news The Federal Opposition has again incorrectly alleged that it could save money by cutting the Labor Federal Government’s multi-billion dollar National Broadband Network project, despite financial projections which show the project is likely to make the Government billions.

The NBN is not listed in the Federal Budget as an expense because it is technically a government investment and will consequently not divert money away from other projects. This accounting technique has been verified by economists from the Parliamentary Library of Australia as an “internationally accepted accounting standard”.

In addition, in the long term, NBN Co’s projections show the network is slated to make a return of between 5.3 percent and 8.8 percent on the up to $44.6 billion that will be invested in the network — meaning it will return an amount ranging from $1.93 billion to $3.92 billion, as well as delivering Australia a fibre optic telecommunications network to replace Telstra’s aging copper infrastructure.

In an interview with ABC News 24 on Monday, Shadow Finance Minister Andrew Robb was questioned by presenter Lyndal Curtis on the Coalition’s ongoing claim that cutting the NBN would save money.
“On the question of spending NBN savings on easing traffic congestions, that’s a saving you then couldn’t book as a saving if you accept, which the Government doesn’t, that the NBN is effectively on the books. Is that promise, spending some of the money that you were counting on to save?” Curtis asked Robb.

Robb replied that the NBN was “borrowing money” — “$50 billion they’re going to borrow in the end, $37 billion we know for sure but it looks like another $50 billion”. “That’s got to come from somewhere. That’s money that could have been invested somewhere else, in a more productive outcome and whether it’s government money or private money, it is money that could be spent on things that would have far greater productivity improvement and we could be having an NBN at much lower cost,” Robb said.

“We could get the best of both worlds but the bottom line is that that money, it’s a combination of private and public. It’s money that is being very inefficiently invested. That money could be going to other purposes and government policy can help that happen but not necessarily always with government putting taxpayers’ money into the mix.”

However, it is believed that Robb’s statement that the money could have been spent on other matters is technically incorrect.

The NBN funding will not divert money from the Federal Budget, as it does not appear on the budget as an expense. And with the project expected to make money in the long term, cancelling it would mean the Government would not make the expected positive return on the project, meaning those extra funds would not be available in the long term for other projects. Ratings agency Standard & Poor’s reaffirmed Australia’s AAA credit rating in September 2011, meaning it is not likely that the Government will have problems using debt to fund the NBN.

Oversight
Separately yesterday, Robb demanded in a statement that Finance Minister Penny Wong “stop distancing herself from the NBN” and take a more active oversight role on a project which Robb claimed threatened “to be a massive drain on government finances”.

Robb has written to Wong in her role as shareholder minister for the NBN (Communications Minister Stephen Conroy is the other NBN shareholder minister), stating that the project needed heightened vigilance and accountability.

Robb called on Senator Wong to release monthly financial statements for NBN Co in her name. “In addition to updates regarding key financial activities, including equity injections, these statements should also provide updates in relation to contracts awarded, other acquisitions and expenses as well as staffing levels,” Robb said.

Robb said it had been reported that NBN Co had already awarded contracts worth more than $7 billion, but the public had “heard nothing from the Finance Minister about whether these decisions will present value for money to taxpayers”.

“What ‘red flag’ mechanisms are in place to alert Penny Wong to potential NBN Co activities that may not present best value outcomes and what veto authority does the shareholder minister have over decisions that are at odds with the interests of taxpayers?” Robb asked. “Penny Wong has tried to distance herself from the NBN which could prove to be the nation’s biggest white elephant, when she should be all over it. She has an obligation to become more actively involved and sharpen her clear oversight role,” he said.

So far, there has been no indication that NBN Co has blown its budget or had financial impropriety within its operations. The organisation reports regularly to the Federal Government, is subject to Freedom of Information laws, and also regularly answers questions from Labor, Coalition, Greens and independent parliamentarians through a series of parliamentary committees devoted to overseeing the project. The Federal Auditor-General also has the power to investigate NBN Co if it deems it necessary.

Wong, according to AAP, responded to Robb’s statement by stating that Robb’s assertion that there was no information, accountability or transparency was “simply unfounded”, with the Finance Minister to reply to Robb’s letter “in due course”.

Image credit: Office of Andrew Robb

news Communications Minister Stephen Conroy has demanded that the Coalition disclose some basic details of its rival broadband policy, noting that Shadow Communications Minister Malcolm Turnbull has not substantially outlined the policy further in public since a landmark speech on the issue in the middle of 2011.

The clearest indication currently available of the Coalition’s rival telecommunications policy is contained in a speech given by Turnbull in August last year, in which he proposed focusing on upgrading the HFC cable networks operated by Telstra and Optus, splitting Telstra into wholesale and retail arms, and using wireless and satellite solutions to serve remote regions.

Since that date, Turnbull has also appeared to focus heavily on the potential for fibre to the node technology to serve Australia’s future broadband needs, in comparison with Labor’s National Broadband Network policy, which focuses on more expensive and technically capable fibre to the home technology.

However, in a statement released late last week, Conroy criticised Turnbull for not releasing significant detail of the Coalition’s policy, demanding that the Shadow Minister “come clean” on the Coalition’s plans. “Six months ago today Malcolm Turnbull addressed the National Press Club on the National Broadband Network. For the rest of 2011 and already in 2012 he has been silent on any policy detail,” Conroy said.

