blog We were a little bit surprised when Shadow Communications Minister Malcolm Turnbul abjectly rejected a move by NBN Co chief executive Mike Quigley last week to back an independent industry investigation into the merits of various high-speed broadband technologies. We would have thought Turnbull would have welcomed such a move, given that it opens the door for a discussion of how the NBN rollout could change under the Coalition.
And, it appears we’re not the only ones to think that way. Local communications analyst Paul Budde writes on his blog today (we recommend you click here for the full post):
“For more than a year the Opposition has been hammering on alternative plumbing solutions for the NBN. FttN and HFC have been spearheading their campaign, but in the past they also had wireless technologies on their list of alternatives. However they claimed that they do not have the resources or the information to investigate this properly – so one would have expected them to embrace the proposal to investigate the current NBN and other potential technical solutions … Why would the Opposition not welcome such a review if they are so sure that they can get the NBN cheaper and faster into the market with their proposed technologies? Here is an excellent opportunity to put that to the test.
There seems to be more of an interest in launching an inquiry into how much a cup of coffee costs at NBN Co than there is in investigating something as serious as the NBN operation.”
We can’t help but agree with Budde. If they are firm in their belief that their policies are the correct ones for Australia, neither the Coalition nor the Government has anything to fear from any number of independent reviews into the future of the NBN. In fact, if it was up to us, we’d go hog wild. How about this for a suggestion: The Federal Department of Broadband, Communications and the Digital Economy should fund three or four such studies. One by the Communications Alliance, one by the Productivity Commission, one by a major consulting firm such as Ernst & Young and one by a consumer group such as the Australian Communications Consumer Action Network.
After all … why not? Such studies are generally inexpensive (a few hundreds thousand to a few million dollars each) and could add a great deal to the debate, providing a solid underpinning for the NBN election debate. Perhaps a consensus between both sides of politics could even be reached at the end of such a process; a desirable thing, given the need for stability in this massive infrastructure project.
But wait … we can’t see either side agreeing to this kind of thing. Because, if we’re being honest about it, the current NBN debate is less about things which actually matter such as better outcomes for Australians and more about politics. And ain’t that just the sad truth.
Image credit: Office of Malcolm Turnbull
Hmmm seem like Turnbull speech on honesty in politics is in the mud. The fact that he doesnt want a review now is purely political. He is scared of the truth and demonstrates everything he has been saying so far is not based on facts but political motivation. Why else will you reject a review when that exactly what you said you wanted to do?
I honestly believe Quigley is all for the best outcome for Australians. The politicians, and the media, politics to the core and Australians be damned. I’d like to see those reports too. Really, this is such a big spend and such and important thing to get right as it will shape communications for decades to come, it is really worth getting it right. Fair enough, the way to achieve the desired outcome could vary depending on the beliefs of the various parties, but at least they could agree on the best way forward technology wise without letting egos and politics in to the discussion. This is about decades of our comms, not for a three year term.
“I honestly believe Quigley is all for the best outcome for Australians.”
indeed. I think he’s just an all round decent human too having given his bonuses to charity, I wonder how many bonuses Malcolm donated to charity when he was at Goldman??
Yes, giving his bonuses to charity. And it really annoys me every time some LNP mouth piece on the forums posts that he is asking for this study to protect his job and suck out more money from the Australian taxpayers. The guy is rich, he doesn’t need the job, he gives away a lot of the money, he came out of retirement to do something he could be proud of. Not play petty politics, not rip off the taxpayer, not to implement some solution he doesn’t believe in because the LNP are ludites.
“Turnbull should welcome Quigley review”
He won’t. Because that would mean that he doesn’t get to dictate the narrative. And that’s what electioneering is all about (in my non-participating, watching elections from the sidelines opinion).
“more about politics”. yep. there endeth the debate on this whole thing.
Here we are, with a chance to set up our nation, connectivity-wise, for the next 50-100 years in a consistent manner for all, at a net cost of zero, and it looks like we’re going to end up with a hodge-podge of options instead, just like we have right now.
Maybe those who don’t want it shouldn’t be allowed to have it?
Let’s keep a register of those people to ensure they stay on copper forever.
This should be bringing us together, not dividing us due to nothing more than politics.
Such a review will dismantle the claims of cheaper, sooner and more affordable because he won’t get to set the terms of such a review.
