news Shadow Communications Minister Malcolm Turnbull has delivered a blistering end of year attack on the Federal Government’s flagship National Broadband Network project, detailing an extraordinary range of areas in which he believes the project is failing.
In a lengthy statement on the matter published this week, which appears to be the text of a speech given by the politician, Turnbull said he suspected that the Coalition’s core criticisms of the project would be “familiar”, following regular statements on the matter over the course of the year.
These ranged from the fact that the project was too expensive (costing “50 billion and very likely more”), as well as driving higher consumer prices anti-competitive due to the planned closure of broadband services over Telstra’s copper and HFC networks and Optus’ HFC networks, poorly targeted as the NBN will take a decade to reach the two million premises in Australia currently with poor levels of broadband, and put the Government in a conflicted position as the owner of a large company in a market it regulated.
“Broadly these were our objections when the current version of the NBN and its startling price tag were unveiled in April 2009,” wrote Turnbull. “In the two and a half years since, none has been adequately answered by Senator Conroy or any other devotee of Labor’s current policy.”
This week, Turnbull added a range of other criticisms to that list.
From the outset of the project, the Member for Wentworth wrote, “the Labor Government has done its best to minimise scrutiny of the NBN”. Labor had, he stated, refused to have the project evaluated by either Infrastructure Australia or the Productivity Commission, had largely exempted it from Freedom of Information laws, had declined to release NBN Co corporate documents without redacting portions of them and limiting Parliamentary committee hearings.
“Many details of this $50 billion gamble of taxpayer funds are not visible to members of Parliament – even those on multiple committees overseeing the NBN, such as myself – or to the taxpayers who are funding construction of the network and the generous salaries paid to executives,” Turnbull said.
As examples of this claimed lack of transparency and accountability, Turnbull pointed out that the lack of quarterly reporting on NBN Co’s part meant it was unclear what the company’s revenues were from the past quarter, when it had started selling commercial services to customers; how many customers the company had in total at the moment. In addition, Turnbull argued that NBN Co chief executive Mike Quigley had shown “a similar reluctance to provide Parliament with even the most anodyne details of commercial matters”.
The Liberal MP also gave two further examples of what he said was NBN Co’s lack of transparency; mistakes he said it had made in disclosing how many housing development residences its infrastructure had been rolled out to, as well as the release of a review by consulting firm Greenhill Caliburn of NBN Co’s most recent corporate plan. “Over its last 25 pages only 15 full paragraphs were entirely free of redaction,” wrote Turnbull.
Financials and the rollout itself
Turnbull also levelled harsh criticism at NBN Co over its financial projections, in terms of both costs and revenues.
The Greenhill Caliburn report estimated NBN Co’s total capital expenditure between 2011 and 2028 as being $50.6 billion — which Turnbull said was far in excess of the Federal Government’s $37 billion figure. Communications Minister Stephen Conroy has suggested that this amount is incorrect as it takes into account maintenance costs — a claim Turnbull denied.
Turnbull also attacked NBN Co’s revenue and operating expense claims, highlighting what he said would be a variety of problems with the company’s estimates — ranging from questions about its average revenue per user estimates to a failure to completely project the amount and timing of payments which would be made to Telstra and Optus as part of NBN Co’s deal with the two telcos to move customers from their networks onto its own.
“Given NBN Co’s financial data is so opaque, it is hard to tell which costs are counted where – but the organisation should respond to these questions with a sense of urgency and release more accurate, realistic and clear financial projections,” said Turnbull. “To fail to do so would be to treat taxpayers with a contempt that no listed company would ever dare show towards its shareholders.”
“So, Senator Conroy, one simple question: what exactly is the latest estimate of the peak capital requirement for the NBN? As it is the NBN Co projects a defensive and non-transparent approach which seems like a cross between the Kremlin and the Church of Scientology.”
With respect to the NBN rollout itself, Turnbull claimed “the only rationale for an NBN in the first place” had been to ensure that regions with substandard broadband were properly served with infrastructure. However, he said, NBN was now choosing sites for its early rollouts based on access to Telstra infrastructure or where it had deals with its construction contractors — “not on how urgently households and communities need access to good quality broadband”.
