Turnbull factually inaccurate on NBN costs

107

news Malcolm Turnbull has over the past 24 hours appeared to make a number of misleading statements regarding the cost of and financial details involved in constructing the National Broadband Network, in what appeared to be an attempt by the Shadow Communications Minister to demonstrate the Coalition’s own rival plan would save tens of billions of dollars.

In several articles and interviews this week, Turnbull alleged that the Coalition’s rival NBN plan — which has not yet been fully revealed, but focuses on fibre to the node technology, as opposed to the fibre to the home technology being deployed by NBN Co under the current Labor plan — would see broadband deployed “sooner, cheaper and more affordably for users”.

“Our broadband policy is to complete the national broadband network, but to do so sooner, cheaper – less cost to the taxpayer – and much more affordably for consumers and that is our plan,” Turnbull said on the ABC’s Lateline program last night. “So we will complete the NBN, all Australians will have access to very fast broadband, but because we’ll use a mix of technologies and use the most cost-effective ones where appropriate, we will be able to do it sooner, cheaper and more affordably.”

Turnbull also made the same argument in an earlier response to several articles by high-profile business and financial commentator Alan Kohler, who has heavily criticised the Coalition’s NBN policy on his site Business Spectator this week.

“[Kohler’s] conclusion is that a change of policy to save tens of billions of dollars is ‘lots of pain, little gain’,” wrote Turnbull. “Apart from the taxpayer, of course, who gets to save tens of billions of dollars and Internet users who get their upgrade a lot sooner and because the capital investment is so much less, more affordably. The Coalition’s approach to the NBN Co is not political or ideological, but rational. We will complete the NBN, there need be no anxiety or uncertainty about that, and we will do so sooner, cheaper and more affordably for users.”

In a separate interview earlier this week with the Financial Review, Turnbull also referred to the claimed ability for the Coalition’s rival NBN policy to save “billions of dollars”. In addition, Kohler noted that Turnbull estimated the amount which could be saved through the Coalition’s policy as being “$20 billion”.

However, there is currently no publicly available evidence that Turnbull is correct in his statement that the Coalition’s rival NBN policy would save the Federal Government billions of dollars in investment when it comes to its funding of the NBN project.

This is because the NBN project is currently projected to actually make a long-term financial return on the Government’s investment in the project over the long term through the year 2033. In its 2010 corporate plan, NBN Co forecast this amount to be between 5.3 percent and 8.8 percent — from $1.93 billion in the worst case to $3.92 billion in the best case. This means that eventually the NBN will make money for the Government rather than cost it — including returning its original investment.


In NBN Co’s most recent corporate plan released several weeks ago, NBN Co firmed that figure at 7.1 percent. The project as a whole is slated to cost $37.4 billion in capital expenditure to construct, with an additional $26.4 billion to be spent on operating expenditure through to the year 2021 when the project is slated to be completed construction. However, NBN Co is also projecting revenues of $23.1 billion over that period, and through the decade after that period it is projecting that it will recoup the Government’s investment in the project and make a return on the investment of 7.1 percent.

NBN Co also states in its corporate plan that this rate is above the Government’s long-term bond yield rate — the interest cost at which it can borrow money from the public through bonds. If NBN Co does not achieve this rate of return, the entire cost of constructing the NBN will not fall at taxpayers’ doors — only the net loss in the Government’s investment — which would be calculated as the total Government investment in the NBN plus NBN Co’s costs through to 2033, minus its revenues and other income.

In comparison, the Coalition has not yet released the details of its own rival NBN policy, although Turnbull stated this week that the policy had been costed. An analysis by Citigroup published in November found that the Coalition’s policy would cost $16.7 billion. The Citigroup report didn’t mention what financial return, if any, the Coalition’s proposal was slated to bring in on its own investment.

Turnbull’s comments do not reflect the first time that the Coalition has referred to the inaccurate possibility of saving government money by cutting or substantially modifying the NBN project. In February, for example, opposition Leader Tony Abbott stated in a high-profile speech at the National Press Club in Canberra that cutting Labor’s National Broadband Network project would free up Federal Government money to be spent in other areas such as transport.

Alan Kohler reinforced this point in a commentary article published this week critiquing the Coalition’s policy. “The money saved – Turnbull estimates $20 billion – can’t be spent elsewhere or used to bring down taxes, because it is capital expenditure, not operating expenditure,” he wrote.

Turnbull’s office was invited to respond to the issue mentioned in this article, but did not comment by the time of publication. However, the Coalition is believed to consider the NBN project as it currently stands as an imprudent investment, as the project’s ROI will be made through the creation of a regulated monopoly. Economic theory generally considers that the private sector is more efficient at investing capital than governments.

If such regulated monopolies — which are common in the infrastructure space, such as energy and water utilities, organisations which administer toll roads and also in telecommunications — do not invest efficiently, they will be forced to charge higher rates than the market would for the same services — leading to the possibility of generally depressed economic activity. However, it is currently unclear how specifically this argument applies to the NBN model.

opinion/analysis
I am actually quite surprised to see Turnbull making the argument in public that Coalition’s NBN policy can save the Government tens of billlions of dollars in capital investment, given that it has been repeatedly shown that the NBN project is expected to make a modest return on its investment. By current financial analysis, the NBN will make the Government money, as well as providing a raft of side benefits to the economy, such as increased productivity and efficiency.

Secondly, as Kohler pointed out this week, it’s not as if the money that Turnbull is talking about can be “saved” in any real sense. It’s capital investment — not operating expenditure. You can’t take that money and “spend” it on something else, because it does not represent an expense, but instead an investment. Governments often borrow money to invest in projects which will make a modest ROI while also benefiting the community at large, and with the Australian Government’s AAA credit rating, it can certainly afford to do so. I wouldn’t say the Australian Government has access to unlimited debt, but given its very strong economic standing currently, it can certainly afford the debt level required to build the NBN, without blinking.