“In one speech, three media releases and 15 tweets this year on the NBN he has continued his negative campaign and not provided an actual broadband policy. Meanwhile, his Coalition partners continue to call for fibre to the home in regional Australia, while his leader tells Australia this week we should invest in last century road and rail infrastructure not 21st century broadband.”
Last week, Conroy pointed out, Turnbull had linked to a Financial Times article on Twitter about a fibre to the node deployment by British telco BT.

“This is the same story he told us about in December,” Conroy added. “But he gives no detail on how it would be, or even if it can be, delivered in Australia. How many powered cabinets will be required to get within 400 metres of every premise? What is the actual speed that customers get rather than just ‘up to 80 Mbps’? How much will it cost? The Coalition needs to come clean – what is their actual policy, what technology do they propose to use and what will it cost.”

Conroy said Turnbull should answer the following questions about the Coalition’s broadband policy:

• How will the coalition achieve the structural separation of Telstra?
• How much will prices increase in regional Australia without a cross subsidy? How much will his “voucher” system for regional Australia cost?
• How many households does Mr Turnbull plan to serve with HFC?
• How many households does he plan to serve with FTTN? How many FTTN nodes does he plan to build?
• How many households does he plan to serve with wireless?
• What does he really think the requirements are for bandwidth in 2020?
• When does he expect his network will need to be replaced by FTTH (he calls it a migration path)?
• How much will his network cost?
• Why does he consisently misrepresent the $35 billion capital cost of the NBN?

The Office of Malcolm Turnbull has been invited to respond to Conroy’s statements.

opinion/analysis
It must be snowing in hell today, because I find myself in complete agreement with Conroy about the lack of detail which Turnbull has so far released about the Coalition’s broadband policy. As I wrote in November last year:

“After my initial burst of enthusiasm for Turnbull’s plan, the Shadow Communications Minister’s behaviour over the succeeding months — in which he has done virtually nothing to address its criticism or expound its merits in public — has done much to sour me on it. Watching Turnbull in action in that period, I often find it hard to believe that he has the energy and determination to see his rival proposal through, should he be appointed Communications Minister in a Coalition Government.”

No doubt it feels nice for Turnbull to be featured by outlets such as the Global Mail on its launch day as Australia’s “Prime Minister in waiting”. And it’s also no doubt nice for Turnbull to make appearances on prime-time Sydney radio discussing the NBN with sympathetic hosts and taking the chance for a few below the belt potshots at Conroy and the NBN project in general.

But policy development isn’t about feeling nice. It’s about substantive outcomes. Right now it seems very likely that the next Federal Election (generally expected to be held in 2013) could see a change in government, with a Coalition team under Opposition Leader Tony Abbott considered likely to knock Labor off its perch. With Abbott having threatened several times to tear up the NBN project, I think it’s about time we get some certainty from the Coalition about just what it’s proposing to replace it with. This is not a joke. This is about Australia’s future.

Image credit: Kim Davies, Creative Commons

fake news The Federal Opposition today released a comprehensive new broadband policy to rival Labor’s big-spending National Broadband Network project, describing its own initiative as a landmark ‘Fibre to the Nothing’ (FTTN) proposal.

Speaking at the National Press Club in Canberra today flanked by Opposition Leader Tony Abbott, Shadow Communications Minister Malcolm Turnbull told an audience of senior political figures and high-ranking executives from the telecommunications and technology industries that the new policy would be based on three key planks.

Firstly, he said, if it won government in the upcoming 2013 Federal Election, the Coalition would roll out fibre broadband infrastructure “nowhere”. “Nobody” in Australia would be provided with next-generation fibre broadband, Turnbull said, because there was “no demand” for the significantly faster speeds which it would provide compared with those available on the existing copper network, and “no-one” wanted to pay higher prices for faster broadband that would “not be used”.

Secondly, Turnbull said a Coalition Government would “never” deal with the issue of Telstra’s vertically integrated operations, which bitter rivals such as Optus, iiNet and Internode have long claimed prevented them from fairly competing in the broadband market, with Telstra being accused of playing favourites with its own retail division. There was “no need” to separate Telstra, according to the Member for Wentworth, as the telecommunications sector had “no shortage” of existing competition.

Lastly, Turnbull added that rural and regional areas around the country would receive “nil” in terms of total subsidies to allow them to purchase broadband services at comparable prices to metropolitan areas in Australia’s major cities. Citing expert commentary from leading economists, Turnbull said investing in this area would unnecessarily lead to “negative” outcomes for competition, distorting the industry in directions that would not serve consumer outcomes, he said.

“Nowhere, never, nil,” Turnbull told the audience emphatically at the conclusion of the speech. “It’s a comprehensive package — we’ve left nothing out.”

Speaking after Turnbull, Opposition Leader Tony Abbott praised the new ‘FTTN’ policy, saying the Coalition’s approach was sharply differentiated from the NBN strategy of the current Labor Federal Government, which he described as a “white elephant”. “The beauty of our policy,” he said, “is the amount of public money that we’ll be allocating to it: Nothing.”

The policy was immediately praised by the Economist Intelligence Unit, which had issued a report in October describing Labor’s NBN policy as the “most extreme” example of government intervention in high-speed broadband planning globally. At the time, Turnbull had used the Economist’s statement to brand the NBN policy as “the telecommunications version of Cuba”.