Turnbull pointed out that Labor MP Ed Husic had complained about the project’s failure to target his electorate in a recent statement. “It is simply unbelievable that after bungling its first tilt at an NBN and wasting its first term, the Government now cannot get its wholly-owned taxpayer-funded monopoly to prioritize the neediest areas,” said Turnbull.
The Member for Wentworth added even in areas where the NBN was being rolled out, uptake was poor.
“Internal NBN data from mid-October obtained by The Australian showed only one in nine of the premises passed by the NBN’s fibre had connected to a service at that date,” he said. “Take-up rates were as low as 2 per cent in Armidale, 5 per cent in Townsville, 6 per cent in Brunswick (where NBN Co was overbuilding an area with HFC pay TV cables, providing comparable broadband), 9 per cent in Kiama and a slightly healthier 19 per cent in Willunga in South Australia. The figures show higher take-up rates ranging from 12 to 25 per cent in longer-established Tasmanian trial sites where broadband options were far less plentiful – underscoring the value of focusing the rollout on poorly-served areas.”
“In the long run, if it continues being rolled out, NBN has little to fear from sluggish take-up given existing or prospective rival fixed-line infrastructure will be decommissioned or legislatively deterred. If consumers or businesses want a fixed line, they will have to use the only network available. That is why the monopoly has been imposed.”
Turnbull concluded his attack on the NBN by summing up the NBN project as spending far too much money and delivering a massive, anti-competitive monopoly to the telecommunications industry.
}There are still only a handful of Australians connected to the NBN. The approach taken by NBN Co and Senator Conroy is utterly at odds with the best practices of carriers and governments in almost every other comparable market. It’s not too late to take stock, conduct the cost benefit analysis and get this project right.”
Image credit: Office of Malcolm Turnbull
Ahh, Malcolm Turnbull. The Opposition Spokesman for Being Malcolm Turnbull.
It’s funny to see Turnbull continue to ramble like this. The most hilarious part is he’s still complaining about the NBN being a monopoly while also complaining about NBNco overbuilding the HFC. On the one hand he is saying people will only have one choice for fixed line but on the other he is saying giving people another choice like fibre is “overbuilding” lol.
Well to be fair he is not the only one complaining about the NBN.
‘Australia’s number three internet service provider (ISP), iiNet, has raised concerns over a number of aspects of NBN Co’s Special Access Undertaking (SAU), lodged to the competition regulator yesterday.’
http://www.computerworld.com.au/article/409530/iinet_voices_concern_over_nbn_access_plan/
“Well to be fair he is not the only one complaining about the NBN.”
Ok, so iiNet has a concern over the NBN access plan? and? If they said it was great what would your response be? (No need to answer, we already know) Oh wait I see where you want this off topic diversion to go, nice try but unfortunately I will have to cut you off at the pass… derp!
Same old stuff it seems.
Costs too much.
Take up too low.
Building in wrong place.
I’m all for proper oversight of this kind of project, but I’m also for bloody well getting s*#t done! The NBN won’t be flawless, but I’m far from convinced that handing out internet vouchers to those in poorly serviced areas is the right thing to do.
Anyone who remembers the Australian Broadband Guarantee program – (a Howard/Liberal program, administered by such luminaries as Coonan, and Alston) – which was not much more than a “voucher program”, will know what an unmitigated disaster it was.
It didn’t work. It was horrifically run, and it drove some rural ISPs to the wall.
Which rural ISP’s were they and how was it directly attributable to the ABG program, and why exactly was it
‘an unmitigated disaster’?
The funding enabled regional and rural exchanges to be upgraded with ADSL which would otherwise not be commercially viable.
“The funding enabled regional and rural exchanges to be upgraded with ADSL which would otherwise not be commercially viable.”
You say a government spent money on a broadband project that was not commercially viable? I assume at the very least a CBA was done?
Is there any point of relevance in there at all?
Yes, there certainly is relevance. The question is “did a government spend money on a broadband project that was not commercially viable?” True or false. Go on, give it a go, this one is easy. I’m sure even you can get it.
Oh I see where you want this off topic diversion to go, nice try but unfortunately I will have to cut you off at the pass.
