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Opinion, Telecommunications - Written by Renai LeMay on Monday, February 18, 2013 11:54 - 197 Comments
Chaos: Coalition a total shambles on NBN policy
opinion Up until now, I’ve been willing to give the Coalition the benefit of the doubt when it comes to national broadband policy, due primarily to the intelligence and experience of its Shadow Communications Minister Malcolm Turnbull. But events last week starkly demonstrated the Coalition is currently a complete mess when it comes to this critical portfolio.
Regular readers of Delimiter will know that while I have long had doubts about the Coalition’s alternative vision to Labor’s flagship National Broadband Network, I have also been willing to acknowledge some of its strengths.
When Turnbull first substantially detailed the Coalition’s rival NBN vision in a major speech to the National Press Club in August 2011, I wrote that the policy was “90 percent” win, as it outlined a “credible, fiscally responsible and less disruptive” alternative to Labor’s big-spending NBN vision.
In December I wrote that although Labor’s NBN vision was still fundamentally a better policy, the Coalition’s alternative still represented a “solid, workable and achievable broadband policy”. And just a fortnight ago, as Opposition Leader Tony Abbott firmed in his support for Turnbull’s fibre to the node-based policy and virtually confirmed the Member for Wentworth as his future Communications Minister, I praised Turnbull’s “tenacity, intellectualism and continued engagement with the telecommunications industry over the NBN”.
But what a difference two weeks can make.
Two weeks ago, from an outside perspective, the Coalition more or less appeared to have overcome the internal disagreements which have plagued Tony Abbott’s front bench about the future of the NBN. Turnbull’s vision of an expedited, more inexpensive upgrade of Telstra’s copper network to fibre to the node technology, using the bones of NBN Co to do so, and maintaining existing HFC cable infrastructure as well as much of the satellite and wireless components of the NBN, appeared to have gained ascendancy over the “demolish the NBN”, “white elephant” rhetoric of less technically minded Coalition politicians such as Abbott and Shadow Treasurer Joe Hockey.
Today, we’re right back where we started: In complete chaos. Turnbull is demonstrating his technical and commercial ineptitude by pitching a technology to the electorate which most Australians have considered deprecated for most of the past decade, and Abbott is back on the bandwagon about how expensive the NBN “white elephant” is, despite the fact that it is actually slated to deliver the Government a long-term return on its investment.
Last Thursday, Turnbull gave what most in the telecommunications industry would consider an extremely disturbing interview which called into question the whole basis of what many had believed to be an increasingly stable and coherent Coalition NBN policy. Earlier that same day, Communications Minister Stephen Conroy had raised the troubling question of whether Turnbull’s fibre to the node upgrade policy would initially ignore vast swathes of metropolitan Australia which are already covered by the HFC cable networks operated by Telstra and Optus; infrastructure which few use due to the difficulty, often impossibility, of getting it connected and its inferior technical nature.
In an interview with Lateline that night, Turnbull naively played right into Conroy’s hands; confirming these areas would be initially ignored by the Coalition’s fibre to the node vision, and even going so far as to appearing to raise the question of whether those areas would receive the fibre to the node upgrade at all; effectively meaning that up to a third of the electorate would remain locked on existing HFC cable and copper (ADSL) broadband with no future upgrade path at all from what they currently have.
Turnbull’s comments rightly caused instant uproar in the telecommunications sector.
The Competitive Carrier’s Coalition — representing most of the non-Telstra carriers — demanded Turnbull abandon what it described as his “HFC fantasy”, criticising it on commercial and technical grounds, as well as the long-term interests of consumers. ““These comments ignore the reality that such a proposal would mean that for 30 percent of the population there would be no effective competitive broadband market.” said Matt Healy.”
The condemnation of Turnbull’s plan extended online, where hundreds of Australians published comments on media outlets such as Delimiter, broadband forums such as Whirlpool and even on Turnbull’s own site, condemning the Shadow Communications Minister’s comments and highlighting the fact that for much of the electorate, Turnbull’s approach would mean little to no improvement on their current broadband situation under a Coalition Government.
Then there are the inconsistencies within Turnbull’s Lateline interview itself.
From a practical point of view, one must question why a Coalition Government would even bother forcing Telstra and Optus to upgrade their HFC cable networks and open them to wholesale access, when in the same Lateline interview, Turnbull baldly stated that the Coalition’s nationwide fibre to the node upgrade of Telstra’s copper network would take only about a quarter of the time, and cost about a quarter as much, as Labor’s FTTP NBN vision.
Given that the NBN is a decade-long project, this would appear to mean that Turnbull envisions that his FTTN NBN vision could be implemented within 2-3 years of the Coalition taking power in the upcoming September Federal Election. One is forced to consider the fact that any process to upgrade the HFC cable networks and open them to wholesale access would itself be likely to take at least that long; if not longer.
Right now, the HFC cable networks are simply not set up for wholesale access, and neither are the ISPs (such as, presumably, iiNet and TPG) that would resell access on them. Hell, it would likely take at least a year or so for the legal negotiations with Telstra and Optus to complete, and at least a few months for a Coalition Government to overcome the legal difficulties that currently block millions of residents of multi-dwelling units (usually apartments) in the HFC footprint from connecting to the cable which runs past their premises.