In a new statement this week, the EIU stated that the Coalition’s plan was the “most conservative” example of government intervention in a telco sector globally. “At the far end of this range of intervention — even further than Antarctica — is the Australian Coalition, which has pledged the lowest level of total public funds pledged, due to its plan to create, own and operate an ultra-fast fibre network in virtually no parts of the country,” the EIU said.

However, not everyone was enthusiastic about the Coalition’s new policy.

Optus chief executive Paul O’Sullivan said it wasn’t appropriate for the Government to do “nothing” about the dominance of Telstra over the telecommunications industry. “From its humble beginnings in 1992, Optus has grown to become a company which today supports more than nine million mobile services and one million fixed and broadband customers,” O’Sullivan said. “We’ve achieved all that through doing almost nothing.”

“But we could never have achieved that if the Federal Government had also done nothing,” the Optus chief added. “It’s important that the Government does something, or else the entire telecommunications industry won’t be able to do anything, and it should be obvious by now that nothing will come of that. For heaven’s sakes, the industry can’t just be left alone to do everything!”

However, in a separate interview following his speech, Turnbull rejected O’Sullivan’s comments. “[Communications Minister] Stephen Conroy gave the industry everything,” he said. “And look where it got him: Nowhere. Now we’re proposing something so simple that it can’t help but work: Nothing. Under our policy, we’ll nip this National Broadband Network policy in the bud, so that it never gets off the ground. The industry will have no place left to run to and no-one to bail it out.”

One final brief comment on the matter came from the maverick chief executive of Internet service provider Exetel, who has been consistently outspoken in his criticism of the NBN policy. Linton posted a brief blog post discussing the National Broadband Network policy this afternoon. “I always knew it would come to nought,” he said.

This article is satire … did we get you? ;)

news The Opposition has formed a new working group to deal with the issue of online safety for Australian children, stating that its rival policy will avoid the “ham-fisted” “cyber-censorship” mandatory Internet filtering approach that remains Labor Federal Government policy for dealing with the issue of how children are protected from Internet nasties.

Labor’s highly controversial Internet filter policy was introduced before the 2007 election and would have seen Australian ISPs forced to block a blacklist of sites containing illegal content as defined by the Australian Communications and Media Authority. However, it has not been implemented yet, due to a high degree of public opposition to the proposal that has seen both the Coalition and Greens oppose it, meaning Labor is unlikely to have enough parliamentary support to push through necessary legislation for the policy.

Opposition Leader Tony Abbot issued a statement last week noting that in a relatively short period of time, the Internet has transformed the lives of Australians. “However, there are also risks, and children are particular vulnerable,” Abbott said. “These risks include children being exposed to illegal or inappropriate content and the increasing use of social media as a forum for online bullying.”

“Today’s online environment,” Abbot added, “extends well beyond accessing websites and email through the family desktop computer. It also includes a range of interactive activities like social networking sites, SMS messaging, Skype, apps and games. It is also becoming far more accessible with children and young people connecting with each other through computers (in homes, schools and libraries), game consoles and mobile devices like smartphones and tablet computers.”

Abbott said the Coalition would not seek to repeat “Labor’s ham-fisted attempt to put a filter on the internet” or to “hinder the dynamic nature of the online environment”. “This is about protecting cyber-privacy. It’s not about trying to enforce cyber-censorship,” he added. And separately, at a press conference last week: “… this is not about censorship of the internet. I don’t believe in internet censorship, never have and never will. This is about online protections, not about online censorship.”

However, the Liberal Leader added, the Coalition did want to assist and equip parents and teachers in their work protecting children and preparing them for adulthood.

To this end, he said, said the Coalition would set up a working group to tackle the issue, with the aim of reporting back to him by mid-2012 on how the issue could be tackled. The group will be chaired by Liberal MP Paul Fletcher, who is one of the Opposition’s chief parliamentarians interested in telecommunications, with a background as a senior Optus executive.

Also joining Fletcher in the group will be Senator Gary Humphries, MP Alex Hawke, MP Natasha Griggs, MP Wyatt Roy, MP Patrick Secker, Senator Stephen Parry, Senator Bridget McKenzie and MP Luke Simpkins. Hawke is notable for regularly commenting on matters in the technology portfolio, while Roy is the Federal Parliament’s youngest member, at the age of 21.

Abbott noted that the working group would also work closely with shadow ministers with portfolio responsibility for online safety — “particularly the shadow ministers for education and communications” (Malcolm Turnbull and Christopher Pyne). A series of roundtables and community forums will be held across Australia as well as online over the coming months to take feedback on the issue.

At a press conference last week, Abbott took a question on the extent to which Internet service providers — which have largely remained opposed to the Internet filter project — would be involved in the consultation. “Look, certainly we welcome the input from the sector and yes, internet service providers are a very important part of the sector,” Abbott said. “We welcome their input. As I said though, our focus is going to be on hearing from parents, teachers and other carers, what tools do they need, do they think they need to keep our kids safe.”

However, Abbott also noted that one of the “real problems”, “one of the very hard problems” to deal with, is what could be done about web sites based overseas, “which contain offensive and defamatory material”. It is this problem which the Government’s Internet filter policy has been aimed at resolving.

opinion/analysis
It seems very much like someone — likely Paul Fletcher — has gotten to Abbott and convinced him that the Coalition needs to take a proactive stance on this issue, as it is an obvious area where Coalition policy can be demonstrated to be more desirable than Labor policy, given the unpopularity of the Internet filter policy.