Comparing the $43 billion NBN rollout which is aiming for a 93% Australia wide FTTH footprint and requires existing working infrastructure to be switched off to be viable is not the same as enabling exchanges and providing satellite services to residences in areas that cannot get BB at all and had a total budget of $270.7 million over four years.
“Oh I see where you want this off topic diversion to go”
Not off topic or a diversion, you and MW are talking about the ABG program correct? Yes? So am I.
“Comparing the $43 billion NBN rollout which is aiming for a 93% Australia wide FTTH blah blah blah”
That’s right they are two vastly different things however that does not answer the question that you are dodging: Did a government spend money on a broadband project that was not commercially viable?
Firstly, the examples I have in mind are currently still going through legal and liquidation processes, and having had dealings with a number of them, I’m not going to corrupt those processes by publicly naming them.
Undoubtedly you’ll piss and moan about that statement, but I’d rather maintain my personal and professional integrity, and show respect for the employees of these organisations, many of whom are still awaiting entitlements.
Do some research.
Secondly, you have once again demonstrated your “gappy” knowledge.
The ABG was more than just about ADSL in “regional and rural” exchanges. It also covered satellite and wireless services, and provided ongoing subsidies towards the ongoing cost of these services to end users.
And yes it was a disaster – if it worked so well – (as you would imply) – why did it fall flat on its face a number of times?
I’ve never met anyone in the industry who thought it was a “good idea”.
‘Do some research.’
Links to what research are you on about?
‘The ABG was more than just about ADSL in “regional and rural” exchanges. It also covered satellite and wireless services, and provided ongoing subsidies towards the ongoing cost of these services to end users.’
Yes I know.
‘And yes it was a disaster – if it worked so well – (as you would imply) – why did it fall flat on its face a number of times?’
Well that’s why I asked you, and you came back with yet another ‘keep- it- vague’ MW response, what are the key industry indicators here that it fell ‘flat on its face a number of times’?
‘I’ve never met anyone in the industry who thought it was a “good idea”.’
Not even ISP’s selling BB ADSL out of regional and rural exchanges and also heavily subsided satellite services enabled with that funding – what did they do refuse to sell it because it wasn’t a ‘good idea’?
So these samples of some ISP’s didn’t think it was a ‘good idea’ even though they sold it and marketed it, Internode especially made a great media deal out of their ABG rollout at the time, and I am sure all those ISP’s customers that signed up for it and are still receiving a ABG subsidised service today are happy the ABG program happened and think it is a ‘great idea’.
http://www.internode.on.net/news/2007/10/68.php
http://www.westnet.com.au/satellite-broadband/australian-broadband-guarantee.html
https://www.optus.com.au/shop/Broadband/Offers-&-Extras/Australian-Broadband-Guarantee-Subsidy
Because the money from the government kept running out.
The ABG was a political stunt to make the government look like it was doing something significant, when all they were doing was delaying the inevitable.
I assume what you mean by the ‘inevitable’ is the NBN FTTH , so you think it the ABG was not a good idea simply because it is not the NBN FTTH to a 93% footprint, so under the myopic MW view anything less than that is therefore not a good idea.
Perhaps you would care to explain to all those customers currently using BB provided under ABG enabled services why it would have been preferable for them to keep using dial-up waiting for a Labor NBN BB service sometime between now and 2022?
I am glad you mentioned the funding because the current Labor Government thought the ABG program was such a good idea they extended funding until June 2012, also I am not sure what you mean by the funding ran out multiple times, it was run to a allocated Government budget and still is.
http://www.minister.dbcde.gov.au/media/media_releases/2008/032
I like how you assume things and get them wrong all the time.
‘when all they were doing was delaying the inevitable.’
So what does ‘the inevitable’ mean here?
The inevitable being spending some money on a real solution.
And of course the ISPs were marketing it and selling it. It was money from the government to service customers they would never have been able to viably service otherwise.
If I walked up to you on the street and offered you $20, you’d take it.
So they thought it was a good idea then?
They thought taking money from the government was a good idea, yes. Nobody agrees that it was sustainable, and so it proved several times when the money ran out.
