High-profile Liberal MP Malcolm Turnbull has slammed Labor’s National Broadband Network Policy in impassioned comments to a Sydney audience, describing it as “a gigantic torching of taxpayers’ money” and claiming most of Australia doesn’t want 100Mbps fibre internet.

“The reality is, there simply isn’t demand at the household and every small business level for internet at that speed, at a price which would make it even remotely financially viable,” the former Opposition Leader told a forum he convened in Sydney today to discuss Labor’s mandatory internet filter policy.

“You’ll spend $40 billion plus dollars, and you’ll get an asset that’s worth $10 billion,” he said.

Describing the NBN as “a colossal white elephant”, Turnbull said he was fundamentally a “free enterprise” person – believing the market would provide most services that consumers wanted, and the Government should provide subsidies to aid the market where it could not provide needed services and make a return.

Turnbull said the market for universal 100Mbps fibre internet was not there – but there was explosive demand for wireless broadband – at which point he held up his Apple iPad device, on which he had been Twittering during the forum proceedings. “This requires a very different sort of architecture,” Turnbull said of wireless broadband.

Turnbull said it was the Opposition’s view that in terms of broadband, government policy should focus on areas – such as in rural Australia – where commercial services were never going to be able to provide broadband at an affordable price. He mentioned the former Howard Government’s OPEL project as one which had the potential to improve services in this way, noting the Rudd Labor Government had “canned” the OPEL deal with Optus and Elders.

“I think that was a great pity,” he said.

Liberal MP Paul Fletcher – formerly an Optus executive in charge of regulatory affairs before his ascension to the parliament – agreed with Turnbull. He argued the NBN policy was “dreamt up on the back of a beer coaster” by former Prime Minister Kevin Rudd and Communications Minister Stephen Conroy in a plane flight.

“It’s an attractive high-level vision,” he said — but when you “dig into the practicalities, what is proposed has some problems”.

“Yes, it would be wonderful if the surgeons at St Vincent’s just down the road here could supervise brain surgery remotely in Alice Springs,” said Turnbull. “But sitting in your apartment in Bondi, you are not going to want to be supervising brain surgery in Alice Springs, in all probability, and so in a sense, it’s just totally over-engineered.”

Look out for further coverage of Turnbull’s filter forum over the next few days

Related posts:

1. “Internet junkie” Turnbull comes out swinging
2. Filter will be “exorcised” if it returns, says Turnbull
3. ISP launches 2TB, 100Mbps NBN plan for $105
4. Amendments turn NBN Co into a retailer: Turnbull
5. Principal Turnbull: Teaching Conroy “Economics 101″

Tweet

1. Marty
   Posted 07/08/2010 at 8:17 pm | Permalink | Reply

   Prepare for all the yelling at Malcolm Turnbull.

2. Justin
   Posted 07/08/2010 at 8:21 pm | Permalink | Reply

   Going to have to disagree with Malcolm here. The demand for wireless is driven by the lack of any real alternative for a lot of people. They simply can’t get ADSL. Those that can are plagued by unreliable connections caused by an aging copper network that is not able to keep up with demand and is not adequately maintained. Wireless is NOT suitable for business.

   Free enterprise doesn’t work with infrastructure at this level. It requires you to build for the future, not what people think they want now.

   • Marty
     Posted 07/08/2010 at 8:43 pm | Permalink | Reply

     Justin you are right. Malcolm mentioned portable devices as the reason that wireless demand is increasing but that doesn’t mean that people don’t still want a reliable ‘wired’ connection when they are at home or office.

     I’m not fully in favour of the NBN because I don’t trust any government to manage the rollout properly but to use the growth in the wireless market as justification for not doing it is ridiculous. I’m lucky enough to be in an Optus HFC area so I have 100Mbps now and I have devices that connect using 3G. People want both.

     As I said, I’m not fully in favour of the NBN for the reason stated above but also because it is a huge amount of money. There are a lot of reasons why the NBN will be good for the country but there are good reasons for spending money on health, the elderly, the young, our roads, trains and the list goes on and on.

     Personally I think Labor should have stuck with the FTTN idea, structually separate Telstra and give incentives for players like iinet, internode, exetel and TPG to build the last mile in regional areas.

     I think the only way to get real competition in our communications industry is to have more than 1 wholesaler. Building the NBN is just going to change who the single wholesaler is, which doesn’t make for much competition at all, especially when it seems it will be legislated that noone can actually compete with the NBN. That’ll be worse than Telstra!