I am rather disappointed that a politician of Turnbull’s financial education doesn’t discuss these nuances in public. Surely, given the complexity of the NBN debate, it would be worth differentiating between capital expenditure and operating expenditure, and the difference between an expense and a return on investment. Or, even if Turnbull doesn’t go into these nuances, I would at least expect him to provide details of how the Coalition’s own policy will function financially. How does he expect Australia to have a realistic public debate on the differing NBN policies without this information?

Image credit: Office of Malcolm Turnbull

107 COMMENTS

  1. Don’t you see?

    As long as the coalition doesn’t embrace FTTH it makes them unelectable for a lot of traditional coalition voters and quite a few swing voters.

    The only sensible explanation as to why Malcolm Turnbull is supporting VDSL against most common sense over FTTH is to make sure that the coalition remains unelectable on the whole, while he will still be electable in his own electorate.

    It is his ploy to ensure that Tony Abbott does not become Prime Minister of Australia, and for this we should all be grateful. Thank you Malcolm Turnbull, you’re doing good work!

    • Well iirc, Malcolm only lost to Tony by 1 vote… that must be galling?

      But again I reiterate, that I believe Tony was put there as the whipping boy to protect Malcolm/Joe the great white hopes, from a then rampaging infinitely popular Rudd…

      Funny how things changed…and can change in a matter of weeks in politics.

      2013 is still many, many weeks away!

    • Nice thinking Dominique. But the mass of the Opposition could overthrow Tony whenever they woke up to him, especially after his pathetic performance on 7.30 Report last night. Instead they see him as their Saviour. What does that tell the nation about the quality of the Opposition?

      • wow, ive just gone to the ABC website and looked up the transcript. hes a slippery fish isnt he? doesnt want to be pinned down on anything. oh! except of course:

        “Are you absolutely scrupulous about making sure what you say in public is accurate?

        TONY ABBOTT: Of course I am.”

        this is the man who said – on the same show no less, may 2010

        “TONY ABBOTT: Sometimes, in the heat of discussion, you go a little bit further than you would if it was an absolutely calm, considered, prepared, scripted remark, which is one of the reasons why the statements that need to be taken absolutely as gospel truth is those carefully prepared scripted remarks.”

        Tony, avoiding all questions so you dont have to give answers you might have to walk back later ….. not the sort of person i have in mind as the next PM. isnt that the sort of behaviour you despise when its the other side of the house doing it?

        i didnt watch the video but the transcript gives the impression of a man trying to make himself as small a target as possible and failing.

  2. And it’s working for me! I won’t vote for the Coalition based only on their ‘NBN’ policy.

    • Just the latest claim on his Twitter, 15 minutes ago:

      “@charliex64 with our approach many regional communities which wd not get FTTP under nbn will get wireline bband via fttn.”

      This would be completely incomprehensible but sound positive to your average coalition MP or convinced coalition voter. On the other hand, anyone with a clue would ask themselves “that means that the whole TUSMA thing would have to be completely renegotiated”, that “suddenly you’re encroaching on an area with diminishing returns as you go into some very rural areas beyond the 93%” and that you’ll have to duplicate services where wireless will already have finished rolling out by 2015 as well as ADSL.

      Never mind the fact that now you’re rolling out VDSL nodes in the 7% of the most rural areas in the country. Completely idiotic. Ask him what communities specifically? You’ll never get an answer, that’s the beauty of it :)

      Completely wrong, quite expensive and not very doable, but on the surface it’ll convince the coalition MPs to continue supporting Malcolm’s strategy. Anyone with any inkling of technology can read this tweet and know that none of it makes sense.

      Good on you, Malcolm, you’re doing great work!

      • Isn’t the idea to save money? Why would he spend more than required by investing in the 7% with fixed broadband, don’t get me wrong I would love to have everyone with FTTP.

        • The point I am making here is that there are many smaller towns (less than 1000 premises) where the NBN will not deliver FTTP but which would be very suitable for a VDSL solution for those premises which are within, say, 1000 metres of the exchange. So the footprint of wireline very fast broadband under our technology-agnostic approach would be larger than it is under the FTTP-only wireline broadband approach of the NBN

          • (1) – Motorola’s E1 Power Broadband product – (designed for hotel internet systems, and which uses VDSL) – gives “up to” 70Mbps in “perfect copper conditions”, over about 200 metres. If you’re talking 1000 metres in existing moisture-compromised Telstra pit and pipe, with copper lines that you DO NOT know the condition of, I have serious concerns as to your claim you can deliver “super fast” over 1000 metres.

            (2) – Are you finally going to have the guts to release your plan and your FULL costings so it can be fully debated, instead of hiding behind the rhetoric and mealy-mouthed political sound bites?

          • Clearly Malcolm does not have either the guts or intelligence to engage in a debate on this topic.

            He jumps in posts a comment which is based on pseudo facts. Then leave and thinks that we are idiots we are not people who know nothing on this and neither is Malcolm at best he is being disingenuous at worst outright lying.

            How much in subsidies will the government need to pay to get this outcome?

            Answer : A shitload which is why it will never happen

          • Under the existing NBN plan, people in the small town have access to fixed wireless connections which would give them 12/1 and eventually 25/5 internet access. If they were willing to pay for it they could also have FTTH installed. I’m not seeing a huge, if any, advantage here with your plan.

          • +1

            This.

            Malcolm, you rightly point out that communities that are sub-1000 premises wont get FttH, and hence some sort of alternative would be preferable, but under the Labor plan that’s already happening.

            They are already getting fixed line wireless, or sattellite connectivity, which is for the bulk of those communities means better than VDSL which is only beneficial for people within a couple of hundred meters of the exchange. The distance issues with other DSL options are magnified with VDSL, a significant issue for smaller communities that generally have a lower population density.

            In reality, some sub-1000 premise communities have been slated to get FttH already, as its easier to do it that way than fixed wireless for the area. I believe it was Joanna Gash’s electorate that was reported in a story a month or so ago, there might be others.