In addition, by investigating the issue, Abbott can be seen to be actively doing something about it — which should do much to placate some of the more conservative elements of society, which have been demanding action on the issue from both parties for years.

Now, I won’t say that I am completely confident of the Coalition’s stance on protecting children online, as we have yet to see what the working group will recommend, come the delivery of its report in mid-2012. However, I have to say that early indications are positive. For once, Abbott and his team appear to understand what they are dealing with when it comes to technology, and I am expecting good things to come out of this initiative.

Certainly, anything that the Coalition proposes couldn’t possibly be a worse policy than Labor’s Internet filter, which still remains on the books.

news The Competitive Carriers’ Coalition (CCC) this week objected strongly to the Government’s decision to exempt Telstra, the nation’s largest telco, from its own regulations in more than 100 locations around the country, saying that it will leave thousands of Australians without the full benefits of increasing competition in broadband markets.

The CCC represents a number of telcos such as Primus, iiNet, AAPT and more — but not Telstra. The organisation’s response was in reaction to the new accord, signed by Telstra this week with Communications Minister Stephen Conroy, which grants it exemptions from meeting the Government’s and National Broadcast Network (NBN) Co’s regulations for the setup of new fibre infrastructure.

Laws passed in 2011, meant to safeguard NBN Co against unfair price competition, require that any company that builds a fibre to the home network has to operate the network in the same way as the wholesale-only NBN does. In return for the exemption, announced Minister Conroy, Telstra would provide what he described as “an open access wholesale service” on fibre networks it is currently deploying in South Brisbane and also in some new housing estate projects.

“The decision gives Telstra a green light to discriminate against consumers who choose to buy services from competitors,” a CCC spokesperson said. “The exemption is to laws that the Government introduced after years of complaints from competitors about Telstra’s conduct. This legislation was supported by competitors who had watched Telstra selectively replace its copper access network with fibre to the home or fibre to the node, and in the process cut off competitors who had paid Telstra to put their equipment into Telstra exchanges.”

The CCC also criticised the “open access” arrangement approved by Minister Conroy, terming it as “vastly inferior and more limited than that offered by NBN Co” and “less competitive to the service Telstra is required to offer over its copper network.”

Some of the flaws in the exemptions, according to the CCC, are:

• The arrangement will not provide competitors with access to the same services that NBN Co will be offering, making it difficult for them to transition to the NBN;
• Of the three speeds offered by Telstra, the 8Mbps option does not meet the national commitment for 12Mbps;
• There is no commitment from Telstra that the wholesale services will be equivalent in any way to Telstra Retail services, opening the door to a return to the worst competitive abuses of the past;
• There is no requirement for Telstra to provide a wholesale equivalent of any other retail service it offers over the networks;
• The wholesale services are inferior to the services that could be offered through the ULLS, because Telstra has to provide only three wholesale service options that limit competitors’ ability to provide different and innovative retail products;
• The wholesale services Telstra has offered do not include a symmetrical service, despite the Government having repeatedly said that this was a key reason for preferring fibre to the home as a technology, and;
• The affected communities will not be covered by the new obligations Telstra will face if its own Structural Separation Undertaking is accepted by the ACCC.

Telstra has confirmed that it will not address several of the complaints by other ISPs about the way it is handling its new fibre rollout in the South Brisbane exchange area. Issues range from the company’s wholesale prices—which are claimed to be markedly higher than equivalent broadband prices on the previous copper network—to the lack of equivalent services such as the ability to stream IPTV services via multi-cast or offer so-called ‘naked’ services without an attached telephone line.

news The nation’s largest telco Telstra has confirmed it will not address several of the largest complaints by other ISPs about the way it is handling its new fibre rollout in the South Brisbane exchange area, despite signing a new accord regarding the region with Communications Minister Stephen Conroy.

Telstra has chosen to replace the copper connections to about 20,000 premises in the region as the exchange — where the copper cables terminate — is being closed in order to make way for the new Queensland Children’s Hospital in the area. The region is one of the first in Australia to receive fibre services to the home — but is not part of the Federal Government’s flagship National Broadband Network project, although the long-term plan is for the infrastructure to become part of the NBN.

However, over the past year other major ISPs such as Optus, iiNet and Internode have expressed strenuous complaints about Telstra’s handling of the situation, with issues ranging from the company’s wholesale prices — which are claimed to be markedly higher than equivalent broadband prices on the previous copper network — to the lack of equivalent services such as the ability to stream IPTV services via multi-cast or offer so-called ‘naked’ services without an attached telephone line.

On Monday Communications Minister Stephen Conroy announced that Telstra would provide what he described as “an open access wholesale service” on fibre networks it is currently deploying in South Brisbane and also in some new housing estate projects.

For customers in those new housing estates, the deal is good news. As iTNews has documented in an extensive article on the subject, the deal will see Telstra’s fibre in those area opened up to retail competition for the first time, with rival ISPs like iiNet, Optus and TPG able to provide services over Telstra’s network, if they sign supply arrangements with the telco.