There’s a good point about how if the coalition wants to see success that they need to drive a certain populist narrative home made by Tony Brown in an opinion column in The Australian that’s worth probably some cursory reading even if you disagree with it – and I accidentally created a response.
And this is bound to upset some people here:
> This option is largely unheralded among middle Australia – although this might change if Turnbull were to adopt a more populist, anti-waste campaign against the current NBN model and aggressively emphasised his value-for-money alternative.
But what such a review would also do, for Turnbull, is assail that backup argument. Right now there’s an illusion of a vibrant competition in broadband. There’s also an illusion that taxes are bad and that the NBN is being funded with taxes. There’s also the illusion that wireless and HFC are good enough without a view on the future. All of these are held to be true enough for even many Labor voters for an assault on these to have an impact.
Right now Turnbull can make the very populist argument of why are we wasting a healthy market in broadband competition and replacing it with a government imposed monopoly? Or the populist argument isn’t building FTTH to all households wasteful when only so few need it. And it’s hard to dispute these among when talking about the public in soundbites short enough to make News Ltd. headlines. And that’s why Turnbull opposes the review. Because it just might force News Ltd. just a little bit to make a positive mention of not the current NBN, but at least aspects of the current approach by NBN Co, in The Australian, unthinkable and as unlikely as it may be. It threatens to change the narrative and inform the people and that’s no good.
Such a review, with the support of all the ISPs and not being run by terms dictated by the government, would threaten the current level of discourse coming out by the coalition on the NBN – and frankly hopefully Labor too. And it’s a very very good thing to see.
Turnbull knows it will be an unfavorable look into his “dead horse” FTTN NoBN. Of course he doesn’t want any more scrutiny of it from the “stupid religious zealots”.
I believe Mals “cheap stunt” of a slogan faster, cheaper will come crashing down around his ears if they do any sort of study on the different technologies… Mal will finally be found out for the disgusting liar that he is, Rupert and his other masters must be getting real worried.
I for one say bring it on.
All this because the Coalition is simply unwilling to accept that the NBN is good policy. Even from the perspective of their ideological roots, it makes sense (break a monopoly, allow competition, eventually get sold off, etc) but the next hundred years of telecommunications infrastructure is being put at risk by Abbott’s ego and Turnbull’s cowardice.
I think they’d win far more votes if they had the intestinal fortitude to do what’s right for the nation rather than continue their childish, myopic crusade against Labor.
Here’s a golden opportunity to demonstrate that this blog is genuinely objective and non-partisan in its NBN coverage and sincere in its stance on policy issues:
Write a short article exhorting the Minister of Communications to immediately request that the Productivity Commission launch a cost benefit study on the NBN on Senator Conroy’s own terms of reference. If they make haste, the PC may even be able to release an interim report prior to the September elections.
If the case for FTTH vs FTTN is so watertight as the torrent of editorials and commentaries on this blog so strongly and consistently maintain, what’s there to be afraid of a harmless PC inquiry?
> Senator Conroy’s own terms of reference
Here’s the copy of a slightly more snarky than usual edition of The Australian when such an analysis would be revealed, regardless of the result:
> Senator Conroy has set the parameters for an analysis being conducted by the treasury led by deficit recordbreaker Treasurer Swan and lo-and-behold it shows that the NBN is in some of the scenarios therein cost negative and in some others that it says are more likely cost positive. The time frame of this analysis has also been set to the unthinkable date of 2040 and relies on a number of forward projections and other reports. What it doesn’t answer is the question of why it took Labor to even find out whether this white elephant is even worth building and what the coalition at-large will weight in on it. Opposition Communications spokesman Malcolm Turnbull says that the result isn’t surprising given the terms of reference, that it misinterpreted aspects of the coalition plan for broadband and says that a cost-benefit analysis of the coalition’s plan over a more reasonable time frame would also show a positive benefit.
Also, it assumes that the NBN needs to justify its existence through things like societal benefits or positive externalities and such. It doesn’t. It justifies itself economically from the revenue raised alone and commercially from the SAU submission to the ACCC as well as the corporate plans.
Make that:
> What it doesn’t answer is the question of why it took Labor this long to even find out whether this white elephant is even worth building and what the coalition at-large will weigh in on it.
