Michelle Rowland
January 16, 2018

The tale of a second rate NBN

Opinion

The tale of a second rate NBN

Michelle Rowland: Reflects on what the NBN could and should have been four years on. 

Just over four years ago, Malcolm Turnbull released the 2013 NBN Strategic Review. This became the document upon which he justified abandoning a fibre National Broadband Network (NBN) in favour of his multi-technology mix.

Much has happened since that time. This anniversary is a timely juncture to reflect on what has unfolded.

From a technology perspective, it has long been accepted that fibre is preferable in terms of speed, reliability and flexibility to meet future demand. 

For this reason, the public debate about the NBN has correctly focused on the question of how much Australia should invest in exchange for the digital capabilities it needs:

  • Should we invest in a cheaper technology now and hope we will not have to incur greater cost and disruption to upgrade in the future?
  • Or should we invest in superior technology now on the basis that this is a prudent economic and social decision for the long-term 

At a policy level, it is a question of which approach delivers the best value.

In terms of its broader impact, the path chosen reflects the clarity of vision one has for the country and the principles which underpin it.

Labor’s fibre NBN was designed to position Australia for the long-term and drive the digital economy for the next forty years. 

This was underpinned by the principles of access, equity and quality — which together aimed to establish access to high-speed broadband as an inalienable right and essential public utility in Australian society.

In contrast, Malcolm Turnbull’s path has been a confusing patchwork of technologies that are variable in both performance and reliability which experts say may be in need of upgrades within the next five years.

This approach has been criticised as short-sighted, and in many ways it projects a backwards view about the importance of broadband in expanding social and economic opportunity.

In comparing what option delivers the best outcome, it is important to focus on the costs of the competing approaches.

The 2013 NBN Corporate Plan laid out a program to complete the fibre rollout by the end of 2021, at a cost of $45 billion in peak funding. 

This posed a major headache for Turnbull, given he always knew his pre-election promise to complete the NBN by 2016 for a cost of $29.5 billion could not be delivered.  

As the financial credibility of the $49 billion multi-technology mix fell apart, the Abbott/Turnbull Government stopped trying to defend its policy. 

Predictably, their ‘Plan B’ boiled down to one objective - make the fibre alternative seem as unrealistic as possible.

Enter the 2013 Strategic Review.

The Strategic Review claimed a multi-technology mix would cost $41 billion and be complete by 2020, and that the fibre to the premises (FTTP) alternative would cost $72.6 billion and be completed by mid 2024. 

Yet there is not a single key assumption in this document which has withstood the test of time.
The further $8 billion cost blowout to the multi-technology mix revealed in August 2015 proved the estimates about copper and HFC to be woefully off the mark. 

More critically, every key assumption contained in the Review about the cost and time of FTTP deployment has also been wrong.

Whilst it would require more words than are available to explain the fallacy of each assumption, it is illustrative to single out one of the more central inputs. 

The Strategic Review inexplicably assumed the cost per premise for fibre was $4,800. 

This is despite former NBN management having already validated the methods and processes in 2013 to deploy fibre for $3,900. This was later confirmed when leaked internal documents embarrassingly revealed NBNCo had actually deployed FTTP for that same cost, despite denials by the Government and NBNCo.

It took until 23 November 2017 for NBNCo management to finally concede on the Hansard record that the company can deploy fibre for $3,900 per premise. 

This admission alone makes a mockery of all the denials and claims which have been made since 2013, as well as the Strategic Review.

There is no doubt the FTTP deployment cost would be comfortably below $3,900 now, had Turnbull simply stuck with the original plan.

This single false assumption enabled the revised outlook in the Strategic Review to magically add an extra $10-12 billion to the capital cost of an FTTP rollout.

In August 2017, NBNCo also confirmed to a Joint Parliamentary Standing Committee that the company had reduced the cycle time of deploying local fibre networks by 40 per cent.

These examples give a sense of proportion as to just how easily the opponents of fibre were able to obfuscate the truth through the manipulation of just a few inputs.

The case for fibre continues to strengthen as real-world evidence validates the assumptions upon which the original business case was based. In contrast, the multi-technology mix is rife with problems:

  • the Telecommunications Industry Ombudsman (TIO) reports consumer complaints about internet services have reached record highs;
  • retail providers have been forced to refund customers because many copper NBN connections were found incapable of delivering the speeds consumers had been sold;
  • the HFC rollout to 2 million premises has been halted because after four years of cost blowouts and delays, the technology still does not work reliably; and
  • the NBNCo CEO has called for new taxes and regulatory protections out of concern the inferior NBN will have problems competing against 4G and 5G wireless technologies. 

The sooner the Turnbull Government stops pretending that copper delivers better economic value than fibre, the better off the Australian public will be.

This dishonest display must end so that we can salvage improvements to the NBN that remain feasible.

More than four years on and Malcolm Turnbull’s multi-technology mix remains as confused, wasteful and unconvincing as it was back in December 2013. 

Consumers will not forget the tragedy of a second-rate NBN that is now showing its true colours. They are living with its consequences. 

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