Yes but the current Labor Government has been in power since 2007 it is now 2011 and the ABG program is still in place, so the ‘money ran out’ under both Governments so therefore it’s just not the previous ‘(a Howard/Liberal program, administered by such luminaries as Coonan, and Alston)’ only problem then?
“The Australian Broadband Guarantee (ABG) program ended on 30 June 2011.”
– http://www.dbcde.gov.au/broadband/australian_broadband_guarantee
Wow, and it was only 6 posts above this one:
http://delimiter.com.au/2011/12/08/everything-about-the-nbn-is-bad-says-turnbull/#comment-234555
I totally cannot see Mr Tunbull complaining, if rollout was prioritised to areas with poor connectivity, that the Government should be rolling out into high density areas for quicker RoI.
Yes but rolling out into higher density areas is not smart initially because higher density areas have to many high speed fixed line alternatives to choose from.
You roll out into higher density areas to force Telstra and Optus to shut down their infrastructure and migrate their customers onto the only fixed line alternative the NBN, but before this can happen the rollout needs to pass 90% of residences in a specified region.
You have to make sure the forced mass migration process that then takes place is as smooth as possible, the slightest hiccup and politically the NBN is dead in the water.
The NBN should be rolled out in metro areas first. A higher density of consumers results in higher take up rates, which means the project pays for itself sooner. Rolling this stuff out to backwaters in Tasmania is pointless and a huge waste of taxpayer money.
I live in a rural area serviced by Telstra for the most part (Optus have built a tower here recently). I prefer to deal with a wholly Aus owned company so I have so far stayed with Telstra but I have no idea why. They charge a premium and the service here barely works. I have to stand outside to use a mobile and theres no garantuee the signal won’t drop out (it normally does tho) and If I hadn’t put an antanae on a 15 foot tower I would have no internet.
The telstra tower is miles away and as I said Optus have built a new tower not far from where I am. Optus can invest money to improve the service (it was virtually non existent) for a very small number of people but not Telstra. Bring on the NBN.
People who live ont the coast have a large variety of ISP’s/plans/connections etc already in place while we have Telstra who have zero intention of improving anything out in the bush. To suggest the NBN should roll out in Metro areas tells me that you like so many other people who live on the coast are just plain greedy not to mention completely ignorant of what happens outside the cities. Not interested either is my bet so long as you have everything then sod you because you live in the bush.
You can get on a boat and leave with Malcolm if you like.
If you want this sort of infrastructure, then move to the metro. It is unfair that the city has to subsidise the bush. I don’t sit here in Sydney demanding free horses and agistment. I’m realistic and know that if I want those things I should move to an appropriate area.
It is you who is greedy.
sorry, no. its not greed to put up ones hand and say ‘hey, we’ve been left behind for the past decade, can we at least get something done for us?’. they are voting constituents as well, incidentally and are well within their rights to ask their member to improve their situation.
you are working from a particularly metro centric viewpoint that says ‘those folks on farms and in Hicksville, they dont have any need for this’. i can think of at least three with two offering direct economic output benefits. and given ~80 percent of the nation is <200KM of a metro area, i dont think it unreasonable to ask, we arent talking wiring up every outhouse with fibre here.
oh and re: "I don’t sit here in Sydney demanding free horses and agistment. I’m realistic and know that if I want those things I should move to an appropriate area."
an appropriate area eh, one of which might be in brisbane, <10KM from the CBD, horses and agistment, and yet frequently pockets of low or no DSL service. this isnt just about the 3% over 90% that are living at the fringes, this is fixing problems with metro copper networks as well.
and lastly 'if you want this sort of infrastructure' the best bang per buck is not necessarily in having as small and as limited a rollout as possible. you throw the net as wide as possible to run economies of scale – one of the reasons the original 90% for the govt spend was upped to 93% coverage. it was found for the dollar spend that it was possible to spend it slightly more effectively than initially thought, so the coverage area was expanded.
there are good reasons for doing this the way its been done – from where i sit greed doesnt have much to do with it.
@Max
Tasmania was done as a Trial to make sure they knew how to roll it out properly, so they had the processes in place same as all the others. Not everyone lives in the middle of the city. Also it has to be rolled out eventually, so why not now?
Like I said, if it is rolled out to the higher density areas *first*, then a far better rate of return is achieved.