Also, there has been an implementation study that, while it didn’t cover what a CBA did, made quite the case for the NBN in its current form (with some changes since then) and cost $25 million. Which means that said hypothetical edition of The Australian might just add:
> Not content with $25 million in 2010, it took more millions and many more years for the DBCDE to conduct a cost-benefit analysis to find out what it was even for.
The Productivity Commission is a independent body, if asked to do a CBA of the NBN they set the terms of reference not Conroy or Turnbull.
@alain
I don’t believe that’s true. I believe the terms of references are given TO them and they produce an independent report BASED on said terms of reference. If they’re given no terms of reference for what they’re producing a report on, how are they supposed to know what to report??
First of all, strictly speaking, it isn’t Conroy or Turnbull that set the terms of reference, but Treasurers Swan or – most likely – Hockey or the Assistant Treasurer. In practice, however, they would likely just rubber stamp whatever minister these came from.
The Productivity Commission operates by getting a reference from the Treasurer that instructs it to either conduct a study or an inquiry. In so doing, terms are set as well. Here is what it looked like in the past:
http://www.pc.gov.au/projects/inquiry/access-regime/terms-of-reference – notice this has a “Scope of the Inquiry”
Or this: http://www.pc.gov.au/projects/inquiry/resource-exploration/terms-of-reference – notice how the treasurer can exclude things like: “The inquiry is not to examine processes under the Commonwealth’s Native Title Act 1993, the Aboriginal Land Rights (Northern Territory) Act 1976 or state Indigenous land rights regimes”
Or this: http://www.pc.gov.au/projects/inquiry/electricity/terms-of-reference – notice how the review is asked to examine two things and two things only?
Or this: http://www.pc.gov.au/projects/study/small-business/terms-of-reference – notice how it even has a date by which the commission is to report back?
So, acknowledging that saying Conroy instead of Swan was a mistake by me with little actual consequence, this:
> The Productivity Commission is a independent body, if asked to do a CBA of the NBN they set the terms of [reference]
Is you once again being wrong. Treasurer Joe Hockey could just tell the productivity to not consider effects from x, y and z, consider a fifteen year time frame ask it to look at a, b and c only. By being able to set the terms of such a review (or inquiry), you can control the result, even if the Productivity Commission is impartial. It still has to work within these terms.
There’s a saying – never hold an inquiry unless you know what the result is going to be. And simply put, a Productivity Commission with terms of reference set by Swan wouldn’t convince anyone in the coalition and vice versa.
Actually, I suspect that this is one of the reasons we hear so few details from Turnbull on the coalition plan.
If we knew what was actually happening other than a bunch of blanket statements then the productivity commission, or anyone with a napkin really, could work out that it’s not a good long term plan that does not much for competition.
Django
Why do you think it came From Quigley and not Conroy..
Conroy isnt going to say we need a review when they already commisioned a expert panel on the issue prior to changing to the current policy.
If its supported by Quigley it looks less like a political move and the industry can analyse what is best for the industry and to provide for Australians telecommunications needs.
I really wish some National ISP (looking at iinet as the only real option) would come out with some product advertising that captures some fibrephone Multicasting and internet over the NBN , maybe their new budii + Fetch TV may be a step towards their planned NBN packaging deals
Who pays for the national broadband in other countries? The taxpayer or business?
If the implication is that in Australia the taxpayers is paying for the NBN, then no. And I’m not sure about who you mean by the business. If it’s NBN Co and you’re talking about Australia, then the government is issuing bonds, including infrastructure bonds, at higher than usual interest rates that NBN Co gets money from that they use to build a network. NBN Co also plans to raise money from private markets starting in 2015. It will then use the revenue from the network to pay off the capital expenditure, with interest. NBN Co will also charge heavy users more than less heavy ones, with less heavy ones being subsidised.
So it’s really the people who will use the NBN the most who will pay for it. In China or the UAE, for example, the government owned telcos (100% and 60% respectively) provide a profit to the government. In the case of the UAE about $2 billion a year. In other cases, like Germany or Japan the government has a minority shareholding and in yet other places like Korea the government isn’t involved at all.
In pretty much no case the taxpayer is ultimately financially responsible for the build of a network – that only happens when the government provides grants or subsidies. The previous Australian Broadband Guarantee was one such example providing satellite broadband to rural Australians. Another example is the FCC in the US releasing $115 million in subsidies some time last year.