However, in both the new housing estates and in its South Brisbane network, Telstra has stated that it will not provide ‘naked’ services or allow multi-cast IP video services that would allow the ISPs’ own video platforms (typically FetchTV) to operate. “There is no change from the [South Brisbane Exchange fibre arrangement] that we have detailed with our customers in previous months,” a Telstra spokesperson said. “An underlying voice service is required for Telstra wholesale and retail customers because this is the way the network is configured and multi-cast is not supported by the network.”

In practice, what the deal signed between Conroy and Telstra means is that Telstra will be exempt from having to meet the Government and NBN Co’s regulations for the setup of new fibre infrastructure. Broadly, the regulations are meant to ensure that any new fibre infrastructure built around Australia has to match the standards of the NBN, so that NBN Co will not overbuild fibre infrastructure in areas where it already exists.

“We welcome this decision to exempt the South Brisbane Fibre network and other smaller specified ‘Velocity’ fibre networks these networks are set out in the Velocity networks exemption) from the Government’s ‘level playing field’ obligations,” the Telstra spokesperson said. “It provides Telstra and its wholesale customers with certainty concerning the availability of a broadband fibre product in these areas. Telstra has agreed to offer a Fibre Access Broadband (FAB) service to wholesale customers as a condition of this exemption.”

Telstra said it had been in discussion with NBN Co in relation to the South Brisbane exchange area — as this area is eventually expected to become part of the NBN. “These discussions continue,” the telco said. And it added that it had signed commercial deals in the area with 20 customers (usually retail ISPs) of its wholesale division.

Conroy said the deal would facilitate competition in the fibre areas covered by the arrangement, and it would be subject to scrutiny by the Australian Competition and Consumer Commission. The ACCC has already stated that it is satisfied with Telstra’s arrangements with customers in the region. However, it is likely that Telstra’s reluctance to offer naked broadband services and IPTV services over its fibre networks will continue to rankle other ISPs and their customers.

In addition, there are other issues which Telstra is facing in the South Brisbane area that have the potential to spill over into the new housing estate areas where it will also begin to open its networks to competition.

Internode has complained publicly about poor Telstra pricing in the South Brisbane exchange area, stating that its own higher pricing in the region was based on the “crazy” underlying wholesale costs which it said Telstra was charging for other ISPs to access its new infrastructure. TPG is also charging higher prices in the region than on other copper infrastructure, and it remains unclear what Telstra’s wholesale pricing on the fibre infrastructure in the new housing estates will look like.

opinion/analysis
It remains unclear why both the ACCC and Communications Minister Stephen Conroy are unwilling to take more drastic action with respect to Telstra’s obviously uncompetitive actions with regard to its fibre networks located around Australia.

It seems like common sense that Telstra should not be simply allowed to replace its existing copper network with a fibre network in certain areas and then be able to completely change its wholesale service offering to retail ISPs, charging them radically different prices for access to the infrastructure and not offering fairly basic services such as broadband without a compulsory associated telephone line. Especially when it seems like much of this infrastructure will eventually become part of the National Broadband Network.

I believe Telstra is not speaking correctly when it says it cannot support naked broadband or multi-cast IPTV streaming services over these fibre networks. I am very sure that this is technically possible. The phrase ‘don’t rock the boat’ comes to mind when I think of the actions of the ACCC and Conroy with regard to this contentious and ongoing issue.

Image credit: Telstra

analysis Yesterday Tony Abbott took to the airwaves on Sydney’s 2UE radio station to discuss Labor’s flagship National Broadband Network policy. But unfortunately, aided by a rather sympathetic host, the Opposition Leader got a few facts about the project wrong. So it’s up to us to correct them.

Before I begin this dissection of Abbott’s comments, let me state that I don’t see this article as being an opinionated one or one biased towards either side. As I have previously noted, there are many things to like about the Coalition’s more minimalist telecommunications policy which it is promulgating as a response to the NBN, and at Delimiter we strive to report fairly on the national NBN debate so that both sides of politics can have their say.

However, that discussion must be based on facts to be useful and move forward, and Abbott’s comments yesterday demonstrated either a lack of knowledge about the subject which he was discussing or a willingness to mislead the public about several of the underpinnings of the NBN project and the recent debate surrounding it. While it’s important to report their views, it’s also important for the media to point out where politicians have published misleading statements. With that out of the way, let’s go through some of Abbott’s statements, which can be heard in full online here.

1. “The news today that there’s about 2500 fibre subscribers and about 1500 wireless subscribers just confirms that this is going to be one of the all-time great white elephants.”

What Abbott appears to be alleging here is that NBN Co is progressing too slowly with respect to its ability to attract subscribers to its network infrastructure; the numbers, the Opposition Leader is implying, are not high enough.

However, if you closely examine NBN Co’s corporate plan, it seems relatively clear that the company is actually more or less on track with respect to the numbers of “active subscribers” which it has signed up, through retail Internet service providers, to use its network. As we detailed yesterday, NBN Co had not, by June 2011, planned to sign up any customers, apart from those who are using fibre networks in areas such as new housing estates — networks that may have already been built by other companies and used by NBN Co.

