Election rant 1: Who’s greediest?


ZDNet.com.au columnist David Braue has committed to write one technology-related election rant for each business day until the Federal Election on August 21. But elections are above all, a debate between two sides. So Delimiter is going to match his seven rants — day by day – providing an alternative devil’s advocate point of view.

opinion I feel a little worried that David Braue might have peaked a little early in the first of his series of ‘seven deadly sins’ rants about election technology policies posted this afternoon. But then, that’s a common problem for those poor souls whose misfortune it is to suffer the titular sin which forms the underlying theme for his piece: Greed.

The reason for this is that David’s argument successfully pinions Tony Abbott and his ragtag bunch of fiscal conservatives on what is obviously the weakest aspect of the broadband policy which they so controversially laid out last week: Wireless.

But — as many pigs have discovered over time — heading straight for the feeding trough without keeping a watchful eye out for the farmer’s axe can lead one to feeling that they’re high on the hog when they’re actually a pig in a poke.

David correctly makes the argument that the wireless aspect of the Coalition’s broadband policy completely ignores a number of technological realities which will ultimately come back to haunt them over the next few years as they attempt to implement the ideas.

Yes — it is obvious to anyone with even a smidgeon of technical experience that mobile broadband (think of the 3G networks that we have today, or even the incoming LTE upgrades) or even fixed broadband such as the WiMax networks that Australian companies like Unwired — and now vividwireless — have attempted to build in Australia — simply cannot replace fixed broadband in Australia’s future.

Forget the latency and throughput needs of medical, education and video on demand applications. Wireless broadband is crap for online gaming, and with Blizzard Entertainment unwilling to host World of WarCraft servers in Australia, generation Y just isn’t going to put up with a wireless future — as Macquarie University student Cassie put to Tony Abbott in no uncertain terms at the Rooty Hill RSL last night.

David’s also right to argue that it’s ludicrous that the Coalition wants to quarantine the spectrum shortly to be unleashed by the imminent demise of the analogue TV signal. It’s called the “digital dividend” for a reason – it needs to be divvied out so that Australia’s mobile networks have some kind of hope in hell of continuing to function when the iPhone 5 (and 6, 7 and 8) hit our sunny shores.

But the problem is that in focusing too strongly on the fallacy of the Coalition’s wireless broadband policies, David has completely ignored the fact that it’s not the Opposition who has gotten most greedy when it comes to broadband – it’s Labor.

The Coalition’s wireless idea may be a turkey, but at least it’s a cheap one — $1 billion for an outer metropolitan wireless broadband network and another $1 billion for the same in regional Australia. That’s $2 billion in total.

In comparison, nobody really knows how much Labor will need to spend running fibre out to every nook and cranny of Australia. The initial plan back during the last election was a mere $4.7 billion (still more than twice the cost of the Coalition’s wireless policy), but only five months later it had ballooned to $43 billion, a figure which appears to have been drawn up on the back of an envelope in KRudd’s private jet.

Estimates — admittedly outlandish ones — go all the way up to $80 billion for the full NBN rollout, and despite NBN Co’s deal with Telstra taking some cost out and the usual economies of scale, few people think the NBN is going to cost anything much south of $30 billion.

Yes, clearly it is not the Coalition which is committing the sin of greed when it comes to telecommunications policies during the 2010 Federal Election. It is Labor whose eyes are bigger than its stomach.

Labor’s recent election ads portraying Joe Hockey as some kind of corpulent Buddha cum oriental martial arts master and accusing Abbott’s Coalition of “unrelenting greed” start to look a little hypocritical when you realise that it’s the slender Julia Gillard and the soccer nut Stephen Conroy that are actually hording all the pies.

The Coalition’s wireless policy is silly, poorly thought out and might slam the brakes on the currently rapid development of Australia’s mobile broadband networks. But at least it’s cheap. As they say in startup companies, fail often and fail early. Let the Coalition quickly discover how futile their wireless policy truly is in government.

It might take them a year and $1 billion to do so. But compared to the tens of billions of dollars of debt Labor will saddle our children with if it wins a mandate to build the NBN, the Coalition’s wireless policies will cost pocket change that Australia can at least afford to splurge.