After the Communications Alliance study declaring it’s good policy for taxpayers to continue underwriting the $36bn FTTP NBN build, I look forward to the Car Manufacturer’s Association’s industry study saying the Federal Government should continue pouring hundreds of millions of subsidies to keep afloat our car manufacturing plants and how this will be good for Our Nation. How about a Housing Industry Association study saying the Government should triple the first home buyer’s grant for new homes, waive all stamp duty until 2020? And how about a study by IT Services Association saying the Government should immediately allocate and tender for billions of dollar to refresh all IT systems at all government departments?
Let the fun begin!
@django
You’re confusing 2 entirely separate systems there. The NBN is underwritten by taxpayers, as you say. It will not require any money from the government Budget.
The Federal Government’s subsidies to the car manufactuing business on the other hand DOES come from the Budget. As would any increase in the First Home Owner’s Grant. Or a refresh of IT systems.
If you cannot understand the difference, most people here would be happy to explain it.
It MIGHT pay back the taxpayers someday, but it hasn’t come anywhere near to break even yet.
That’s what “underwriting” means, taking onboard the risk of failure. Hence insurance underwriters, etc.
It’s still not on the budget until such time as the government decides they need write off bad debt, which may never occur.
You’re arguing trivial points that don’t undermine the original argument at all as well.
Taxpayers carry the risk, it is not a trivial point, it is what went wrong with the entire US real estate industry (because Ginny Mae was the underwriter, backed by the taxpayer) and nearly dragged down their banking system. The banks of course had the necessary influence in government to make sure they got looked after when crunch time came.
As for how budgets should be prepared, assets should correctly be marked to market value, which has not been done, and that too is a can of worms. The ALP is working from an already failed play book. Trying to get a government to correctly calculate the equivalent market value of a risky venture is basically impossible, which is why traditional government asset valuation is strictly conservative. That’s why we have a free market, to discover these prices. That’s the whole purpose of the thing.
http://accounting.smartpros.com/x71398.xml
It is trivial in the context of the what you were replying to. Specifically:
Do you really need to correct the mirror error in the definition of underwriting above (specially that the government might have to pay should the underwritten project fail)? We are all aware of this risk Tel, however as seven_tech was trying to point out, underwriting is different to directly funding or subsidising.
Are you deliberately ignoring this in order to take a stab at the financing of the NBN which you have demonstrated many times in the past you feel will fail? Because I will not be subjected to such obvious strawman arguments, no matter how legitimate your concerns may be.
You mean every industry should start doing what the farmers have been doing for decades?
Perish the thought.
Dumb shits in opposition, There is no better way than fibre to the premises! Yes it costs more but your kids/grandkids will thank you in decades. Fibre to the node what is the point of that, may as well be using dial up, Great the HD content you just bought online comes to the end of your street super fast in less than a few minutes, Then you wait as it takes another hour to get from the end of your street to your property.
I remember at the start when the idiots were also bragging about how wireless should be the alternative, Yet they have no clue that that same wireless setup relies on fibre/cable backbone, That’s what the wireless base station is plugged into, Either way you still need a super fast/fat pipe to handle all the data and the closer you can get it to your house then the better your net speeds will be. Fibre to the node is a half assed answer to cut costs and make them look good it does nothing to solve the future needs of the population.
They are all happy to waste millions/billions on stupid things that only minority groups benefit from at everyone elses tax payer expense such as baby bonuses, First home buyers grants etc etc Yet here is something that EVERYONE can benefit from and for generations afterwards, There is no “too expensive” for such a project that is part of a countries infrastructure, It’s not just for entertainment, High speeds will benefit business’s and help create more wealth. Opposition should just go away on this subject, Seriously if they even think about scrapping NBN or going for cheaper alternative then they have already lost my future vote and some of my friends votes as well.
“In fact, if it was up to us, we’d go hog wild. How about this for a suggestion: The Federal Department of Broadband, Communications and the Digital Economy should fund three or four such studies. One by the Communications Alliance, one by the Productivity Commission, one by a major consulting firm such as Ernst & Young and one by a consumer group such as the Australian Communications Consumer Action Network.”
If this were to happen, the opposition and the Murdoch press would go hog wild complaining about the millions of dollars in Labor waste. After all, this mob were willing to do a beat-up over how much NBNCo spends on coffee (of all things).
I think most private companies would agree that $160,000 is a lot of coffee. At the supposed 16c a cup, that’s one million cups of coffee…
@Tel
Really? Could you point me to where private companies list their coffee expenditure?