            You may have heard of Joanna Gash, Federal member for Gilmore, Liberal party MP.

            I’ve noticed very little commentary on that Liberal electorate getting a leg up, any chance of a comment?

            I also wonder what other sub-1000 premise communities will get a similar leg up as time rolls on.

          • Communities under 1000 premises will get FTTH if they are one the route of the fibre backbone. If this isn’t the case how will Malcolm offer FTTN without that backbone? Seems he can offer it only where NBNCo will offer FTTH to smaller communities.

          • Remember the Coalition keeps saying there are breakthroughs on the horizon when it comes to the capacity of fixed wireless to deliver speeds comparable to FTTH. That being the case, why is there any concern about <1000 communities being disadvantaged?

            The Coalition has a long history of walking on both sides of the promise road on all sorts of issues: lower taxes, more government expenditure (especially roads) and lower deficits and interest rates all at the same time!

          • Fine.
            You show us these area’s where you think VDSL will suffice.
            Tell us how much Labour cost will be added to the whole equation.

            And we’ll do the sums and debate the feasibility of it.

            We will then debate, this, versus the trade off, of the vast majority of Australia, loosing ‘ubiquity’..

            Sincerely and in good faith.
            Anthony Wasiukiewicz

          • Ah, so you’re saying that a bunch of very small towns will get better broadband, up to, say, 30-40Mbps on average (the performance of VDSL at ~0.5km), at the expense of about 60% of the country who will drop back from gigabit-capable FTTP that delivers 1000Mbps down to VDSL that can similarly only deliver 30-40Mbps on average?
            (Yes, I know some residences will be right next door to the exchange, and get 100Mbps, but the average punter will be lucky to get much more than 30Mbps).

            All I can say is that I thought that kind of lowest-common-denominator policy died with the Soviet Union…

          • Further, this is what YOU said last night:

            “The point is if the applications that you want are high-definition video streaming, you know, all of the social media and commercial applications that you use – if they can be accommodated within bandwidth that can be provided at a quarter of the cost and, say, a third of the time, then that is a much more sensible deal, and that … now, you may say in 20 years time things will be different. Well, if they’re different in 20 years time, we’ll make some further investments in 20 years time.”

            This means one of two things:

            (1) – Australia can have a full FTTP broadband network in around 10 years under the current ALP plan.

            or

            (2) – Australia can have a full FTTP broadband network in around 30 years under your current plan.

            Your commitment to giving Australia 30 years from now, the technology the rest of the world moving to now, is utterly narrow minded.

            This is why people hate your plan. Zero vision for the future.

            You only care about three-year political cycles, and it’s a disgrace.

          • > The point I am making here is that there are many smaller towns (less than 1000 premises) where the NBN will not deliver FTTP but which would be very suitable for a VDSL solution for those premises which are within, say, 1000 metres of the exchange. So the footprint of wireline very fast broadband under our technology-agnostic approach would be larger than it is under the FTTP-only wireline broadband approach of the NBN

            Let’s keep in mind that Malcolm Turnbull here is talking about 1-ish percent of premises out there. Actually, NBN Co may well have the same result without any government funding required, and the same thing is true for FTTN.

            The TUSMA suggests that ADSL services will continue to keep running as now in the last 7% of the country. Telstra, after the NBN Co has rolled out, can now take hundreds of DSLAMs, as can other providers, and put them into exchanges that cover these last 7%. It’s an investment that has already been made a decade ago, on average, and can be redeployed, at some cost, but not at too great a cost.

            Malcolm’s solution is to tear up part of the TUSMA and the agreement with Telstra to provide VDSL services, which is a whole lot larger investement, to quite remote places. I question whether that one-ish percent really needs VDSL over ADSL2+, and said places would already have wireless NBN services too. It’s a nonsensical plan.

            Additionally, many town centres in places between 500 and 1000 premises would already be covered by fibre… so in those places you’d be deploying… VDSL to places specifically far out from town, and making the conscious choice for that over ADSL2+.

            I appreciate the sentiment, and so will many many coalition MPs. But anyone with half an education can see through such a plan, and Labor has naught to do but translate this into a point in the election campaign. It makes sense on the surface, but it falls down as soon as one looks at it. I’m just glad we’ve still got about a year before the election to absorb this kind of thing and it’s making the coalition unelectable despite the headline claim.

          • Malcolm, the Copper in regional area’s is in even worse condition than it is in the Metro area’s making your FTTN proposals pointless without an extensive & expensive copper upgrade program!

            Face facts, this country needs FTTH to secure its economic future – as a former Business CDM with an ISP, I can tell you that Small to Medium business is screaming out for affordable Fibre but you seem in-cable of listening!

          • Spot on. The last time our (ADSL) connection was so bad, the Telstra tech said the copper in our area (Renmark SA) was badly degraded, and that all they could do was patch it and hope it held together until the NBN. This time, we’re waiting for Telstra to act on a connection which goes down many times a day, and can stay down for extended periods if there is strong wind, a thunderstorm or after a power cut. FTTN is useless for rural regions, because our copper is shot. “The last mile” in a rural region translates to many km of soggy, oxidized copper cable and dodgy fittings.

          • But if you’re talking about communities which already have copper, and distances of around 1000 metres then VDSL provides no benefit over ADSL.

            And given all the exchanges being shut down in the cities, there’ll be plenty of ADSL hardware to go around

          • Scenario: 1000 premises in a town.

            Simple questions:
            How many exchanges on average are in such a town?
            How many premises on average are within 1km of the exchange(s)?
            Can someone (looking at MT) please provide a graph plotting distance from the exchange vs. the expected theoretical level of service received (up and down)?
            How much is this upgrade expected to cost per exchange?

          • “So the footprint of wireline very fast broadband under our technology-agnostic approach would be larger than it is under the FTTP-only wireline broadband approach of the NBN”

            I see. So even though according to you “The internet is becoming a wireless internet” under your substandard plan there will actually be MORE wired premises… and people wonder why we don’t take the coaltion seriously when it comes to broadband LOL.