     • Justin
       Posted 07/08/2010 at 9:02 pm | Permalink | Reply

       FTTN may well be enough. I don’t know, haven’t read enough on it. My worry with FTTN is, where is the node? And, you’re still stuck with the current copper network from the node to the home (at least that’s my understanding). Quite frankly, that network (in my case at least) sucks.

       I agree totally about the management of the rollout. I believe it can be managed well, but certainly not by this government.

   • Marty
     Posted 07/08/2010 at 8:47 pm | Permalink | Reply

     Sorry just on your point “Free enterprise doesn’t work with infrastructure at this level. It requires you to build for the future, not what people think they want now.”

     This can be done by doing FTTN and then mandating that any new developments have to put fibre in the ground ready for connection just like we do with water and sewerage.

3. goosmurf
   Posted 07/08/2010 at 10:36 pm | Permalink | Reply

   What Australia really doesn’t want is the constant flip flopping between parties who are only concerned with leaving their mark on Australia’s future. I honestly don’t give a rats arse which plan is adopted, as long as we just stick to one plan. It wastes far more dollars for us to keep coming up with new plans than to just stick with one and actually see it to fruition.

   These discussions about an NBN of some sort, whether its FTTN, FTTP/FTTH, OPEL or what not have been going on for years and there are no new facts or issues coming to light. Its time to stop talking and just get on with it. The ISP industry seems mostly happy with the Labor NBN plan so far so why are we still discussing completely different alternatives?!

   • Marty
     Posted 07/08/2010 at 11:16 pm | Permalink | Reply

     Yep, they need to stop playing politics and just stick with one of the plans.

     “The ISP industry seems mostly happy with the Labor NBN plan so far so why are we still discussing completely different alternatives?!”
     Of course the ISP’s are happy with the Labor NBN plan because they won’t have to pay to advance their own industry.

     • Myke
       Posted 08/08/2010 at 1:57 pm | Permalink | Reply

       Yeah Turnbull laid the analogy of asking a truck company the question “would you like us to create 5 lane highways everywhere, and we’ll foot the bill”.

       “Yes”

       Now we need to ask the rest of Australia, do you want 5 lane highways or would you prefer the odd school and hospital upgrade, money is finite you choose?

       Justin Milne was talking about the perceived difference (logarithmic) between 20 and 100Mbps, ie your average browser wouldn’t feel it was 5 times as fast, probably ~2x. Now I don’t agree, because I’m a truck driver (a heavy user), but I concede the point of possible waste of tax dollars for a&a smith.

       Simon Sheikh (GetUp) tried to steer the conversation to what businesses might develop if we did have such bandwidth. If Australia’s still happy to foot the bill I’d be excited to see. :-)

4. Kristina
   Posted 08/08/2010 at 10:45 am | Permalink | Reply

   I think Malcolm has a point. Speaking for the ‘plebs’ as I’m not hugely industry literate unlike many here, most don’t give a stuff. I know when I went ADSL ( don’t we love our acronyms and abbreviations even when most people, including me, go…huh?) I wanted a wireless doohicky (technical term). Could have gone with a sort of one but pretty ho hum and not cheap, so went wired with iinet. Still mostly good if not as widely applicable. Plus when it rains things slow up.

   Give me a dongle thing that I can use wherever that’s me and not some public access whatsit and I’ll be happy. But, a fast and not ludicrously dear to the home alternate to what I have now, next best option.

   If it’s there people will use it. Make it so. A fibre replacement for the copper dodgy patch job that’s there now, terrif and put the damn cables in the ground along with the rest while we’re at it.

   But, now let’s get serious…ask pollies to not play politics….get real.

   Okay, now you can throw things.

   Kristina

5. Marty
   Posted 08/08/2010 at 2:15 pm | Permalink | Reply

   I’d like to here Mark Newtons thoughts on all of this. I have sent a message to him on twitter, so we will see.

6. Michael Wyres
   Posted 09/08/2010 at 8:27 am | Permalink | Reply

   What Turnbull does not understand is that the NBN is not a “normal” business model. People thinking on the same lines believe that it has to make the $43B back – and fast – and that’s just a load of cobblers. The life of the NBN will be measured in decades, and the fibre being laid is already capable of delivering 4Gbit speeds – so 100Mbit is barely pushing what it would be ultimately capable of.

   Once operational, absolutely the NBN needs to be profitable – but ignore the setup costs (whatever they turn out to be) for a moment.

   We build multi-million and billion dollar freeway infrastructure in this country – without any case for the “money” to be returned. The “return” is the increased economic activity supported by the existence of those freeways – (and the same can be said about rail infrastructure) – over the life of that infrastructure. You build a $300M ring road around a city to bring more than $300M of increased economic activity to the region that ring road supports over it’s lifetime. Sure – there are maintenance factors – but that’s all part of the equation too.