And don’t say there isn’t any. Dozens of private companies provide canteen coffee machines in main offices.
Well it’s only 0.07% of their total employee benefits expenses so I guess it’s not worth arguing over.
Most places I’ve been at, the employees had to club together and put their own money into a coffee machine. Where I am now, the employer provides one electric kettle (value $20) and one small microwave (value $100) but the way I see it, I’m there to do a job, and a cup of tea is good enough.
I was at a lecture where one of the “small caps” investors employed by the Commonwealth Bank talked about what a good job he was doing, and someone asked him “What is the first thing you do to get a quick picture of a business?”
His reply (without hesitation), “Measure the boardroom table,” the theory being that if it’s too big, they don’t have their spending focus as tight as it should be.
Let’s see.
First job. Tea, coffee, milk, fridge, microwave, kettle, boss would take us out to lunch or dinner about once a week, would create a bar tab for us.
Second job. Tea, coffee, coffee machine (had bring in own coffee), free cans of softdrink, boxes of fruit, microwave, hot water urn, filtered chilled water, pizza and beer friday nights, donuts once a week.
Third job. 3 microwaves, 2 toaster overs, toaster, hot water urn, TEA LADY, brings jug of ice water to desk in the morning, tea or coffee delivered about 10:30 am and 3:30 pm, she will heat lunches for people so they are ready if you like, company shouts meal, bbq, indian, whatever about once a month.
Tel, you have to find an employer who isn’t a tight arse.
I agree with your well-reasoned and insightful argument and wish to add, in its spirit:
He’s less of an analyst and more of a banal-ist.
Grahame Lynch has made a very good point overnight on Twitter: “The question isn’t who is right.. it’s whether he is balanced. He clearly isn’t.”
And I agree that it doesn’t matter whether Nick Ross is right or not (and in my opinion, clearly without needing to elaborate, he isn’t), but what matter is that he’s a tech journalist with an irrational and quasi-religious belief with an agenda driven by a blind trust in government.
Are we talking balance, as in examining the evidence for the arguments put forward for all sides, then making an informed statement about what the best option is? Or ‘media balance’, which usually entails giving the dog astrologer equal time to the world-leading researcher?
@Bern
Or “News Ltd. Media Balance” Which involves using emotive language that portrays said Dog Astrologer as a world leading expert and said world leading expert as a money grubbing company man who’s out to bring down Democracy….
What I don’t get is why they are so worried about saying what they plan for the NBN ( other than the limited dribble so far )? All the polls and reports point to a massive coalition win in the next election regardless. I can only assume they plan to rip it out ( the NBN ) as Abbott said originally and they know that once they announce that it will be a worse response than the Carbon Tax.
Turnbull called for a report, knowing full well the Labor Government would wish to do no such thing (it would introduce delays, costs — all the good oil Turnbull can use as ammunition).
Quigley has decided to call Turnbull’s bluff. Shock — the Wizard of Wentworth now exclaims such a review is ‘too late’.
If it’s too late, then why bother? Could it simply be yet another stalling tactic, in the quest to ‘destroy the NBN’ — it’s pretty obvious, really.
Oh, and Lynch calling Ross unbalanced is hilarious. That amused me no end.
Actually, I was (and still am) a bit surprised Conroy didn’t do a CBA as soon as Malcolm brought it up.
It would have short-circuited all the ensuing “expensive white elephant” nonsense and he could have made sure the terms of reference were applicable to a decades long, nation building project. And it would have also served as a validation that the had the right approach to boot.
As it stands, Malcolm will get one done that will have limited terms of reference (probably in terms of only a decade and a half) that will be designed to show he is “right”, with not much in it to show any benefit for Australia as a nation…
Well said Renai, as usual.
Tony’s just invented a new task for NBN.
Great thinking Tone, Online Universities (online senior secondary to follow get rid of all those costly schools)!!!!! Heaps of bandwidth needed to broadcast all those lectures and video conferencing, great task for the NBN don’t think fibre to the node is going to cut it for this app.
A real shot in the arm for the NBN!
The poor old Luddite doesn’t realize that, don’t expect him to understand the importance of upload. Ohh I forgot the affluent can shell out many thousands for FTTH from the FTTN node to take advantage, the rest can just be consumed with envy as they miss out
Comments are closed.