David Havyatt
January 16, 2019

Tackling Rudd’s NBN revisionism

Politics

Tackling Rudd’s NBN revisionism

Kevin Rudd: Drawing ire and fire from all sides over NBN claims

Kevin Rudd’s The PM Years is an interesting exercise in revisionism that has fuelled great interest in his assertion that Murdoch attacked the NBN for commercial reasons. Before we assess that claim it is instructive to see how unreliable Rudd is otherwise on the NBN.

According to Rudd, Labor had said it would build the first version of the NBN “in partnership with Telstra.” The reference he gives is to a Stephen Bartholomeusz article that makes it clear there was no such plan, it was a tender.

The fantasy continues with the assertion that the expert panel was appointed to ‘negotiate with Telstra’ and was headed by Treasury Secretary Ken Henry. Once again, the proffered reference supports neither assertion – it was chaired by Comms Department Secretary Patricia Scott and was considering tender responses.

He then adds the absurd comment “Of course, Telstra was not the only would-be participant in the process; it had been the subject of an open tenderer to the marketplace.” The farce is amplified by having no reference to Telstra’s exclusion from the tender on the basis of non-compliance with the tender conditions.

There is no reference to the infamous mid-air briefing provided by Conroy; a version that only appeared in print because Rudd’s office briefed it out. It was a story that fueled the myth of the NBN being developed on a coaster/napkin/envelope depending on the spinner.

The only pieces of accuracy in Rudd’s account are that it was the expert panel that advised Government to by-pass fibre to the node and progress straight to fibre to the premises, that the policy was subject to numerous cabinet committee meetings, and that it was Rudd’s insistence that once the NBN was up and running as a profitable enterprise it would be privatised completely.

Rudd at this point in his story says that the public loved the fibre to the home announcement but that the Murdoch media ‘declared war.’ He says, “It was only later that I discovered Murdoch had identified a lethal threat to the long-term commercial viability of the Foxtel cable network in Australia.”

Rudd’s claim isn’t even new; it was the basis of a report soon after Rudd’s return to leadership.

What is new is the so-called ‘smoking gun’ being filings with the SEC. Timing is slightly important here because 2013 is when Newscorp Inc was split into 21st Century Fox and News Corp, the former being production and video distribution assets while the latter contains publishing assets and just one video business, Foxtel.

The 10-Q (quarterly filing) in 2013 contains the risk The Company Must Respond to Changes in Consumer Behavior as a Result of New Technologies in Order to Remain Competitive saying:

Content owners are increasingly delivering their content directly to consumers over the Internet, often without charge, and innovations in distribution platforms have enabled consumers to view such Internet-delivered content on portable devices and televisions…There is a risk that the Company’s responses to these changes and strategies to remain competitive, including distribution of its content on a “pay” basis, may not be adopted by consumers. In addition, enhanced Internet capabilities and other new media may reduce the demand for newspapers and television viewership, which could negatively affect the Company’s revenues.

So ‘enhanced Internet capabilities’ might be a threat. The earlier filings for Newscorp Inc haven’t been examined to see when this risk was first included. But if killing Labor’s NBN was meant to eliminate the threat then it certainly hasn’t been the case.

The 10-K (annual filing) last year contains the risk The Company’s Businesses Face Significant Competition from Other Sources of Content, and its Success Depends on its Ability to Compete Efectively saying:

The Company’s businesses face significant competition from other sources of news, information and entertainment content, including both traditional and new content providers. This competition has intensified as a result of the continued development of new digital and other technologies and platforms…In addition, due to the increased availability of high-speed Internet access and innovations in content distribution platforms that enable streaming and downloading of programming, consumers are now more readily able to watch Internet-delivered content on smart TVs, computers, tablets, streaming devices and mobile devices through a variety of providers. These include IPTV providers and SVOD services such as Fetch TV, Netflix, Stan, Amazon Prime Video, hayu and Mubi, as well as programmers and distributors such as CBS, Disney and the FTA networks that have begun providing content, including smaller, lower-cost programming packages, directly to consumers over the Internet, in some cases also without charge.

The absurdity of the Rudd claim can be seen in the original ALP policy document which quoted Murdoch:

News Corporation Chairman Rupert Murdoch has described Australian broadband as a “disgrace”, concluding: "We are being left behind and we will pay for it.”

The problem with Rudd’s foray into the NBN is it has created a platform for Malcolm Turnbull to repeat his fabrications about Labor’s National Broadband Network.

Rudd is right that Murdoch’s media unrelentingly attacked the NBN; but the motivation wasn’t any commercial risk to Murdoch. He (and after 2010 the Coalition) knew that the NBN was incredibly popular and so to defeat Labor the NBN had to be discredited.

That’s why in April 2013 the Daily Telegraph splashed headlines claiming Labor’s NBN would cost $94 billion. That’s why Foxtel hosted the Coalition policy launch.