          • There are some people in regional areas that currently have ADSL but will miss out on FTTH. These people may be annoyed when they find out their ADSL will be taken away and replaced by NBN wireless or satellite. I understand that the wireless should be superior to their current ADSL1 (these people are probably on RIMs) but satellite may not be (e.g. due to lag and weather interference). People with ADSL will feel entitled to faster landline broadband.

            I predict this will be a political issue as people discover this. Turnbull may get political points by promising faster speeds for all ADSL areas. I can only hope so, then Labor might feel the need to match the promise: all ADSL areas should get FTTH!

          • These people may be annoyed when they find out their ADSL will be taken away and replaced by NBN wireless or satellite.

            No they won’t, because that’s not what will happen. If you are not getting fibre, then the copper will not be decommissioned and you will be able to continue receiving ADSL if that’s what you want. The copper is only being decommissioned where NBNco is laying fibre.

          • OK good, so ADSL will still be available if fibre isn’t.
            So there only remains the small problem of being stuck with ADSL1 speeds.
            If Labor promised FTTH to all ADSL areas that would be fantastic. Next best may be the coalition’s FTTN policy.

          • Yes, that’s true. But I personally am quite sceptical that the Coalition will actually be able to deliver FTTN to communities like yours. The devil is in the details, and so far we haven’t seen any of the details from the Coalition.

          • Ooh BTW fincoder, according to Citi Group’s previous analysis, they project that the Coalitions FttN will be available to just 40% of Aussies.

            Now considering that (iirc) only 30% of Aussies can currently get HFC and I am on the urban fringe and can’t get HFC, do you really think you’ll will get FttN?

          • Malcolm, as a staunch Pro-NBNer, I give you credit for posting here at Delimiter kudos and thanks…

          • Comment-and-run isn’t the same as actually answering questions on the issue.

          • No you are right…

            But as a pro-NBNer who has actually gone into bat for Conroy (not his filter though), Malcolm is here and Stephen isn’t.

          • “The point I am making here is that there are many smaller towns (less than 1000 premises) where the NBN will not deliver FTTP but which would be very suitable for a VDSL solution for those premises which are within, say, 1000 metres of the exchange.”

            And that would potentially be a great ADDITION to the NBN, but why must you muck around with the other ~97%?

          • “The point I am making here is that there are many smaller towns (less than 1000 premises) where the NBN will not deliver FTTP but which would be very suitable for a VDSL solution for those premises which are within, say, 1000 metres of the exchange.”

            And that would potentially be a great ADDITION to the NBN, but why must you muck around with the other ~97%?

            There’s something called

          • Malcolm
            With due respect.
            It may not be that simple, I was a country boy and have many country family members and friends. As others have indicated the blocks are rather large especially in smaller towns. The other factor is many have their phone etc services provided by Radio Link. You can see the towers generally on hills scattered around rural Australia. The backbone capacity just is not there.
            As Conservatives are extremely enthusiastic about subsidies, it may be that snake fibre runs could meander around rural Aust providing for some of the communities with appropriate subsidies

          • Hi Malcolm

            Why do you cherry pick the questions you answer?

            It is evident from your occasional replies that you (or your staff) follow the various debate. Instead of calling those disagreeing with you “zealots”, why don’t you prove us all wrong by giving us something worthwhile to discuss: Your fully detailed, costed plan. If it is so good, it should be your moment of glory. If you can’t, try, at least, to give a reason why you can’t that will not insult people’s intelligence.

          • Ok, 1000m. Now we finally start to get some idea of the speeds we can expect from your FTTN spec. None of this 200m length speed quoting for 1km length prices anymore please.

          • Malcolm

            Enlighten us. What speed would you get at say 900m, 700m…?

            An answer would be astonishing.

            An intelligent answer, based on fact, would not only be surprising, it would extraordinary.

          • Dear Mr Turnbull,

            I think you are presenting a bit of a furphy by suggesting that towns with < 1000 premises can potentially get your FTTN solution instead of being relegated to wireless. I am not sure if you are genuinely making a distinction between wireless and satellite (which of course is also a form of wireless).

            A core question is how many < 1000 premises towns will actually be on wireless as opposed to satellite anyway? You've potentially identified a very small number of premises that *might* benefit from VDSL over wireless.

            These small towns can apply for an NBN extension if they are close enough to a Fibre Node, and the costs will be determined on a case-by-case basis.

        • I don’t think that’s the idea. There’s been disagreements between Tony Abbott and Malcolm Turnbull before, not least of all during the leadership spill. In fact, quite a few people seem to see Malcolm Turnbull as more fitting into the Labor party.

          I also don’t think that Malcolm Turnbull is genuinely wasting his time on this. He is doing something, and there has to be some measure of thinking behind this.

          Maybe we should start to redefine the goal that Malcolm Turnbull is going for. It may not be to promote a serious alternative broadband policy for this country.

          If the goal is to make sure that, in the 2010 election, he would make sure that the coalition broadband policy was such that it would lose the election, then he has reached this goal. He is doing everything he can to cause a repeat of this in 2013. His latest interview on Lateline, yesterday, may have just not been his best acting effort. Malcolm Turnbull may however well be on the way to make sure that, in 2013, the coalition does not win the election. Malcolm Turnbull is not a stupid man, and I’m sure he understands the funding model behind the NBN quite well.

          He has no reason to go to the media as often as he does if he does have a genuine plan.

          In fact, I think that Malcolm Turnbull is a greater asset to Labor and NBN Co while he spouts nonsensical rubbish for the coalition and thus making them somewhat unelectable among many regional Australians and tech-heads than he would be were he working on a broadband policy that makes sense. I am proposing that we see Malcolm Turnbull as the actor who is sacrificing himself for the good of the country, as he did in 2010, to make sure that the climate-change deniers and wireless worshippers in the coalition don’t get their hands on NBN Co in 2013 either.

