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Featured, Opinion, Telecommunications - Written by Renai LeMay on Monday, March 25, 2013 13:48 - 278 Comments
Broken dreams: The NBN’s bubble has burst
opinion With its rollout schedule significantly delayed yet again, its contractual and political relationships on the rocks and its transparency thrown out the window, it’s apparent that NBN Co is not delivering the National Broadband Network the nation was promised. So what’s the future of this great Australian dream?
After NBN Co’s dramatic revelation last week — in the midst of Labor’s leadership crisis, no less — that it was three months behind in terms of its fibre rollout schedule, I sat down for a bit of a long think and asked myself what the future of this troubled project was likely to look like.
The most attractive thing about the NBN dream has always been that it’s a panacea: A universal remedy to all of Australia’s long-term telecommunications problems. When I talk to the average guy on the street about telecommunications (not all of my friends and family are early technology adopters or IT professionals), I usually hear a litany of complaints about the issue; ranging from dropouts to crappy speeds, poor telephone call quality, a lack of mobile reception, exorbitant prices or even an inability to get fixed-line broadband at all in certain areas.
Faced with these ongoing complaints, my answer, for years now, whenever anyone finds out I’m a technology journalist and asks me about these problems, is to let them know about the NBN, and promise them that things won’t always be this way.
The NBN is the one big idea which which should have been the panacea to resolving all of these issues. It was to have brought fibre to most of Australia, wiping out all of the issues with Telstra’s ageing copper network which have plagued Australians’ broadband connections for so long, delivered massive speed improvements, eliminated blackspots and even potentially driven mobile coverage beyond where it currently is, due to its ability to deliver backhaul to any mobile phone tower, anywhere. And of course it also has had the potential to level the playing field in the competitive telco market and bring competition into areas, such as the bush, where Telstra still dominates.
But as the situation with the NBN stands right now, I’m no longer confident giving the answer that the NBN is the long-term panacea to Australia’s telecommunications needs. The project has run into too many issues over the past year for me to have the levels of confidence in it that I once had; and I’m convinced that the next several years of its life will be even more rocky than the first five have been.
The first and most pressing issue that is confronting the NBN right now is that Labor and the management of NBN Co itself appear to have drastically underestimated the complexity and effort which will actually be required on the ground to deploy this largest and most complex of telecommunications networks.
As a concept, the current NBN model has been the dominant one since April 2009, when then-Prime Minister Kevin Rudd and Communications Minister Stephen Conroy abandoned the previous, much more limited fibre to the node model and opted for a near-universal fibre alternative. Since that stage, the rollout of the NBN has been substantially delayed twice that we know of.
The first delay — formally confirmed in August 2012 when NBN Co released its second corporate plan — was forgivable. As NBN Co chief executive Mike Quigley has pointed out repeatedly, the groundwork of the project shifted underneath it several times in the first several years of its life, as NBN Co’s deal to use Telstra’s infrastructure took much longer than anticipated and it was also handed responsibility for greenfields developments.
However, the second major delay, announced last week, is, frankly, not forgivable.
Cast your mind back to mid-February this year. At that stage, NBN Co’s management fronted a Senate Estimates inquiry and strongly pushed the line that NBN Co was on track to meet its June 2013 targets, specifically the target of 341,000 total fibre premises having been passed nationwide. Several weeks later in mid-February, Quigley himself fronted the media for an extensive press conference session in Sydney. Although the progress of the rollout didn’t come up in detail, again there was absolutely no indication that NBN Co wasn’t on track to meet its mid-year targets.
Last week, as NBN Co drastically revised its rollout timetable down (it now plans to reach just 190,000 to 220,000 premises by the end of June), Quigley acknowledged to journalists that “over the last month or two”, it had become “increasingly evident” that NBN Co wouldn’t make its mid-year targets. Last week’s announcement, then, represented the formalisation of that understanding; as NBN Co’s board was taken through the delays by its executive team and approved the release of new targets.
The problem with Quigley’s comments is that they imply a level of straight-out deception on the part of the NBN Co chief executive. If Quigley and his team had been seeing increasing evidence of delays in the project’s rollout over the past several months, why has it been publicly insisting that it was on track?