No what it means is you get fibre and rural australia will get shafted.
No.
The rollout happens and gets paid for with taxpayer money regardless. “Making a return quicker” is a moot point as it’s going to be a long time before the NBN pays for itself anyway. That’s why the government is funding it in the first place, if it was going to make a good RoI, fast, then the private sector would’ve already done it.
Also, as a project using public money, the money should always go where it’s most NEEDED first. Why would we as taxpayers pay for a project that’s just going to start by cherrypicking the profitable areas and raking it in? Why are we even paying for it in that case? It’s supposed to be an “outside in” rollout.
>”“Making a return quicker” is a moot point as it’s going to be a long time before the NBN pays for itself anyway”
Just because a project takes a long time does not mean ROI is irrelevant!
I think the problem is the rural people seem have an ingrained handout mentality:
I want free Internet and I live 500 kms from anywhere
I stuffed up my crops and want free money
I want free state-of-the-art hospitals to service 12 people
I want heavily subsidised, under-utilised public transport
I want free 4WDs for my farm
waah i’m flooded
waah there’s a drought
Seriously, you people are basket cases and we city folk are getting real sick of your whinging.
The opposition is whinging and saying no? I don’t believe it!
A summary of the year of Turnbull . Non-article article.
i expect this time next year – provided there are no federal changes – there will be an almost identical piece from Malcolm with an almost identical regurgitation of self determined ‘facts’ re: the state of the NBN rollout.
id love to have it everywhere its needed first too but you cant wave a wand and magically have your network build itself. there are reasons why the rollout areas are where they are, theres a process to go through and certain areas are simply higher up the list than others. the important thing, Malcolm, is that the rollout is happening in many places at once and the process is getting to the stage where when one area is completed, it becomes a node for the surrounding areas in future rounds of building.
there is method to the madness but since the Liberals involved have resolutely plugged their ears and said theres nothing to listen to, you can hardly blame anyone else when you subsequently front like you dont know whats going on with the rollout.
let me guess – you’re STILL avoiding that half day chat with Quigley, arent you?
There is no point arguing with people who want the NBN, they will just personally attack you. I like the idea of the NBN because I live in Tarneit and get no Internet, wireless or ADSL, so the NBN is a breath of fresh air. But the fact that the government cant give us a proper time line OR propert expenditure OR proper take up is disturbing. How hard is it?? Look at how many people have signed up, count it and present it…
I had to get my TV inspected for a possible fire hazard (it’s OK BTW). I was talking to the TV service guy, who is lucky enough to live in Kiama Downs, and was able to take part in the NBN trial (for free, now on a paid plan).
Before he was on the NBN, he was ho-hum about it (speeds, latency, etc). Now, he would not buy a house that did not have an NBN connection.
The NBN is a game-changer, and the small cost involved to get the infrastructure in place for the next 50+ years is well worth it.
$50 BILLION DOLLARS A SMALL COST!!!???!!! Thats the funniest thing I’ve ever heard… the roads we build, the aid we spend dont even come to that amount
your right. the roads cost Australians more. there is upkeep on them and they are used for free. so its a drainage on the tax payer money. where as the NBN the users are paying for it. so slowly, but surly they will pay back that 37 billion dollar investment.
Even assuming the almost certainly erroneous “$50 billion” Turnbull likes to quote (I personally don’t have the expertise to estimate what the final cost will be, but I can pretty confidently predict it will not be “$50 billion” – maybe more, probably less) …
The NBN infrastructure is almost entirely in new build. In about 10 years is will go into a maintenance period predicted to be about 50 years long, having spent approx $5 billion/year to that point. The comparison with roads is ridiculous – the Australian road infrastructure is in maintenance, with very little new build.
New infrastructure costs money. Compared to the predicted benefits to the economy and various “intangibles” (quality of life for seniors, etc) it is indeed a “small cost”.
The comparison of roads is actually right on the money… And you just proved it in yuor last comment. Building a new freeway costs around 10%, in which MILLIONS upon MILLIONS of people will use, they put meticulous planning measures in place to make sure it is what people need. The NBN hasnt even been fully fleshed out yet and they’ve organised contracts, and even if it costs the original $37 bill that the labour kronies PROMISED, it only has a 1 in 8 take up across most areas.