As Tony Abbott told the Rooty Hill RSL last night — after wiping the floor with Labor’s brave redhead leader — everyone wants to drive a really fantastic car. But in Australia’s case, it’s more important to buy the car that we can actually afford.

Image credit: Gareth Weeks, royalty free


  1. There was a blog post I read a few days ago (it might have been here actually, can’t remember been reading so much), that commented more or less that one of the main problems with the NBN is the cost, and whether it is worth it at this point in time to make such a large investment when we already have debt to clean up and have no guarantee of return on the NBN.

    That I think is part of the beauty of the coalition plan. Yes it isn’t perfect, yes it has some major problems, but what it does do is rollout a much higher quality backbone and it does fix the services for the users who are most desperate for it. In another 3 years or so when the economy is in a better position and a rollout of a similar to today NBN project is considered, then the backbone of that network would already be in place.

    As I’ve said in other replies don’t get me wrong 100Mb would be a wonderful connection to have, but can I survive without it for the time being, absolutely.

  2. [Let the Coalition quickly discover how futile their wireless policy truly is in government.] …. meaning FTTH will have to be rolled out eventually – in communications fibre is the ‘end game’ after all
    [It might take them a year and $1 billion to do so] …. it’ll take much longer to start the wireless build – frequency is unavailable until the analogue tv is switched off in 2014

  3. as the old saying goes… you get what you pay for…

    with labors NBN you may pay a premium but in turn you get a system that is alot longer term and relatively easily upgradeable

    liberal you pay peanuts but in turn you receive peanuts… which means you will have to pay more later down the track to do the same as what labor is proposing already as well as pay for your poor stop gap measure as well…

    do it once and do it right… $26 billion/$30 billion/$43 billion or whatever it turns out to be is not that much to spend over the 8 year build period in an area that has been under prioritised for all too long… in the same time they have users on the network paying for services, Telstra migrating all their customers over to the NBN etc etc so even if it is at a loss its still making some return so its not like its a money pit that will never end (unlike health, welfare, defence, education etc etc that are bottomless pits)…. at the end you do have a proper wholesale service provider which is what we should have had before Telstra was broken up by Howard… if that happened then this problem would not have been created and not needed interjection by the Labor Government… and you have something that you can sell off at the end (not that I think this is a good idea until FTTH reaches everywhere copper is currently connected lets say 10 years after the initial 8 year build period occurs but at least put a plan in motion to that effect after the initial 93% occurs to 97/98/99%… not some inferior wireless system that needs continual upgrades which costs even more money in the long run thus for a stop gap measure its ok, but its not the right idea overall…)

    with governments instead of 1 term proposals we should be looking for long term solutions and the liberals have no clue regarding to anything technology wise…

  4. [As Tony Abbott told the Rooty Hill RSL last night — after wiping the floor with Labor’s brave redhead leader — everyone wants to drive a really fantastic car. But in Australia’s case, it’s more important to buy the car that we can actually afford.]

    I think it is more important to buy the car that won’t fall apart in a few years…

    $41bn over ten years is not alot of money, add up all the other policies in the pipelines and you will see many other policies that exceed $4.1bn/year – said other policies DO NOT make money.

    NBN will migrate 9.11 million broadband services to NBN. Even at $10 income each that is $92m a month, $1.104bn a year, $11.04bn in 10 years.

    When did Centrelink make money for the government? but it’s okay to throw mountains of cash at that?

    It’s only a problem because it’s being spent on technology? and not centrelink, baby bonus, maternety leave or similar policies?

    Time for the geeks to get a long deserved slice of the pie, not that the NBN won’t improve everyones lives. We pay tax just like everyone else, yet almost never get any ‘policies’ that are important to us.

  5. You know what, I’ll add to my last post some more:

    This is the 2009-2010 government budget:



    $110bn Social security + welfare
    $12bn community services and culture
    $51bn health
    $80bn general government services (is this the private jets?)
    $13bn industry and workforce
    $35bn education
    $20bn defense
    $13bn infastructure transport and energy.

    NBN works out to be $4.3bn/year

    In the same time the NBN will cost $43bn, welfare and social security will cost $1.10 trillion…

    So it’s OK to piss away cash on every sector than telecomunications, but even spending 4% of our budget on building a broadband network to bring us out of the dark ages is blasphemy?