It’s also not the first time this has happened. In late 2012, NBN Co let the public know that informally, based on data from its construction partners, it expected to actually reach about 300,000 brownfields fibre premises by mid-2013, instead of the 286,000 its formal business plan called for.
By mid-February, NBN Co was insisting that it was still on track to make its original mid-2013 targets, but acknowledged that delays with the rollout caused by its contractor Syntheo meant it wouldn’t make the higher 300,000 target. NBN Co has since taken back construction work in the Northern Territory from Syntheo, and Quigley is shortly planning to make a personal visit up north to check out the situation on the ground.
Do you see what’s happening here? If you look at NBN Co’s behaviour over the past six months, NBN Co is suffering signs of, as Greens Communications Spokesperson Senator Scott Ludlam, said last week “either high-level delusion or basic contract mismanagement”. Either NBN Co hasn’t understood its rollout well enough to predict how it’s going, or it’s not managing its contractors well enough to be able to predict how it’s going. And meanwhile, the company appears to be misleading the public about the status of that rollout.
There are also other signs that the company’s rollout figures are not to be trusted. It took NBN Co the better part two months to deliver basic figures for its rollout and the number of active connections it had on its network when a Freedom of Information request was filed for them in mid-December; and yet, figures released by NBN retailer ISP DeVoteD several weeks ago inadvertently revealed that internally, NBN Co did indeed have week-by-week updated rollout statistics that it discloses to its ISP partners but not to the public.
At this stage, basically every stakeholder involved in the NBN is concerned about it. The company’s own contractors are leaking like a sieve — to the extent that the Financial Review newspaper was able to predict almost to the exact number last week by how much the company’s rollout was delayed. Pro-NBN politicians such as Ludlam and Rob Oakeshott (who based much of his original support for the Labor Federal Government back during the 2010 Federal Election on its NBN policy) are publicly doubting the project. And even the company’s most enthusiastic retail ISPs, such as iiNet, which currently appears to be taking the lion’s share of retail customers, are concerned the rollout is progressing too slowly. TPG’s lack of interest in the whole endeavour is starting to look prophetic.
For the first time, ongoing comments by Shadow Communications Minister Malcolm Turnbull that nobody has any confidence that NBN Co’s current management can complete the rollout by its end date of 2021 are starting to be correct. Even the NBN’s keenest supporters are doubting it at this point.
There are also other reasons to doubt the NBN; reasons less related to its rollout. Quigley’s choice to hold a press conference last week to announce the delays literally as the Federal Labor Party was meeting to decide if it still had confidence in Julia Gillard as Prime Minister (Quigley’s press conference was held at 4pm; the Labor vote proceeded from 4:30) stunk, no matter how much Quigley would like to deny it, of an attempt to bury the NBN delays as a story.
Puzzling too, was Quigley’s admission that he had not spoken to Communications Minister Stephen Conroy that day about the delays, and the confirmation by NBN Co chairman Harrison Young — completely independently of any public relations processes which NBN Co or Conroy’s office might have wanted to put in place around his departure — that he would not seek another term as the leader of the company’s board.
Yes, to those following the NBN last Thursday, the whole project, like Labor’s leadership non-ballot, appeared to have descended into a farce, with its rollout falling around its ears, its contractors not delivering what they said they would, NBN Co’s own management attempting to conceal the truth from the public or just flat out resigning (as many NBN Co senior staff had already done over the years) and the company’s own media spokespeople refusing to comment on any of these issues until extremely late on Thursday afternoon.
The conclusion you might have reached by now — which is the conclusion I have reached — is that the NBN was a great idea from the Australian Labor Party — a great vision, a great dream, to resolve all of the problems in Australian telecommunications; but that Labor and NBN Co’s management is screwing it up; not delivering it as promised; mismanaging it, driving without both hands on the wheel. By the time the September election occurs this year, only a few hundred thousand premises will be able to connect to the NBN’s fibre, with a few hundred thousand more under construction. Not precisely the panacea which so many of us were expecting. And at that point, everything will change again.