          If that is his mission, and considering he is not as stupid as his lack of a genuinely good reply to the thousands of questions posted to him on his broadband policy may suggest it could actually be, then I’m happy that Malcolm Turnbull is doing what he is doing. It worked in 2010, and I’m hoping it’ll work in 2013 again.

          • There’s a saying, “put your money where your mouth is”.

            If nothing else, his investment in France Telecom, in part for FTTH, is putting his money where his brain is… and his mouth is meanwhile ensuring that the same project is succeeding in Australia by skewing the entire tech industry and many swing voters into a defensive stance in support of the NBN.

            Malcolm Turnbull is probably the greatest rallier to the cause of FTTH NBN we have seen, quite possibly more so than Senator Conroy.

          • Dominique…

            I have another similar conspiracy/take.

            Perhaps the Coalition are hoping Labor win the 2013 election and build the “white elephant (sarcasm) NBN” so that when they win the following election, they can do another Telstra, sell it, bank the cash and then say… look at all of the money our government has and how fiscally superior we are :/

  3. It’s beyond infuriating to watch the Coalition repeat this misinformation ad nauseam; especially when the person espousing it is completely familiar with the funding model of the NBN.

  4. I would love Turnbull to tell us exactly what he assumed access to Telstra copper will cost him. I am fairly sure he hasn’t gone and asked them yet (or maybe he has, they replied “tree fiddy lol”, and he took them at their word).

    $10bn seems awfully close to the margin of error just in accessing the copper network alone. How much did the NBN pay for just duct access?

    Or maybe I have got it totally wrong and his plan is simply to give telstra $33bn and say “have at it”.

    • I wonder if the Telstra copper he’s going to rely on is the same Telstra copper my area currently uses.
      To quote one of their retired techs. “It’s stuffed and has been for 20 years. You’re lucky you’ve an internet connection at all” Somehow I doubt we are the only area in the country with rotting copper.
      Good luck Mal you’re going to need it. Most of us know you don’t even believe your own idea. Or perhaps I should say Tony’s idea.

  5. I still struggle to understand why you would fund roads, hospitals and god knows what else out of debt, it would be incredibly difficult to repay this out of general revenue especially if you need to borrow in boom times. Without an income from these sources they cannot repay themselves like the NBN.

  6. I tries being surprised by MT’s latest BS but failed!

    As I tweeted, what he is really offering us is Fibber To The Node and I’ll pass thanks Malcolm!

  7. Amid the discussion of the cost figures and rollout targets in the recently released Corporate Plan, there is one set of figures which has received very little attention.

    And I fully expect to keep banging on about it, just to draw some much-needed notice.

    What I refer to is the ROLLOUT RATE – the effective number of premises being passed each day (and connected to a termination point on the outside of the building.

    In the current financial year, the rate will ramp up to an average of more than 1000 each day. But the really big push will come around the expected time of the next election, in late 2013.

    In that year, the average daily rate of premises passed will be over 3,300 PER DAY, and rising. That’s 70,000 a month.

    When Mr Turnbull talks about rolling ou “faster”, that is the rate he will be confronted with, should he be sworn in as Communications Minister in late 2013. How will he get faster rollouts by (1) cancelling a fast and accelerating rollout in full flight, (2) literally going back to the drawing board to come up with a new network design, (3) conducting a CBA before committing further government funding, (4) renegotiating with the sme Telstra team that poved masters at dragging out the last set of negotiations, and (5) only THEN look about hiring the crews who got laid off from the original NBN to restart the whole thing with a brand new FTTN topology?

    Really? That’s going to be FASTER?

    • At peak rollout, it’s planned to be around 6,700 a day. That’s almost 187,600 a month. In February, the month with the least number of days.

    • To be fair to MT, I read it a little different. Yes, all that negotiation and change still has to happen before the Liberal plan can start, but while thats going on the 3000/month rollout of FttH will still be happening for contracted exchanges.

      They might halt new negotiations past the 3 year plan, but until the existing contracts are completed there will still be rollout. Its not going to stop overnight, despite what people think.

      • Michael: yes, you are quite right about the peak levels. I think that’s around 2015-16. I was keeping things within the overall timeframe of the next election to focus on the reality facing an incoming LNP government. But yes, certainly the rollout will only get faster and more efficient over time. :)

        GongGav: I only hope you are right. There are multiple scenarios for what Abbott might do, depending on how bloody-minded (or just bloody stupid) he is feeling at the time.
        Scenario 1: Hard shut down. Contractors and workers are orders to cease work immediately.
        Scenario 2: Soft shut down. Current worksites and builds are to be finished, but no new starts, even if they’re on the 3-year plan or next up.
        Scenario 3: Quiet running. Keep the rollout on schedule, but with a likely finish date that will align with the wording of the contracts – probably 30 June 2014, or not long after. This will then allow various reviews, expert committees and alleged CBAs/whatevers to produce a statement of direction within 6-9 months. Everything to be renegotiated from that point on. [Most likely, in my view.]
        Scenario 4: Tweak the details, all else stays the same. Cosmetic changes (goosing the rollout schedule, give some Nats a bump up the schedule) or minor changes to the scope of the project (reduce fibre footprint to 90% or lower). And above all, rename! The cheapest kind of facelift there is.

        • Good scenarios.

          Scenario 1: Goes against the “Ve vill honor ze kontrakts und komplete ze NBN objektives” lines tossed about a few times. Willing to give a pass on this one until they do it.

          Scenario 2: I consider this a real possibility. All comments so far suggest exchanges not yet started will be “renegotiated” into FttN rollout. No real proof, only comments made along the way. But something in this ballpark could easily happen.

          Scenario 3: Least work for the Liberals, it lets them recycle some of the key parts of Labor’s rollout. The schedule was VERY carefully figured to get the optimum speed of rollout, whether people agree or not. Wasting that would be pointless as it applies to both FttH and FttN.