Why does NBN co have a court order that the main investors and stake holders are not allowed to speak ill of it???????????? I didnt know we lived in a censored community. The only reason you would need to keep quiet would be to hide the truth
Personally, I’d be ashamed to publicly admit that that is the level of “proof” I required to believe something.
OK – I’m out of troll food now.
“1 in 8 take up across most areas”
A few things to keep in mind:
1. Most people are locked into 2-3 year contracts on their internet service. So even if they wanted to switch, they would be unable to without incurring significant penalties for doing so.
2. Regardless of the take-up rate, once they reach that cut off point where everyone gets moved over to the NBN regardless, take-up rates become meaningless.
Give it time, those percentages will change as people come out of contracts and the copper network starts being pulled out.
2 points
– There is nothing stopping the people from moving onto the NBN if their ISP has a plan on NBN as well, contracts do not prohibit that
– Thats really not proving your point, it shows there is no demand for the NBN unless you force everyone onto it
So what does Level Headed want the government to do exactly?
Do you want to wait until Telstra’s copper network totally falls to bits? Do you know how old the copper network is, do you understand not everyone can get ADSL due to varies factors such as Rims, Pair Gains, distance from exchange etc? Why do you think there are so many complaints to the TIO?
This is not 1980’s anymore where its only to supply “voice”.
This country needs a new national fibre network. Yes needs. Internet is a part of life, its another utility that people use/need every day. The majority of the population should be able to connect to it (93%) and should all get the same speeds that are not effected due to poor lines, distance or availability at the exchange. That is fair.
I have no issues with the cost, we all pay taxes, and it will be paid off over time.
The problem with Turnbull is he has no plan. Liberals could of done something about it years ago if they wanted to, yet they simply complain time and time again about cost & time to build. Thats his job as shadow minister, I understand that.
Please don’t even mention FTTP, its already know that it would be a pointless exercise and cost just as much. Expanding the current HFC networks is just as expensive, and wireless for 93% of the population is pointless, expensive, and slow with too many towers required. FTTH once laid will last 50 years and the speed restrictions are hardware based so its easily update able to get faster speeds.
“Please don’t even mention FTTP”
I think you mean FTTN there … and you know the naysayers will jump on any typo as “proof” of their own position.
“So what does Level Headed want the government to do exactly?”
Supply flat top hair cuts like his.
So Big Mal once again restated his arguements against the NBN. Did he include time liberals wasted at hearings covering things not NBN related? Time wasted overall on personal attacks on NBN employees by the libs? Did he mention the liberal lack of policy beyond “We will do it better”?
For all the bad about the NBN, the liberals really do not paint a decent alternative in this field. Putting ideas out there that with a little research, can be found to be Bad Ideas ™ is not good policy.
Until the Libs actually present a NBN policy, that is costed, that has a CBA, isn’t tethered with FOI restrictions and that makes sense, then just saying “no” doesn’t gain any traction with me. Why should their policy be costed, have a CBA, and no FOI restrictions? Because that’s what they demand of the Labor policy, it would be hypocritical of them if they didn’t. Also the policy should jump through these hoops before the election, so I can make an informed voting decision, not after as Malcolm has stated as the policy unveiling date.
Your asking for something thats not possible
A party in opposition does not have access to the funding, nor the departments, to provide the comprehensive reports you are asking for. They get access to government departments during a caretaker period, which is when an election is announced
Turnbull is just an idiot. All he does is complain (and a lot of what he says is bull anyway) and never presents a viable alternative.
30, 40, 50 or 60 billion Who cares. Without NBN that amount will be insignificant compared to the losses we would endure without it.
Why can’t the opposition tell the people the real reason they oppose NBN.
I doubt if their reason is anything to do with idealism so is it because of the pressure applied from those who stand to lose control of various forms of the media and entertainment industries?
It’s a pity that Mr Howard in one of his many blunders prevented Telstra from laying optic fibre nation wide 16 years ago The cost back then was, you guessed it, $6 billion..
When it comes to anything greater than the old telegraph the Libs are simply way out of their league
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