   The NBN is a freeway. $43B is a LOT of money – unquestioned – but over its life – (DECADES) – will it provide $43B of benefit to the Australian economy? Absolutely. The cost advantages for S2S and B2B connectivity over existing options will take care of a lot of that by itself. Inter-capital bandwidth in Australia, for example, is ridiculously expensive by world standards. The SAVING of that money business would be otherwise spending can be directly injected into OTHER areas of the economy. This is only one example.

   There are flow on benefits also.

   For example, large numbers of people for whom telecommuting would not have been a consideration in the past will suddenly be given that as a real option. Many more people working from home, even a few days a week, means less people driving on the road – (environmental benefit, lower road maintenance costs, pressure off already crowded/failing public transport systems). If people aren’t on the roads as much, there are less accidents, less road trauma, and this reduces costs for the struggling health system in this country. Less accidents mean less pressure on insurance premiums – (both for automotive and health policies). I’m sure there are many other ways you could extrapolate the very existence of the NBN to effects on other parts of the economy.

   With the NBN you absolutely have to look outside the normal “box”. In the old Australian economy, the NBN is ridiculous. In the economy the NBN would create, it will be crucial. And if we don’t transform our economy away from one that relies on the “sheep’s back”, as it is often described, we will slip so far behind when every other country does this, that we’ll be absolutely nowhere.

   • Me
     Posted 09/08/2010 at 11:09 am | Permalink | Reply

     What the hell would Malcolm Turnbull know about business models?! Did he even examine the business case study that had been put together for the NBN? Oh hang on, there wasn’t one…

7. Phillo
   Posted 09/08/2010 at 12:18 pm | Permalink | Reply

   @ Michael Wyres. I have to say…. that perfectly sums up the NBN! Well done!

   To be honest…. I am skewed towards the conservative side of politics, however the NBN process is brilliant and it annoys me that the Coalition are so intent on knocking it down.

   We often forget that the copper network that is now one of the core services of Telstra was started 100 years ago. The NBN is setting up a network that will be relevant for at least the next 50 years (with upgrades of course) and provides the stability that a hard wired network brings.

   I am looking forward to the day I get the fibre at my place.

8. Jason
   Posted 09/08/2010 at 3:23 pm | Permalink | Reply

   “But sitting in your apartment in Bondi, you are not going to want to be supervising brain surgery in Alice Springs, in all probability, and so in a sense, it’s just totally over-engineered.”

   Yeah, sure Malcolm. But you’re thinking in terms of a network that doesn’t have 100MBps *now*. If 100MBps was more or less ubiquitous, solutions would arise to exploit it for sure. Imagine the degree of flexibility we’d have for new media applications on a platform that fast? There would be new applications that I can’t even dream up right now – for consumers sitting in their apartments in bondi. No kidding.

   $40bn expenditure, ->$10b asset -> $countless billions in new innovation into the market based on the new, faster network. Which means… more revenue for everyone.

   The trouble now is that no-one is going to build these new innovative apps off the back of what is a very slow network, and no private provider is going to step up and build the network because the applications (and therefore demands) don’t exist. This is why I don’t have a flying car.

   Oh, wait. My mistake, I’m being optimistic. Sorry.

9. Damo
   Posted 15/09/2010 at 6:50 pm | Permalink | Reply

   The problem is, people keep saying “I don’t need 100Mb/s”. What they really mean is they don’t need 100mb/s today! They forget that the NBN rollout will take up to 8 years and they need to be thinking about what their needs will be then, not now.

   10 years ago, most people were running connections on less than 1mb/s. 10 years later, we are on 12mb/s (over 10x more bandwidth) why is it unreasonable to expect that in 10 years we will 10x faster than today.

   Nielsen’s Law (that Internet bandwidth doubles every 21 months) shows that we will be on 100mb/s by about 2015. While back in 2000, we could update technology to get faster on copper, today, we have reached the physical limits of copper. We now need to upgrade the copper component, as well, to fiber.

   Both parties plans will take 8-10 years to implement. Given the Libs plan is to get everyone on 12Mb/s, they are aiming to cater for today’s requirements and not the needs of people when the project is done (in 8 years).

   The other thing to note, both Turnbull and Hockey, have used their iPads to highlight Australia’s need for wireless. However, neither side are promising the type of wireless technology, that is used to connect to your iPad or other roaming technologies. Wireless, that is being discussed by both sides, refers to wireless links between towers and houses (instead of physical cable). It doesn’t give any more portability that fiber does. So the question is, do the libs not understand the wireless technology they are sprouting – or are they deliberately trying to mislead people about what their plan offers?