The fabrications of 2013 endure despite every piece of evidence since demonstrating the accuracy of NBN Co and Labor’s fibre to the home plan. Globally fibre to the home costs have declined in line with NBN expectations, the deal with Telstra took longer than allowed for to conclude, the use of HFC continues to be troublesome despite dumping the use of Optus fibre.

But the politicians haven’t acted alone, the NBN Co Chair and management took full responsibility for the ‘Strategic Review.’ This was an error laden review conducted over eight weeks that rejected facts included in the company’s own plan and failed to recognise the revenue impacts of lower speeds.

Just one example is the justification for the reduction of ‘multicast revenue’ on the basis that “the multicast forecasts in the Corporate Plan appear to overstate the demand and availability of premium IPTV content in Australia.” And yet we see the list that News Corp is presenting of IPTV offerings in Australia now.

The multicast functionality of the fibre to the home NBN provided a migration path for programmed content like Foxtel that doesn’t exist on fibre to the node; killing off FTTH is forcing Foxtel to more directly compete with the IPTV providers.

All up three counterfactuals – Coalition claims about what FTTP would cost — have been proffered; the Coalition campaign launch analysis, the Strategic Review and one included with the Corporate Plan release in 2015.

The Labor policy for the 2016 election included a systematic demolition of these counterfactuals in an appendix.

Given that the NBN was such a critical issue in the 2013 campaign and that Murdoch was targeting it you would have thought that Rudd would have campaigned strongly on it. At a campaign focussed meeting of Labor ministers in the second quarter of 2013, the NBN was identified as the only positive story Labor had. Unfortunately, the change of leader guaranteed a change of Minister.

New Minister, Anthony Albanese, was good and campaigned strongly, but what was needed was the PM. Since before the leadership change the PM's office and the Minister's office had been trying to organise an "NBN Day" where the focus of campaigning could be on the NBN and the more important Digital Economy issues. The leadership change derailed the initial plans and nothing else was able to be arranged prior to the election being called.

Once the election was called, campaign HQ continued to plan for an NBN day. As was documented in the official ALP review of the campaign, "There were serious difficulties managing the liaison between the Travelling Party and Campaign Headquarters." Planning for an NBN day was one specific case.

Bruce Hawker’s book The Rudd Rebellion gives us a great insight into the 2013 campaign. He records that on 20 August ALP pollster John Utting had advised the need to do more NBN stories – especially to appeal to male voters.

A visit to NBN Co’s Discovery Centre had been planned and postponed about three times, and the visit was finally scheduled for the Saturday 24 August. In the meantime, Campaign HQ worked with the Minister's office to prepare a document making the case for Labor's NBN. A longish word document was developed by people at Campaign HQ into an excellent brochure I Want My NBN.

Hawker recounts the visit:

Following the frenetic pace we had set yesterday I was looking forward to a quiet Saturday in Sydney. However, I woke up before 7 a.m. and found a message from Fiona to say she was ill and would not be able to attend the press conference. So I got dressed and went out to Kirribilli and went through the issues - including the latest round of terrible polls showing, among other things, that Kevin would lose his own seat...We then went to the NBN Discovery Centre at North Sydney, where we found out that the Syrian crisis was escalating, following the revelation that Syrian authorities had used chemical warfare on their own people. I said that we should make this the story of the day and ensure that Kevin said he would be offering Abbott a briefing. Nothing is more likely to worry the voters than the thought of Tony Abbott being in charge during a Middle Eastern crisis. Imagine Julie Bishop calling the shots while Tony does a triathlon....

The press conference went well.

The sequence of events at the Discovery Centre was that Rudd was given a tour and then he and his entourage went into a conference room before emerging for a media conference. Rudd led with Syria and only got brought back to the NBN by an aide thrusting an iPad at him with the brochure to be launched.

The news was dominated by the conflict between Rudd’s apparent announcement that he was suspending the campaign for Syria when he actually went to film Kitchen Cabinet before returning to Canberra for briefings.

Members of the ALP caucus after the election had no knowledge of the brochure.

As we head to the 2019 election many wonder what the ALP policy will be. Will they commit to returning to fibre to the home, or will they commit at least to only using fibre to the curb?

The draft platform considered at the national conference in December had four simple paragraphs, the last of which read “Labor will hold the Liberal Government to account for the roll out of a second rate NBN, and work to deliver for all Australians a network that is fast, reliable and affordable.” Labor won’t be holding a Royal Commission, but they will be undertaking their own review. That will identify how much the flawed MTM has cost taxpayers and that sum should be considered for an asset write-off. And Labor certainly won’t be privatising NBN Co until the job of building fast, reliable and affordable broadband to all Australians is completed.

Labor doesn’t need to make any promises – anyone who cares knows that Labor’s NBN plans will be better than the Coalition’s.

David Havyatt worked as a Special Adviser to Senator Conroy from Dec 2011 to June 2013. He is no longer employed in a political office and no longer works in telecommunications.

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