Ok I start from the standpoint that during the depths of the...

Ok I start from the standpoint that during the depths of the financial crisis, the governments of the world met and decided that the best way to get out of the mess was for the governments to act in a coordinated fashion to fill the void so to speak of lost economic activity, by announcing spending of trillions of dollars. Interest rates were plummeting as a sign of central bank panic.

The australian government rolled out the NBN thinking that this is a no brainer to sell to the australian public at this point in time.... people are so frightened by the prospect of an implosion of the world economy that they will agree to these huge expenditures, as a form of insurance against the crisis.

The size of the expenditure and the crippling debt that would be inevitably passed on to the australian public seemed irrelevant at the time because everyone thought they knew what the terrible alternative was... and it wasnt pretty.

Fast forward to this week and here is the point I am trying to make- we have a lot of evidence out now that we have dodged the global armageddon bullet. Especially in australia.
Rates are going up and not in a small way. The market, banks and Glenn stephens says so. We have a strong AUD recovering commodity prices, and a trading partner in china that needs us as mush as we need them. All in all there seems litlle left to justify a continuation of the thinking that justified the huge financial risks being proposed to the australian public in the form of the NBN.

We now have an atmosphere not of fear, desperation and panic, but one of cautious optimism. In this newly evolved economic climate, I believe that the justification of the NBN just does not stack up.
1.The stimulus is not really needed and indeed could lead to an overheating and subsequent further interest rises.

2.The focus is now going on to the economic viability of the NBN. Without doubt the viability is zero unless Telstra can be coerced into playing ball. Without Telstras customers, without Telstras network infrastructure, without Telstras cooperation, there will be no economic viability, just an economic liability on the australian public. It is nonsense to expect that the government will be able to find investors for the NBN without Telstras support and cooperation.

3.Conroy has over played his hand. He believes that by giving the Telstra board the option of no 4g spectrum but remain vertically integrated versus split up and gaining access to the spectrum, that the board has no choice.
Maybe the board will see it that way, but I doubt it. They know that the government is entirely dependant on TLS to make the NBN a viability. What if TLS was to refuse to split and compete with the NBN.
The Rudd government will have to defend the indefencible going into the next election. Why indefensible? Well how can it be justified to the electorate?
1 If the economics depend on Telstra not competing with the NBN and also on Telstra customers using the NBN , how then can the economic viability be claimed if TLS are not on board going into the next election.
2. If 1. is recognised then the only way for the NBN to work for investors is if the australian government subsidize heavily the monthly access fee.
3. Once 2. is recognized then the scrutiny of the numbers will start and the issue becomes a political hot potatoe.
4. Once 3 is recognised then the Rudd govt will have
to question why they are still pursuing the same lofty ideas that were born in the midst of a huge financial crisis and that is now being questioned

The board of telstra of course know all this. Conroy knows this, and I believe is getting more and more aware of the political time frame every day. He wants resolution fast so as to avoid the issue being raw in the minds of the electorate next election.
The board are playing it smart by giving conflicting signals, delaying waiting, as they know that the longer Conroy has to wait the more desperate he will become to do a deal.

Whilst these delays create uncertainty and share price weakness they also signal to me that we are now at a huge buying opportunity given that the government will have to deal with telstra and that the deal will have to be generous to avoid a backlash and more delays from Telstra.
Conroy wants answers before xmas. He will deal as if his life depends on it. He will finally be seen to be fair and reasonable and the board will be congratulated for a job well done