news Communications Minister Anthony Albanese has controversially claimed that the Coalition’s fibre on demand service could cost end customers as much as $50,000, as the debate escalates about which major side of politics is presenting a more accurate picture of National Broadband Network finances going into the Federal Election.
Under Labor’s NBN policy, some 93 percent of Australian premises will receive fibre directly to the premise, delivering maximum download speeds of up to 1Gbps. The remainder of the population will be served by a combination of satellite and wireless broadband, delivering speeds of up to 25Mbps.
The Coalition’s policy will see fibre to the premises deployed to a significantly lesser proportion of the population — 22 percent — with 71 percent covered by fibre to the node technology, where fibre is extended to neighbourhood ‘nodes’ and the remainder of the distance to premises covered by Telstra’s existing copper network. The Coalition’s policy will also continue to use the HFC cable network operated by Telstra and will also target the remaining 7 percent of premises with satellite and wireless.
According to the Coalition’s media release issued in April upon the policy’s launch, the Coalition’s policy is based on the core pledge that the group will deliver download speeds of between 25Mbps and 100Mbps by the end of 2016 — effectively the end of its first term in power — and 50Mbps to 100Mbps by the end of 2019, effectively the end of its second term. According to the Coalition’s statement, the 25Mbps to 100Mbps pledge applies to “all premises”, while the higher pledge by 2019 applies to “90 percent of fixed line users”.
On additional feature of the Coalition’s policy will see users offered a so-called ‘fibre on demand’ extension services where they will be able to pay to have fibre extended from their local node to their premises.
The Coalition believes it will be possible to offer this kind of service on a similar basis as it is offered in the UK, where wholesale telco BT Openreach is offering so-called ‘fibre on demand’ extension services at a price depending on how far premises are from their nearby node. According to OpenReach’s price list, costs for the fibre extension service include a £500 (AU$823) initial connection fee and ‘annual rental’ cost of £465 (AU$765), plus a specific charge ranging from £200 (AU$329) up to £3,500 (AU$5,762), depending on the distance premises are from local nodes. Shadow Communications Minister Malcolm Turnbull has stated he believes the service will be available for up to several thousand dollars in Australia.
However, an article published in The Australian newspaper yesterday (paywalled) claimed the real figure could be up to $50,000, based on current contractor rates involving extensions of Telstra’s network. In a media release issued yesterday, Albanese appeared to take The Australian’s calculations as gospel.
“Contractors in the Australian today have confirmed that families and businesses will be slugged as much as $50,000 if they want to connect to superfast fibre broadband if Tony Abbott wins the election,” stated Albanese.
“Under the Coalition’s second rate plan, fibre optic cable will be run to a fridge-sized cabinet plonked on everyone’s street corner. Last century’s copper wire is here to stay, with those wanting to connect their home or business to the latest fibre technology having to pay as much as $50,000 out of their own pockets, plus an ongoing rental fee of $800 a year.”
“Given these extraordinary costs, it’s no wonder that businesses and farmers are amongst the latest to give their backing to Federal Labor’s NBN, which connects fibre all the way to their premises for free.”
“The Rudd Labor Government believes that high-speed, affordable and reliable broadband is an essential utility – like water and electricity. It shouldn’t depend on where you happen to live or how much money you have. If you want the National Broadband Network, you have to vote Labor.
Whether it be cutting the Schoolkids bonus, cutting superannuation contributions, or charging families as much as $50,000 to connect to superfast fibre broadband, if Tony Abbott wins, Australian families, businesses, and farmers will lose.”
In a separate release, Turnbull stated that The Australian’s article contained “a number of inaccuracies and misleading statements”.
“The article states that the cost of obtaining access to Telstra’s duct network is $5 per metre – stating that this could cost homeowners more than $2500 to connect to fibre,” wrote Turnbull. “However, the NBN Co has already paid billions of dollars to acquire access to Telstra pits and ducts.”
“It also states that terminating fibre in a household can cost up to $4000. Yet the article is entirely uncritical of Labor’s claim on April 19 that the customer connect portion of the network is costing $1,100 per household.”
“Above all, it is wrongheaded to assert that a particular home-owner would bear the end-to-end costs of a fibre-on-demand deployment from a node to their premises. If The Australian ever bothered to interview anyone at BT Openreach, which it quotes in its story, it would have reported that the costs take into account the deployment of shared network infrastructure.”
“That is, once a single household requests a fibre on demand product, it becomes cheaper to provision fibre to anyone else in the street whose premises have been passed to order a service at a later date, and that is reflected in the deployment charges.”
“But most baffling are the contradictions in the article. If it is going to cost up to $50,000 to connect some houses via FTTP, how will the NBN be able to avoid those costs? And if not, how can they possibly say that the average cost to connect a household in Australia will be $2,400? And if it is going to cost up to $50,000 for some houses to get FTTP, isn’t it worth trying to avoid that very high cost if you can get those customers a service level that will satisfy their needs the foreseeable future?”
The news comes as both major sides of politics have been engaged in an election debate involving claim and counter-claim regarding the NBN, in which the truth has often been a casualty of war. Labor’s primary contention is that the Coalition’s NBN policy relies on outdated technology, regarding the use of copper cable in its FTTN strategy, although FTTN networks are used in most first-world countries successfully. The Coalition, for its part, has refused to fully cost its own NBN policy, but has controversially claimed that Labor’s NBN project could cost up to $50 billion more than Labor expects. Based on NBN Co’s current projections, the claim is not based in fact.
I don’t have the time this morning to go into detailed analysis of this situation, but let me say this: I don’t believe the claim that the Coalition’s fibre on demand service will cost $50,000 a pop has any basis in reality. The UK experience clearly shows the costs will be dramatically less, and Turnbull is right that most of the costs will be absorbed by NBN Co in any case. Sure, the UK is different from Australia in terms of its population density, but it’s not different to the extent that FTTP extension costs will be ten times higher. With this claim, as with many of his recent claims, Anthony Albanese is on shaky ground.