By June 2012, NBN Co is planning to have signed up some 116,000 customers in total — but again, the vast majority of these will come from so-called ‘greenfields Build-Operate-Transfer (BOT)’ networks. Only a small handful will come from customers on its own networks, and given that NBN Co only launched commercial services on its networks in October, and that those networks have so far only been rolled out to a fraction of the population, we’d say that having some 4,000 active subscribers at this point is pretty much a decent result for NBN Co, especially given that 2,300 of those are on fibre. That’s why NBN Co issued a media release with the news. It was proud of it. However, it appears that Abbott has misconstrued NBN Co’s numbers.

2. “Vast amounts of money spent. $50 billion plus, and going up all the time, to give us something that most people don’t want, don’t need and don’t want to pay more for.”

In actual fact, the Coalition’s own telecommunications policy aims to provide Australians with very much the same outcomes that Labor’s NBN policy does; the two policies simply vary in the ways that they seek to achieve this aim.

The debate over the need for higher speeds has virtually disappeared over the past six months, and it has become common for Shadow Communications Minister Malcolm Turnbull to highlight how fibre to the node and HFC cable technology (as opposed to the fibre to the home rollout of the NBN) can provide similar speeds to the NBN — higher than 50Mbps and even up to 80Mbps and beyond. By releasing such a policy, the Coalition is directly suggesting that Australia does need higher broadband speeds than we currently have access to, in contrast to Abbott’s statement. It’s just that the Coalition doesn’t want to spend the same amount of money as Labor on this kind of scheme.

In addition, there is ample evidence that Australians do want higher broadband speeds and consider telecommunications infrastructure important. A Liberal Party report handed down by former Howard minister Peter Reith in July to the Federal Executive of the Liberal Party, for example, found that a failure to adequately respond to Labor’s NBN policy was a key reason for losing valuable votes in the 2010 Federal Election, especially in the sensitive Tasmanian electorate, which is receiving the network before the rest of the nation. Abbott received that report and surely read it.

3. “… there’s about a thousand people working for the NBN, that’s one employee for every four subscribers, and the average wage of the NBN is $165,000. Now this is the best remunerated company in Australia, and one person earning $165,000 people per year for every four subscribers, and the billion dollars that they have spent so far on the rollout works out at $250,000 per connection.”

Actually, if you examine the salaries of NBN Co’s top-earning staff, you’ll find that NBN Co is one of the poorest-remunerated major companies in Australia’s telecommunications sector, despite the fact that over the past several years it has poached high-quality senior staff from all of Australia’s major telcos.

NBN Co chief executive Mike Quigley, for example, earned $1.9 million in 2011, less than half of what Telstra CEO David Thodey did (he earned $5.1 million) and Optus CEO Paul O’Sullivan ($3 million). Similarly, other top NBN Co executives such as Patrick Flannigan (who has since left the company), Gary McLaren, Tim Smeallie, Jim Hassell, Kevin Brown and others are all earning less than $1 million per year — usually around the $700,000 to $800,000 mark. The details are in NBN Co’s latest annual report (PDF).

To say that these salaries are laughably low compared to what many of these executives could pick up by working for Telstra, Qantas, or other companies (as several of them have) is an understatement. Telstra’s top management, for example, are usually on at least $1.5 million per year and often higher — up to $3 million or $4 million a year. You can check these details for yourself in Telstra’s latest annual report (PDF).

We don’t have as much transparency with respect to the rest of NBN Co’s staff, and certainly the company would have had to pay a decent rate to head-hunt Australia’s top telco engineering talent the way it has. If you’re revamping Australia’s entire fixed-line broadband infrastructure, you need the best. Even so, I’m betting many of NBN Co’s employees took a pay cut to altruistically join what they see as a worthy national project.

4. Tim Webster: “I don’t think my family’s very unusual, we’ve got a couple of computers at home, a laptop, an iPad, we’re wireless, quite happy with the speed, quite happy with the service, and people will shop around, Tony, that’s the thing, and you will get the best deal. You won’t go to the NBN because it’s the government’s organisation, will you?”

Tony Abbott: “Well exactly right, in fact many people I think will shun the NBN precisely because it is the government organisation. Why do deals with a dodgy government. But look, everyone is connected these days.”

Um … firstly, Tim, your home connection is likely Wi-Fi hooked up to a fixed-line ADSL or HFC cable broadband connection. It’s not “wireless” in the sense that the Coalition usually talks about broadband. “Wireless” in the NBN debate means 3G or 4G mobile broadband networks — and I’m betting you don’t have that.

Secondly, it is factually incorrect for Abbott to state that many people will shun the NBN infrastructure because it is a government-owned organisation which built it and operates it. For starters, no Australian will buy broadband directly from NBN Co; under the law NBN Co can only sell services to retail ISPs, which will sell those services to consumers. It will be the same ISPs offering services over the NBN as currently operate in Australia — Telstra, Optus, iiNet, TPG and Vodafone — and they won’t be “shunned”.

But the most important issue here is that both Abbott and Webster are presenting NBN sign-ups as though Australians will have a choice. They won’t. If you want fixed-line broadband infrastructure, in future you will buy it through the NBN fibre connection to your house. Under current policy, both ADSL and HFC cable networks in Australia will be shut down for broadband. So yes, you WILL go to the NBN. Because you will have no choice.

5. “All the NBN is doing is slowly digging up streets to connect fibre to 93% of Australian households, whether they need it, want it, or can afford to pay extra for it. And that’s why it is such a monumental waste of money and such a misdirection of resources.”