When all this has been done … can the HFC cable actually support hundreds of thousands to millions of new customers using it? The evidence so far suggests not; we’ve heard time and time again how the HFC slows to a crawl when Australians in the footprint return from work every day, given its nature as shared infrastructure. We suspect that faced with the choice between FTTN and HFC infrastructure, almost everyone in the HFC footprint will choose FTTN.
Yes, as the CCC noted, Turnbull’s views on the HFC cable networks are indeed a “fantasy”; one which the Member for Wentworth appears to have dreamed up without consideration for the views of the telecommunications industry, without consideration for the Australians who will actually be using his planned broadband infrastructure, and most importantly, without consideration for the actual technical and legal facts of the situation.
Will Telstra even consent to uprade and wholesale its HFC cable infrastructure? Is it even possible to open the HFC networks to wholesale access? Right now, nobody knows.
Following the Lateline interview, Turnbull was rapidly forced to issue a statement clarifying his position and re-committing to upgrading the HFC footprint with FTTN. But again, here the Shadow Minister displays a lack of awareness of commercial and technical reality.
In his statement, Turnbull argued that “premises connected to the HFC network can obtain some of the fastest broadband speeds available in Australia at the present time”; ignoring the fact that most within the HFC footprint have already turned instead to ADSL broadband as it is more reliable and already open to wholesale access. He argued that Telstra could operate its HFC network as a “second wholesale carrier in competition with the NBN”, despite the fact that the evidence shows very few Australians would choose to take up the HFC cable infrastructure in preference to a FTTN solution through NBN Co. And he argued that broadband services under Labor’s FTTP NBN vision will be less affordable “than basic broadband ought to be”, despite the fact that current NBN pricing is directly comparable with existing ADSL pricing, and it is far from certain what impact a dual HFC cable/FTTN market would have on retail pricing or NBN Co’s own profitability.
There is also Turnbull’s claim that NBN Co is not prioritising its rollout on “the neediest areas”, despite the fact that NBN Co is prioritising rural and regional areas first in its rollout, through Australia-wide satellite access and wireless services in certain areas, as well as its ‘outside-in’ rollout structure agreed upon with the Independents at the 2010 Federal Election, and its explicit focus on broadband-starved areas such as Tasmania and the Canberran suburb of Gungahlin.
So while Turnbull was sticking his foot in his mouth, pushing deprecated and unpopular technologies and ignoring commercial and technical reality last week, what was Tony Abbott doing?
As many readers have already noted, Abbott was back on the campaign trail making misleading statements about the NBN’s finances. “If we don’t go ahead with the National Broadband Network in its current form, that’s about $50 billion less that the Commonwealth will need to borrow,” said Abbott in a major speech to the Committee for the Economic Development of Australia. “So, we will get government spending sustainably down and most importantly, ladies and gentlemen, we will get productivity up.”
And on ABC Radio, Abbott said: “Obviously I don’t think we need to borrow as much as the current government is borrowing for the National Broadband Network. I think we can get faster broadband, more accessible broadband without doing all of this. We are planning to give people faster broadband much more quickly and much more affordably than is the case under the NBN. The thing about the NBN is that it’s not really a broadband project, it’s a infrastructure project, which basically involves digging up every street to put fibre to the home. Now fibre’s a very important part of our communications system. You don’t need fibre to just about every home to have a better broadband system than we’ve got now.”
Once again, Abbott was back on the same bandwagon last week. Claiming that cutting the NBN can save money, despite the fact that the NBN is currently on track to make a modest return on the government’s capital investment in it. Labelling NBN funds as “spending”, despite the fact that accounting standard account for those funds as an investment; a completely different class of money. Claiming that consumers will pay more to use the NBN, when there is so far no evidence for the claim. Claiming that the construction of the NBN will involve “digging up every street”, despite the fact that NBN Co has signed a deal to re-use Telstra’s existing pits, ducts and pipes for its fibre infrastructure.
There is no doubt that the Coalition has come a long way since the 2010 Federal Election, when then-Shadow Communications Minister Tony Smith presented a minimalist joke of a telecommunications policy which would have left Australia in the digital dark ages for another three years. And there is also no doubt that building the NBN is taking more time and effort than most people expected.
But what we’re seeing from the Coalition at the moment is nothing short of a complete shambles.
Constant misleading statements about the NBN’s underlying economics. A demonstrated lack of understanding of the technical, commercial and regulatory realities of the telecommunications industry and the future of broadband provision in Australia. And a continued focus on legacy technologies which most consider deprecated and failed. This is what the Coalition continues to hand Australians when it comes to NBN policy.
When it comes down to it, what Australians want from the Coalition when it comes to the NBN — as in every other policy area — is for it to represent a safe pair of hands. We’re not talking here about organising a chook raffle in a country pub; we’re talking about a multi-billion-dollar national infrastructure project which will shape the whole future of Australia’s telecommunications needs and even our wider economy. Every Australian, every business, needs reliable, fast broadband access and we need a plan to deliver that.
But all of the signals coming out of the Coalition so far are that, when it comes to national telecommunications policy, it’s not capable of organising that proverbial chook raffle; let alone taking charge of something as complex and important as the NBN.
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