For those still clinging to hope with respect to the NBN, the question now becomes: Can the Coalition, which is pretty much definitely going to win the September Federal Election (especially considering Labor’s implosion last week), salvage the project? Can it bring it back on track, impose better control over NBN Co’s contractors, expedite the rollout through a fibre to the node rollout? Can the Coalition bring the NBN back to the panacea which I described earlier in this article?
My own personal opinion is that no, it cannot.
As the ABC’s Technology + Games Editor Nick Ross has exhaustively chronicled, to start with, the Coalition’s rival NBN vision is nothing like Labor’s; on a range of fronts, it fails to deliver on the same aims when it comes to a number of basic service delivery outcomes. It won’t resolve many of the problems with Australia’s copper network, because vast chunks of that network will remain in place as the Coalition extends fibre only partway to Australian premises; and in the short to medium-term it won’t even attempt to target areas which are already covered by the existing and highly flawed HFC cable networks operated by Telstra and Optus. “Covered” in this case, of course, for those who live in apartments, means “not covered”.
As Quigley himself pointed out on the ABC’s Inside Business program over the weekend, there are also extensive questions right now as to how the Coalition’s plan will even work in practice, given that it will require NBN Co to come to some form of deal to leave Telstra’s copper network, and many of the IT systems associated with it, in place. Hell, no organisation globally has ever succeeded in upgrading a copper network to FTTN in the style the Coalition is proposing, apart from incumbent telcos. If NBN Co goes down this path, I’m not sure anybody knows right now whether such a model can even work. And if it does, does anyone reasonably expect it to be rolled out in a faster, better way than the current NBN vision is being rolled out? Surely it will suffer precisely the same problems, with the same contractors.
We can also expect many delays from the implementation of the Coalition’s NBN policy over the first few years of its life. Delays as the Productivity Commission painstakingly undertakes the study into Australia’s future broadband needs which Shadow Communications Minister Malcolm Turnbull has long promised. Delays while NBN Co renegotiates its massive contracts with Telstra and perhaps Optus. Delays while Turnbull forces NBN Co to reshape its entire rollout and billions of dollars of contracts around a fundamentally different rollout style. Delays while the Coalition evaluates the current NBN legislation and potentially alters it. Delays while it audits NBN Co’s finances. Upheaval while dozens (hundreds?) of NBN Co staff quit in protest and are replaced.
All of this, in the context of a Coalition front bench which has demonstrated time and time again — through the words of senior politicians such as Tony Abbott, Joe Hockey, Christopher Pyne, Warren Truss and others — that it does not fundamentally understand the technology underpinnings of the NBN, and may not agree with the views of its portfolio spokesperson (Turnbull) on the issue.
With confidence with regards to Labor’s management of the NBN rapidly eroding, can anyone have any confidence that the Coalition’s alternative will be any better? No. We simply cannot. The Coalition has not given us any reason to over the past several years; in fact, the opposite. As I’ve previously written, the Coalition is a total shambles when it comes to NBN policy.
Going back to the start of this article, I wrote that the wonderful thing about the NBN dream is that it’s a panacea: A universal remedy to all of Australia’s long-term telecommunications problems, designed to fix, once and for all, problems with dropouts, crappy speeds, poor telephone call quality, a lack of mobile reception, exorbitant prices or even an inability to get fixed-line broadband at all in certain areas.
The NBN is still a wonderful dream; wonderful enough that anyone from overseas who visits Australia tends to praise it as a fantastic undertaking that they wish their own government had undertaken.
But let’s be real about this: For the foreseeable future, the NBN is going to remain just that — a dream. The NBN is not coming to your house or business any time soon, and in the next five or so years Australia can expect the current disgraceful level of political infighting about the project and delays in its rollout to continue. This dreadful situation is not going away any time soon, and neither are the problems with your broadband connection. So get used to the dropouts.
The NBN has always been a fantastic dream. But all dreams must end as we wake to grisly reality. This project has been mismanaged by Labor, and is about to be screwed over wholesale by the Coalition. At this stage, the suggestion by then-Telstra chief executive Sol Trujillo back in 2005 that the Government pay Telstra a few billion to deploy FTTN itself (and lock out competitors along the way) is looking more and more like it would have been a winner, comparatively. We may not have had competition in the telco landscape, and we may not have had fibre to the home. But at least we would have had something.
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