4.07 billion a year ago.
The broadband battle has become one of the defining features of the five-week election campaign, as the coalition attempts to pitch itself as more fiscally conservative than Labor. The election result is expected to go down to the wire with Labor only narrowly ahead of the coalition according to the latest polls.
The coalition is offering a scaled-back network that relies on a mix of fiber, copper and wireless technologies. It will provide A$2.75 billion to help fund construction of a national fiber-optic backbone, with another A$750 million expected from industry.
But, unlike the governing Labor party's plan, it will stop short of reaching individual homes--which Communications Minister Stephen Conroy describes as the "single largest bottleneck" to higher speeds.
The opposition plan also includes spending A$1 billion to upgrade much slower existing copper networks and A$2 billion on wireless networks.
Mr. Quigley said Thursday wireless technologies are "physically unable" to match fiber, which will be capable of "virtually unlimited" download capacity. In urban areas, wireless also would require the construction of significantly more wireless towers to reach even the baseline speed of 12Mbps, he said.
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