In this sentence Abbott appears to be suggesting that Australians will pay extra for the NBN. This statement is factually inaccurate.

In November last year, Optus released the first tranche of its pricing for NBN services. The plans were interesting because in virtually every single aspect, they represented better value than the telco’s current ADSL plans — and for exactly the same price. And increasingly, this is not an unusual situation. iiNet, Internode, Exetel and Primus have also released NBN pricing, and in all cases the pricing was pretty similar to current ADSL broadband pricing — but offering vastly better services over the NBN’s improved fibre infrastructure.

In summary, I have to say that I am pretty disappointed with Tony Abbott’s knowledge of the National Broadband Network debate, as demonstrated during the radio interview with Tim Webster on 2UE yesterday. At several points, Abbott uttered statements which were pretty much in direct conflict with his own party’s voter research and policies, his comments about NBN Co salaries are highly debatable, and on several points — buying services from the NBN and the price of doing so — he made clearly factually inaccurate statements.

To be fair on the Coalition, Malcolm Turnbull is their telco expert, and he usually does a very good job of debating the issues. Perhaps it’s time for Abbott to stop talking about the NBN — before Conroy starts issuing his own corrections to the Opposition Leader’s false statements.

Image credit: Screenshot of Tony Abbott on the 7:30 Report talking about the NBN, believed to be OK to use under fair use

news Maverick telecommunications analyst Paul Budde has published a blog entry arguing that realising the vision of the National Broadband Network (NBN) initiative will require not just building new FTTH (Fibre to the Home) networks, but also retaining the current HFC (Hybrid Fibre Coaxial) and FTTN (Fibre to the Node) networks currently being used in Australia.

Currently the Labor Federal Government’s NBN policy is broadly focused on creating FTTH infrastructure, although it also uses wireless and satellite networks in rural and regional areas.

In October this year, the Coalition had announced that its NBN policy would focus on FTTN networks instead of the more costly FTTH network. Shadow Communications Minister Turnbull on returning from Korea where he had surveyed HFC networks operating along with fibre networks said, “The way you get an affordable price is through competition so why seek to stamp out the competition from the HFC cable?” The Coalition had said that they would use Telstra’s copper phone lines to establish a FTTN network rather than Labor’s more expensive FTTH.

While FTTH is the latest in technology since fibre networks are the fastest, it makes economic sense to retain the existing networks of FTTN and HFC cable as long as they can be upgraded to improve efficiency, Budde said in his post.

“For at least the next five years most of what we want to achieve within the context of the digital economy and the trans-sector concept can be accomplished through these technologies– as indicated by the Opposition,” Budde wrote.

“This does need to be placed in the overall context that eventually these technologies will need to be upgraded to FttH, but there is certainly no rush to do so any time soon. Where there is no HFC and no FttN?? (in an estimated 70% of the country) it does not make sense to first upgrade to FttN and to return later and upgrade to FttH. If there had been some communication between the opposition and the industry we believe that such a recognition might have become part of the original NBN plan.”

Even at this stage, the analyst wrote, “it would not be too late for the government to acknowledge this”. “We would not even be surprised if NBN Co bases its rollout on such a plan,” he added. “ie, no rush in areas where HFC and FttN is in place. The fact that Telstra is investing heavily is a clear indication that this company is under the same impression. Perhaps by making this clear we can rid ourselves of some of the political clamour.”

Budde says that the coalition has to accept the fact that FTTH is the best in technology today and offers the best in performance. He said that the future of Australia is fibre. However, the Labor government should also accept that in many areas, current infrastructure is good enough for the immediate future and need not be ‘fibred-up’ overnight. Budde said that there needs to be cooperation and communication in Australian politics to ensure that a National Broadband plan is drafted and implemented instead of either party establishing different agendas of priority.

The news comes as Earlier this month, Communications Minister Stephen Conroy attacked Turnbull’s NBN policy on multiple counts, such as the fact that the speeds delivered on an FTTN network would depend on the diameter of the copper wire and that “We simply do not have the copper available for speed or performance of what Turnbull is claiming.” He also said that ultimately copper based networks would become obsolete as bandwidth requirements increase. Conroy concluded that the Coalition is offering three technologies—FTTN, HFC and mobile wireless, all of which are severely limited in efficiency.

However, British telecommunications expert Robert Kenny subsequently issued a detailed statement criticising Conroy’s claims — pointing out trials by international networking companies such as Alcatel-Lucent which supported the idea that FTTN networks could be effective in Australia.

Image credit: BuddeComm

news The Australian Press Council has expressed concern about the Daily Telegraph’s coverage of the Federal Government’s National Broadband Network project, backing a local critic’s complaint that three articles in a short period of time had contained “inaccurate or misleading assertions” about the NBN.

In a statement, the Press Council noted that it had taken notice of a complaint made about three articles published by The Daily Telegraph on 9 June, 17 June and 6 July 2011 about aspects of the National Broadband Network (NBN).

The first article in The Daily Telegraph, headlined “Australian taxpayers’ latest NBN horror show”, was also published in other News Ltd newspapers under a different headline. The plaintiff, local Jamie Benaud, complained that this article overstated the ratio of NBN staff to customers by understating the number of customers who had taken up NBN offers. He also pointed out the inaccuracy of the article’s claim that customers and internet service providers (ISPs) were accessing NBN services without charge in Tasmania. The Council regarded the wrong assertion about the staff/customer ratio as misleading and unfair since the NBN was still at a very early start-up stage.