          Scenario 4: Least likely to me. The replanning to move locations about would mean restarting, and end up forcing something like scenario 1 at some point. Which probably means this will be the plan…

          I hope scenario 3 plays out, it means fibre gets rolled out to more and more premises. At some point, like Kuhler said the other day, it passes a point of no return and the Liberals can “grudgingly” let it roll on as per current plan.

          Thats scenario 5 – rollout as per schedule, get some “independant review” stating that the Labor plan is too far gone, so nothing changes at all. Except some minor delays in announcing future exchanges, which can be corrected well before the 3 years is up before they would be starting.

          That of course is best case scenario with a Liberal win. Labor win, only 1 scenario where nothing changes at all, we keep eating our weetbix each morning and wait for the revolution to commence.

  8. I certainly hope that if the Liberals win the next election and the FTTH rollout is halted, that at the minimum they will negotiate/force Telstra to wholesale the HFC network. Companies such as Internode have expressed an interest in the past of reselling HFC. I would not want to give up my 100Mbit Bigpond service for a 25Mbps FTTN service.

      • Dont know WTF you are on about… but there is little being said on the future of the HFC network under the Liberals plan. At least Conroy is asking the question.

        From AFR:

        Mr Conroy also said Mr Turnbull needed to clarify publicly whether his plans relied on the hybrid fibre-coaxial (HFC) networks of Telstra and Optus. If this was the case, he said, the Coalition needed to explain how the telcos could be made to ensure the networks were upgraded to be open access, as well as being connected to apartment blocks and provide business-grade services.

        • You state the FTTH rollout should be stopped and then state you are happy with your 100mbps HFC service – that’s pure arrogance combined with a large dose of ignorance!

          • No, if the Liberals get in, then dedice to halt the rollout, I hope the HFC network will stay, as I much prefer that to FTTN. Certainly FTTH is the way to go.

  9. “Economic theory generally considers that the private sector is more efficient at investing capital than governments.”

    IMO this is actually the core issue.

    The NBN is being attacked for its financial and technical model and what it represents, a threat to an ideology.
    This can have the potential to impact on investment opportunities world wide, especially in safe haven investment vehicles in public infrastructure with a secure return.
    Basically bugger the National Best interest, look after the money market instead

    Worthy of note (forgive the slight digression) but our tax office is being approached by and working with African and resource rich developing nations as to how to set up their own MRRT’s and Royalty programs in relation to mining development in their Nations to ensure a fair return to their economies.

    Our current Government therefore has 2 strikes against it in the World wide Investment Sector
    Also why there is a level of worldwide interest in our NBN

  10. The Coalition is against the NBN because it is Labor policy. The technical or financial merits have nothing to do with the argument.

    Just like Dr No is going to scrap the Carbon tax thereby foregoing it’s income stream and then pay for “Direct Action” by taxing the public. And scrap the mining resource tax and also reduce spending.

    So they are going to reduce the government income, reduce the government debt and no new taxes?

    If you believe that then I’ll sell you the new Spit Bridge that will magically make the traffic on Military Rd “disappear” and not spoil views.

    Rationality has no place in these arguments as they are purely ideologically based.

  11. TransACT do FttC/VDSL2 in the ACT, offering speeds of “up to” 60Mbps. With VDSL1, the offered speeds are “up to” 8Mbps.

    FttC is a step up from FttN, and they only offer “up to” 60Mbps.

    Malcolm’s speed claims seem even more rubbery.

  12. I don’t know if that was the “real” MT above (but I assume it is), but that response shows the utter contempt the Coalition has for the Australian people. To respond to one tiny (and actually slightly off-topic) point and ignore the larger issue the article raises is becoming a common tactic among NBN detractors: ignore the majority of the topic and nitpick tiny, largely unimportant details.

  13. I have a fibre fed, Telstra CMUX (which only provides ADSL1 currently) near my home, in the middle of a semi-rural, 120 lot development. As the blocks are over 2000sqm (they are all 5000sqm), NBNCo is not including us in the fibre footprint, so we are going to be stuck with NBN 12/1 Wireless when it does arrive. The development is only 5 years old, so the copper is all quite new.

    I would love NBN fibre, and was considering paying NBNCo extension, but at the $50/m approx cost revealed recently, I would be up for several hundred grand to get NBNCo to extend the fibre to my home from my nearby regional city.

    So, given a choice between 12/1 NBN wireless, or making use of the already in place Telstra backhaul fibre and just upgrading the existing CMUX to VDSL (tophat version 2?), I would choose VDSL over NBN Wireless every day of the week.

    • @Muz:

      “in the middle of a semi-rural, 120 lot development. As the blocks are over 2000sqm (they are all 5000sqm),”

      “but at the $50/m approx cost revealed recently, I would be up for several hundred grand to get NBNCo to extend the fibre to my home from my nearby regional city.”

      Look into the extension plan properly.
      I think you will find that the $50 per metre cost isn’t a given.
      There was a cost released in the media, but it was for 1 specific case, and this is still being looked at as it seems to be a bit of an anomoly situation. You can read about it on Whirlpool.

      You will need 1 node for 200 homes. This covers your 120 rural lot development.

      http://www.nbnco.com.au/getting-connected/network-extension.html
      PDF’s are on the right hand side.

      Doing an extension solo is likely to be costly.
      But the key is to get everyone in the 120 lot development on board.
      Or the developer on board.

      Having fibre access ‘WILL’ increase property values.

      Sound like you have a bit of work ahead of you.
      Best of luck.

    • This will most likely be my situation also. Even though I’m pro-NBN, I can’t help thinking that the coalition’s FTTN policy may actually serve us better: i.e. people currently with ADSL but outside the planned FTTH footprint.

      Can the existing fibre connecting RIMs be re-used for NBN FTTH or a hypothetical FTTN?

    • Don’t forget, wireless will be upgraded to 25/5. I would take 25/5 over “up to fantasy number” any day of the week.