  6. Just imagine 20,000 malware infected pc’s with a 100Mbps pipe each to utilise………

  7. Currently my score is 1-nil to ZDET.

    David’s greed article was more persuasive, and did not delve into the cheap shots you included at the end of your article Renai. Your failure to include the full context of the car remark by leaving out the rejoinder from the audience that duideka mentioned in his comment leaves your article open to be interpreted as spin ie deliberately leaving out context and information you are aware of that weakens your argument rather than addressing it head on.

    In general terms I think the failure of tech media to acknowlege or in some cases even understand that the NBN is more than just a technology issue. It is as much about providing infrastructure in general, and the economic stimulus that accompanies such a project. The Snowy Mountains scheme didn’t just provide electricity.

    The lack of infrastructure is lamented by many who often blame (often quite justifiably) state governments for their failure to provide essential services as and when they are needed, and not 20 years later. Sadly these same people then often deride projects such as the NBN as too expensive or as unneeded.

    Personally I would prefer a government that forsees future demand for services, whether it be a train, bus or fibre connection, and starts building a multiple-year project so that it finishes contemporaneously with the uprise in demand rather than after the fact.

    • Well, I think it is going to be relatively hard to win this one, given that it truly is Labor’s broadband policy that is more convincing. But I am going to do my darndest to argue the opposite side and provide a true debate! :)

      As for cheap shots … I wouldn’t say that I included cheap shots. But you do need to end an article with something a little colourful. Of course I’m leaving out information — that is the essence of opinion. You take a certain view of the world and argue a certain case. It doesn’t mean that it’s whole truth — it’s a slant on things. Otherwise it would not be labelled ‘opinion’.

      Personally I think there is a real case to be made for a National Broadband Network that is somewhere in the middle between Labor’s “all” and the Coalition’s “nothing” approach. There needs to be a balance between economic stimulus and economic responsibility. Neither party quite gets that right now.

  8. Government debt is not all bad. A LOT of debt is bad, but some govt debt is actually a good.

    If the govt uses the bond market to raise debt, it can sell more bonds to fight inflation (by taking money out of circulation, reducing the supply of money)

    It also create secure assetts to the lenders (banks, super funds, individual investors) with a rate of return higher than the cash rate (the rate banks lend to each other).

    Debt becomes bad when there is too much of it, and the cost of servicing the debt becomes too much.

  9. Renai, your argument really doesn’t make any sense. Are you saying that it is okay to pay for a cheap and rotten turkey just because it is cheaper than the other one? If it is rotten it is rotten.

    And you really should give everyone the full picture on this comment:
    “The initial plan back during the last election was a mere $4.7 billion (still more than twice the cost of the Coalition’s wireless policy), but only five months later it had ballooned to $43 billion, a figure which appears to have been drawn up on the back of an envelope in KRudd’s private jet.”

    Yes, that was for an FTTN RFT, which was ultimately canned by a panel of the nation’s best telco, policy and economic experts who all agreed it would be better to go for FTTP and so advised the gov – have a chat to Reg Coutts or Rod Tucker before you pull this comment again.

    And this disregards a signficant proportion of observers who believe with the Telstra deal the network can be built for between $20b and $30b – including the person quoted in the linked article!!!
    “…few people think the NBN is going to cost anything much south of $30 billion.”

    If it is a sin to want to commence building a future proof, and world-class network that will drive significant economic gain – and there are already examples of this – (Read here for a start: http://www.computerworld.com.au/article/351653/nbn_101_economic_argument/) then I’m happy to line up.

    The cost argument is a valid one to be concerned about, but you need to be fair and not just count the direct output that NBN Co will spend and what the direct revenues will be. A fair analysis would look at what the maintenance and regulatory failure / oversight costs would be over the same period as against doing the NBN with existing networks.

    You also should be including the opportunity loss analysis – i.e. if we do the NBN now and get a competitive advantage against other nations (e.g. singapore in services because they are killing us at the mo) and attract organisations (e.g. financial services) and incentivise existing business models and emerging/new ones along with stimulating consumption of both ICT and ICT-enabled goods and services as against what happens if we don’t.

    I don’t believe giving the country an infrastructure that we don’t have to worry about it’s capacity to support any kind of communications for potentially the next 50 years is greedy by any means. On the contrary it removes the communications capacity issue that currently dogs this economy, especially as FTTP is far better at upstream than any other technology.