The Daily Telegraph claimed that the customer figures were based on up-to-date available data at the time of publication, and that free access applied in all the mainland States. The Council however, deemed that the newspaper should have tried harder to obtain the latest customer figures even though the mistake did not significantly affect the point being made. The Council admitted that the errors by themselves could have been considered minor ones, but that the forceful nature of the headline necessitated upholding the complaints about the article.

Benaud’s complaint targeted an unfair and inaccurate implication in another article headlined “Join the NBN or you’ll be digging deep”. The impression created was that customers not signing up for NBN at the beginning would have to pay an “estimated” $900 per day to have the cable laid to their home at a later date and then up to $140 a month to get an ISP connection. Benaud indicated NBN Co’s statement that later cable-laying would still be free of cost for “standard installation” and that ISP connection costs could be as reasonable as $30 a month.

The Daily Telegraph agreed that its statement regarding cable-laying costs might have been misread and had therefore published a clarification, but it upheld its mention of only the upper ISP price as fair and a common practice. The Council disagreed about the statement related to the cable-laying cost, calling it seriously inaccurate, while noting the newspaper’s attempts to clarify the matter.

However, the Council said the article implied that $900 would have to be paid to an ISP. With the actual ISP connection fee range being as wide as $30-140 and the minimum fees also being well known, the Council described as unfair and misleading the newspaper’s description of the fee as “up to $140”.

Benaud complained about the comparison in the article titled “Low interest in high speed internet” of a certain customer’s current internet costs of $39 per month with what it claimed would be between $53 and more than $130 a month on signing up for NBN services.

Benaud said that this should have taken into account that the customer’s phone service would cost much more than $39 totally for internet and phone, since the price range of $53 to $130, in reality, included a combination of internet and phone services, and not internet alone. The Daily Telegraph stated that the consumer himself did not have a problem with the portrayal or accuracy of his statements.

Since the newspaper omitted the costs of combined phone and internet services, the Council upheld the complaint, calling the comparison misleading. The Council also expressed its concern that the three articles had been published in a short space of time containing erroneous and misleading assertions. It stated that the sequence of mistakes should not have occurred and should have been addressed sufficiently and promptly when brought to the newspaper’s attention.

It’s not the first time that a major News Ltd newspaper in Australia has been criticised for its coverage of the NBN. In a war of words in October 2010, Communications Minister Stephen Conroy had asked Coalition senators not to believe what they read in newspapers such as The Australian and in other publications by News Ltd, after The Australian published a string of articles about the NBN which Conroy perceived to be unnecessarily negative.

news iiNet’s buyout of fellow ISP Internode demonstrated the dramatic reduction in competition Labor’s flagship National Broadband Network policy was wreaking on Australia’s telecommunications sector, Shadow Communications Minister Malcolm Turnbull said today.

This afternoon, iiNet revealed it would buy Internode, in a move that will vault iiNet into clear third place in size amongst Australia’s fixed broadband players and reduce the number of major Australian ISPs again. iiNet has also acquired a number of other ISPs over the past several years, including TransACT, AAPT and Netspace.

In a telephone press conference following the revelation of the deal, Internode managing director Simon Hackett said Internode’s inability to gain sufficient scale to compete in a National Broadband Network world was a core reason why he decided to sell the company. Hackett has previously publicly criticised NBN Co for its pricing model, which he claimed would not allow even medium-sized Australian ISPs to compete effectively on a national basis.

Responding to the buyout this afternoon, Turnbull said the acquisition demonstrated the effect which the NBN policy had on competition.

“Labor claims the NBN will provide a level playing field and enhance competition, but this merger confirms it will diminish competition – not just at the infrastructure level, but among service providers too,” the Member for Wentworth said in a statement.

“The NBN’s vast expense is the reason it is pricing small, innovative internet and phone companies out of the market. Senator Conroy’s plan will reduce consumer choice, and ultimately increase prices for broadband users.”

Turnbull has previously warned about the NBN’s potential impact on competition. The construction of the network will see a number of existing infrastructure options taken off the table for Australians, with both Telstra and Optus shutting down broadband access via their existing HFC cable networks and Telstra also shutting down its existing copper network as the NBN’s predominantly fibre network is rolled out.

In addition, the Australian Competition and Consumer Commission has previously expressed concerns about some clauses of NBN Co’s arrangement with Telstra which would prevent the telco from marketing wireless broadband services as alternatives to the NBN’s fibre.

Over the past decade, Internode has been a leader in driving competitive outcomes in the telecommunications sector on a number of fronts. On the infrastructure front, it has rolled out substantial ADSL infrastructure in competition with Telstra, Optus and other telcos, becoming one of the first ISPs to offer ADSL2+ speeds up to 24Mbps.

In addition, it has been one of the first companies to offer bundled services like Internet telephony, IPTV and other services. On the regulatory front, it has been active in lobbying the government and dealing with the ACCC to get better outcomes for consumers and in its own business. It has also maintained a strong customer service record, compared to the lesser customer service standards evinced by telcos like Telstra and Optus.

Communications Minister Stephen Conroy has been invited to respond to Turnbull’s comments.

Image credit: Office of Malcolm Turnbull