  14. Just as a matter of interest I wonder if this post appears on Malcolm’s site.

    ” Reply
    Abel Adamski says:
    Your comment is awaiting moderation.
    August 22, 2012 at 3:54 pm

    Malcolm
    With Respect, you have responded to Alan’s articles, yet it is very notable that you have not responded to Paul Budde’s articles re The US and UK realities.
    Maybe you should obtain your information from less biased sources.
    Your “experts” are sounding more and more like Lehman Bros CEO’s advice prior to the GFC or Emrons CEO’s advice on Energy and the Private sector.
    Try actual recognised industry experts that are not aligned with vested interests that have to at all times consider investor confidence.

    http://technologyspectator.com.au/why-bt-model-wont-work-nbn

    http://technologyspectator.com.au/why-nbn-shouldnt-follow-atts-lead

    • If you actually read the article in question you get:

      That’s right; France Telecom has been rolling out FttP since 2007 in major French cities, and is aiming to have 10 million homes online with 100Mbps fibre by 2015. By 2020 — two years before our own NBN roll-out will be complete — France Telecom expects to have 15 million homes connected. This represents just over 60 per cent of the approximately 23 million homes in France.

      So from 2007 to 2020 they hope to achieve 15 million connections (not clear if this is actually paying services, but skip that for the moment). A bit of basic searching reveals:

      http://www.huawei.com/en/about-huawei/publications/communicate/hw-079257-28255-25062-hw_079157-hw_079251.htm

      France Telecom currently serves 182 million customers, more than two-thirds of whom are under the Orange brand. France Telecom’s market activities are strongly balanced among countries in Europe, Africa, and the Middle East and cover 121 million mobile customers in 30 countries, ranking us as the third largest operator in Europe. France Telecom has the most customers in Europe for fixed lines, ADSL and VoIP. In the corporate market, our Orange Business Service provides services for two-thirds of the world’s leading multinationals across 220 countries and regions.

      So let me see, 15 million fiber connections (maybe paying customers) hopeful for 2020, vs 121 million mobile customers RIGHT NOW, gosh it does look like the majority of their business is wireless. Oh my, who da thunk it? Turnbull invested in a wireless operator. Might as well just buy Telstra … I did.

      If you further read the details, you will see that fiber rollout in France targets primarily high density urban areas where the highest return can be achieved for the least investment. Egats, cost / benefit studies!

      • “not clear if this is actually paying services, but skip that for the moment”

        No. Let’s not skip it at all. How many copper connections are there in Australia and then tell us how many have “paying services” on ADSL or ADSL2+? (Hint: iirc it’s about 70%)

        “Oh my, who da thunk it? ”

        Everyone that knows population > premises.

        “you will see that fiber rollout in France targets primarily high density urban areas where the highest return can be achieved for the least investment.”

        I think that’s one of the problems that the NBN plans to solve. It wont exclude less profitable areas. I thought this was obvious but apparently not…

        “Turnbull’s speculation is as good as anyone else’s.”

        Not really considering he is notorious for getting it wrong most of the time. So yeah excuse me for trusting Quigley over him and the rest of the clowns.

  15. Amazing how many people on this blog have difficulty drawing the distinction between past, present and future.

    In NBN Co’s most recent corporate plan released several weeks ago, NBN Co firmed that figure at 7.1 percent. The project as a whole is slated to cost $37.4 billion in capital expenditure to construct, with an additional $26.4 billion to be spent on operating expenditure through to the year 2021 when the project is slated to be completed construction. However, NBN Co is also projecting revenues of $23.1 billion over that period, and through the decade after that period it is projecting that it will recoup the Government’s investment in the project and make a return on the investment of 7.1 percent.

    All completely speculative of course, so Turnbull’s speculation is as good as anyone else’s.

    It ain’t a fact until after it has happened.

    • “All completely speculative of course, so Turnbull’s speculation is as good as anyone else’s.”

      Somebody who’s been proven to be repeatedly ‘factually incorrect’ vs the myriad of experts?

      Why is his speculation any good?

    • By that logic, do you think we should also be teaching Creationism in schools? If everybody’s opinion should be given equal weight, then clearly you think we should.

      Of course NBNco’s projections are speculation. But if you disagree with them, please tell us what you believe about them to be wrong and why, and don’t just make up your own contradictory ones.

      • “By that logic, do you think we should also be teaching Creationism in schools?”

        I could stand it.

      • I know this is a big stretch, but the creation of the Earth happened in the past. Thus, we can sift through evidence, dig up rocks and what have you, because those events a done with, they actually happened.

        A statement like: “through the decade after that period it is projecting that it will recoup the Government’s investment” is a speculative statement about the future. It is an opinion. You cannot find evidence for future events no matter where you look, because those events have not happened yet.

          • You cant PROVE the sun will come up tomorrow, just give an expected result. The likelyhood is 100% that it WILL, to as many decimal points as you care to write, but there’s still a infinitisimal chance that something could happen to stop the sun coming up.

            Black hole, sun implodes, alien invasion, whatever. Not likely events in the slightest, but with infinite possibilities, there is always something that COULD disprove an assumption.

            And the sun coming up tomorrow is an assumption until it happens. Proof needs empirical evidence, not circumstantial evidence.

          • (please read this tongue-in-cheek; it’s not meant to be as harsh as it may sound. Yet the point I think is valid.)
            You’re right. It is, after all, merely my own opinion. Idle speculation in fact.
            Clearly the past cannot be used to predict the future.
            I’m sorry Data Miners, Analytics Professional, and Financial Analysts, you may as well quit your jobs because it turns out your work is invalid.
            Indeed, seeing as tomorrow hasn’t actually happened yet none of us should make any sort of plans to go to work tomorrow until we have independently verified that tomorrow is going ahead.

            “A statement like: “through the decade after that period it is projecting that it will recoup the Government’s investment” is a speculative statement about the future. It is an opinion.”
            Reasonable assumptions and extrapolations based on evidence from past events, done by professionals with appropriate experience. What were they thinking??