    • If my argument doesn’t make any sense, it’s because neither party’s policy is really that palatable. We’re not facing a choice between policies that make sense — we’re facing a choice between one policy that is a massive overspend to fix structural problems in the telco sector, and one policy that is woefully inadequate.

      There is no sane third alternative.

      As for the first NBN plan, we don’t know what the expert panel really said — the Government has never released their full report, and I would suggest that that policy was never a good one to start with, as it relied on a public private partnership, which never seems to work well (hello, NSW).

      In my opinion, the NBN is not a valid solution to the regulatory challenges posed by Telstra’s integrated nature. A better solution would be to structurally separate Telstra and thus incentivise private sector investment in the telecommunications sector, as we are seeing in the mobile sector and as the rolling wave of DSLAM rollouts was promising.

      You’ll notice that neither party is proposing such an approach — yet it is largely what the industry has been crying out for, for many years.

      A structurally separated Telstra would have incentive to invest in fibre for growth, and would give certainty to the rest of the industry (who might even passively invest in the newly created wholesale player themselves) as to further investments.

  10. Oh yeah, the other thing is the Opposition’s policy is not just weak because of wireless, it’s weak because it entrenches a multi-speed communications economy – and makes forces services to either overlook portions of the country or downgrade their service to the lowest common connection denominator.

  11. Oh yeah, the other thing is the Opposition’s policy is not just weak because of wireless, it’s weak because it entrenches a multi-speed communications economy – and makes forces services to either overlook portions of the country or downgrade their service to the lowest common connection denominator.

    An almost ubiquitous service level is a much better option and again removes a significant cost premium that companies and individuals have to pay at the moment if they want faster broadband.

  12. What the heck kind of article was that? You just said that we absolutely needed fixed broadband infrastructure, and then said that we shouldn’t build it because it’s too expensive. If we need to have it, then we should just knuckle down and pay for it.

    • As mentioned above, I think a better alternative would be structurally separate Telstra first, and see what happens in the short period after that. I think that could lead to many of the same outcomes as a new wholesale fibre monopolist, without quite so much massive Government intervention and spend.

      • structurally separate Telstra?
        i’ve been waiting for that to happen for many , many years and guess what? i’m a shareholder. Telstra will never get off its a##e until it is separated and unfortunately with the Liberals , the status quo will continue – this time they have lost my vote.

  13. Sorry Renai, but the last 10 years has shown that the market is not going to bring about the sort of infrastructure build that we’re going to need in the next twenty years. Especially not under the Coalition, who you may have noticed have committed to keeping Telstra in one piece.

    You spend the first half of your article arguing that the Coalition plan is woeful, and it is. The reliance on wireless to offer “Peak Speeds” of between 12Mb/s and 100Mb/s while you patch up the copper network, just means that we’re going to be having the fibre discussion further on down the track, putting us further behind the eight ball.

    The other thing that annoys me is that those arguing against the NBN love to throw around the 45 billion price tag, as if it’s dead money, that there is no chance of actually getting a return. That is patently false. Service providers won’t be given free bandwidth, they will have to pay for it, which will contribute back to paying off the initial investment (which with Telstras involvement is almost halved by the way), as well as ongoing maintenance and development.

    Yes I think Conroy is a bad minister. His dealings with the FTA networks, internet filter and so on, give me absolutely zero confidence. However the NBN policy itself is not bad policy.

  14. Looking back at Labors past promises and costing which was nothing like the original estimates, and allowing for the rorts and failures, I think we should double the $43billion for a start! Frankly, I don ‘t think anyone in Labor is qualified, any more than coalition regarding the technological side of this huge undertaking, especially Swan and Conroy! I think that it would be better to consider the suggestion of the Coalition, at a great saving, to a country up to it’s ears in debt; then at a later date, if really required by all, they could start saving for the extremely expensive Labor plan. So , what if $ 600million eventualy is wasted, that would be nothing compared to a failed or rorted plan of Labor, and nothing to what Labor has already wasted on pink bats, green loans and BER to schools who did not have students!!! Not forgetting stimulus payments to people living overseas and not spending in this country? We are the fools who pay for these mistakes.

    • the Labor party is not the one building the network , the NBN Co is doing the build – maybe do some research before spewing FUD?

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