        • Right, so it’s evidence that makes one theory more valid than another. The evidence that NBNco presents for their assumptions is based on things like the trial sites (i.e. that tells them how long it will take to build), current broadband penetration and the deals with Telstra/Optus provide evidence for their predicted take-up rates. Current RSP prices show that cost to end-users isn’t all that much more than before.

          What evidence has Turnbull presented for his claim that the Coalition will be able to build their network for lower capex, sooner and at lower cost to end-users? So far, he’s presented none, and that makes his predictions worthless.

          As I said, all opinions are not created equal and just saying they are does not make it true.

    • The cost of every project everywhere is speculative (estimated) :/

      It’s just the NBN is seen as us vs. them ideology by Malcolm and his trusty pawns, which is why they refuse to accept any estimations and then try to apply stupid stipulations to the NBN only.

      BTW after rattling off all the financial projections from the NBN Corporate Plan, where’s Malcolm’s?

      See the difference now?

  16. Lets see, the first version of the NBN was about 4 billion. The next over 40 billion made up by Labor as desperate election ploy, the real cost in execess of 50 billion or higher (no one really knows as budgets are just inconvenient targets). However, no criticism of Labor because you get your NBN.

    No cost/benefit analysis either and again no criticism. But plenty for the Coalition who will not entertain your overgrow sense of entitlement to a tax payer funded NBN. That is not analysis mate, it is propaganda.

    • Lets see, the first version of the NBN was about 4 billion. The next over 40 billion made up by Labor as desperate election ployafter careful consideration of the merits (and lack there of) of a 4 billion dollar hand out to Telstra for sub-par FTTN. The real cost in execess of 50 billion or higher36 billion dollars, paid by users of the network (no one reallyeveryone knows as budgets are just inconvenient targetsclearly explained and provided in the corporate plan). However, no criticism of Labor because you get yourThank god we aren’t wasting money on an FTTN NBN.

      No cost/benefit analysis either and again no criticism. But plenty for the Coalition who will not entertain your overgrow sense of entitlement to a tax payer funded NBN. That is not analysis mate, it is propaganda.
      deleted due to inaccuracy.

      FTFY

    • Trying to disrupt again. You obviously like the sentence ” overgrow sense of entitlement”. It may be time to move on. Anything new to offer? Try something unusual trying to come up with some facts.

    • “Lets see, the first version of the NBN was about 4 billion.”

      was a pretty good idea at the time, right up until telstra didnt want to play nice.

      so they got bypassed

      “The next over 40 billion made up by Labor as desperate election ploy,”

      it worked, theyre in power, and its a much better idea,although much more costly as well, but when you have to rebuild an entire nations comms infrastructure you dont expect that to be cheap.

      “the real cost in execess of 50 billion or higher (no one really knows as budgets are just inconvenient targets).”

      people really need to stop thinking projects can only last 4 years, the nbn (as ftth) can be around for 50+ years, easily, its installation cost is effectively meaningless – on the condition that its revenue can cover its opex and interest payments, which it can.

      “However, no criticism of Labor because you get your NBN.”

      the ALP arent perfect, they pretty much fell into this NBN due to telstra, its not something they outright planned from the beginning, it evolved into this, but at least they seem to have some sense about what can be accomplished over a very long timespan, one in which they may not be in power.

      “No cost/benefit analysis either and again no criticism.”

      most people realise that a CBA is useless for a project this large and with such a long lifespan, we dont have an issue with a CBA not being done.

      the LNP do have an issue so the logic is that if you want a CBA done on the ALP version then you need to do one on yours – its not us that want it, its the LNP – if they dont do a CBA (although its a waste of time and money) then theyre being hypocritical.

      ” But plenty for the Coalition who will not entertain your overgrow sense of entitlement to a tax payer funded NBN.”

      actually the ALP NBN is user funded, and while all users are taxpayes, not all users pay tax (especially with the new threshold)

      the LNP NBN is most definitely a taxpayer funded scheme. can you not recognise that the subsidies involved will be massive, and ongoing, and a burden on the taxpayer?

  17. turnbull: “and much more affordably for consumers and that is our plan”

    more affordabe than nbnco is now? (im presuming the “context” is plan costs, and not taxpayer costs)

    im sure they can do that but it would have to involve fairly large subsidies to bring the end user costs down (which theyve stated they would be doing), and those subsidies will come from all taxpayers, not just the users of the nbn.

    at least the ALP make an effort to make a profit out of nbnco, the LNP seem determined to just throw money away and let the taxpayer pick up the bill.

    for a party that believes in leaving the market to its own devices it seems rather hypocritical doesnt it? either the broadband market is working how its supposed to, or it isnt. you cant have it both ways.

    renai – “quite surprised to see Turnbull making the argument in public that Coalition’s NBN policy can save the Government tens of billlions of dollars in capital investment”

    capex is easy to save money on, you just spend less, or have someone else build it – telstra builds it and nbnco lease it (because telstra need to stay separated to comply), zero capex but the opex just went up massively.

    you should have realised by now that mr turnbull is excellent at political spin.

  18. 12.23 PM and only one comment from Malcolm Turnbull out of 97 comments. Does that say it all?

  19. Malcolm?

    Malcolm???!!

    Lots of good points and questions above on which you can demonstrate your self-implied superiority in designing and implementing national network architecture.

    You DO have something real to tell us, don’t you?

  20. I am puzzled by Malcolm Turnbull’s declaration that his policy is fully costed.

    Does this mean that Telstra has already agreed on a price for the copper network?
    Does it mean that he has worked out how much of that network will be useable and what maintenance costs will be necessary?
    Does it mean that he has already negotiated changes to existing contracts?
    Does it mean that he has already worked out how much will be spent on subsidies?

    I won’t even bother to start wondering whether the cost of inevitable upgrades is part of his policy.

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