Conroy eviscerates Economist’s “right-wing dogma”


Communications Minister Stephen Conroy has delivered a contemptuous riposte to the research arm of global financial magazine The Economist, describing a report produced by the organisation analysing Labor’s flagship National Broadband Network project as “right-wing dogma”.

The report published yesterday described the NBN project as costing the Australian taxpayer 24 times as much as a similar project in South Korea, and delivering one tenth the speed. The Economist also took the Federal Government to task for spending money from the public purse on the project instead of utilising private sector efforts.

Shadow Communications Minister Malcolm Turnbull immediately welcomed the report yesterday. “Now the Economist Intelligence Unit joins the long list of expert observers, both international and local, who are utterly dismayed by the reckless spending of the Gillard Government on the NBN,” he said. “The study confirms, yet again, that this NBN project should be the subject of a rigorous cost benefit analysis by the Productivity Commission.”

However, in a media conference in Canberra today, Conroy ridiculed the research, pointing out that the opening paragraph of an Economist media statement on the report was “factually wrong”, in that Australia’s NBN would support 1Gbps — not the 100Mbps the report claimed it would. The upgraded speeds were announced during the 2010 election campaign.

“Unfortunately their research failed to notice that in actual fact we’re delivering a gigabyte — the same as Korea,” the Minister said. “It’s factually wrong in its opening statement and it goes down from there.”

Conroy said the report gave countries “zero marks for public investments” in national broadband networks, but “ten out of ten” for private investment. This, he said, was “ideological dogma — right-wing dogma”, as it showed The Economist was opposed to government investment in infrastructure.

The Labor stalwart said the Government was investing in the telecommunications sector in Australia because it had suffered 12 years of “market failure” under the previous Howard Government. “Any economic textbook you read from first year onwards will tell you that there is market failure,” Conroy — who has a degree in economics — said.

In addition, he said the only NBN deal which had been offered by the private sector to the Government was the offer by previous Telstra chief executive Sol Trujillo to build a fibre to the node network. “They offered John Howard a deal. They offered that deal to me as well,” he said, noting the arrangement hadn’t proved suitable. “The Howard Government rejected Telstra’s kind offer, we rejected Telstra’s kind offer, and nobody else is offering.”

Other aspects of the report were also flawed, Conroy said — such as the differences in size, population and density between countries like Australia and South Korea — and the fact that South Korea had already built a national fibre to the node (basement) network and was now upgrading it to fibre to the home.

Holding up a piece of paper which he said constituted the entirety of the analysis in the report, Conroy said he hoped the media hadn’t paid the $3,000 the report costs to buy in full. “For those who haven’t spent the $3,000, I just wanted you to see the entire analysis in this document,” Conroy said. “I hope not too many of you spent the $3,000.”

Image credit: Kim Davies, Creative Commons


  1. “Unfortunately their research failed to notice that in actual fact we’re delivering a gigabyte”

    Is that an accruate quote Renai? I unfortunately didn’t see it. Shouldn’t it be gigabit. :P

    • That’s what I typed in my notes about what he said. I know it sounds strange, but it wouldn’t be abnormal for Conroy to say gigabyte instead of gigabit.

      • Yeah I’ve heard him say early on in the piece that people would have 25 megabyte downloads. He really has no clue. It’s just lucky that the mate he picked to run NBNco seems to know what he’s doing, or at least he’s asking the right people and listening to them.

      • I heard him this morning, he said gigabyte.
        *shrug*. I still dont get why conroy of all people can’t get it right.

        Though; as long as I get at-least a gigabit per second. I won’t be complaining for a second if they supply me with a gigabyte per second 8 times faster than promised!

  2. Wouldn’t it be funny if he gave out copies of the $3000 report to everyone at the press conference and then his mates at AFACT would want to lock him up for copyright infringement.

    One can hope, can’t they.

    From what I’ve seen reported, the ‘Report’ is a load of rubbish. You can’t compare a country the size of Korea(The same size as Tasmania) with a country the size of Australia. There are far greater distances to cover and the population density is far less here.

    If Australia had the same population density as Korea, I dare say we wouldn’t need the NBN because it would have been financially viable for Telstra or Optus to do it.

    • I agree, the Economist report was a piece of crap … they didn’t pay even the slightest amount of attention to what Australia is actually doing here.

      • Additionally, isn’t it a bit rich to claim that South Korea’s FTTN network is cheaper than Australias, given that the South Korean government has invested something like 70 billion dollars into their network in the past?

        Biggest problem I’m having right now is sourcing where that 70 billion dollar figure I have found came from.

        Trying to find Fibre to the Node articles about anything other than Australia is impossible…

      • For starters, as stated by Conroy

        “90% of Australia’s population occupies 2% of its land area.”

        In fact, that was his justification that the NBN (vs asian countries) that the NBN wasn’t too expensive. Now he is indirectly using it as justification that the NBN is too expensive

        The report showed one thing, and it showed it well, it displayed the enormous and gargantuan amount of money being spent on the internet

        And Conroy’s attitude of “everyone is wrong but me” is going to bight him back in the behind, stuff like this is only making the coalitions argument even stronger, and the Labors argument that much weaker

  3. Although not infallible, The Economist has credibility based on a track record. Conroy hasn’t.

    • Doesn’t refute Conroy’s Cristisms through, particularly about the network delievering 1Gbps.

      It just means you should take what Conroy says with a grain of salt… but I thought everyone already did that?

    • The Economist is also very right-wing.

      It’s not often I watch a presser from Conroy, and don’t feel dirty, but despite his usual vocabulary and public speaking fails, he actually did okay today.

    • Actually, The Economist has never been all that accurate…but they are excellent at getting the pulse of the right-wing to a tee.

      • i actually find the magazine quite good and enjoy the read when I’m overseas — but I don’t know much about their research unit. I wouldn’t say they’re overly “right-wing” — more “mainstream capitalist” … which is not the same thing at all these days.

    • @greg, the Economist certainly does have a track record of credibility. It sure did a great job predicting the global financial crisis – NOT!

      Anyway, its methodology in this case was to get both the technical description and funding sources completely wrong (suspiciously consistent with the theory that they were supplied by Malcolm Turnbull, who knew about the report before everyone else), and to use as its key criterion the profitability of the project to big business.

      Because the NBN constitutes a permanent antidote to the social inequity and price gouging of sixteen years of market failure, and deliberately designed to return bond rates of return only, it was bound to be marked down by the Economist Intelligence Unit.

      I wonder who actually commissioned the report? My bet is on either big telecoms or big banks. Someone must know.

  4. The 1 Gbps “clarification” was actually announced by Julia Gillard August last year. There was plenty of publicity at the time, even ABC’s Kerry O’Brien interrogated Tony Abbott – in particular his policy – unrealistic and misleading claims for the capabilities of HFC and wireless technologies.

    This makes me wonder where these journalists live. Yet another case of false and misleading behavour and those poor suckers that paid $3000 for their crap. I hope they all ask for their money back.

    Over at Yahoo there is a poll going right now. Do you still support the government’s NBN plan?
    6843 votes – Yes 24% – No 21% – I never have 55%

    Watching people stuff up their ICT related measurement units always amuses me. Comparing South Korea and Australia is simply infantile. I am sure cost of the cable is per meter.

    The business opportunity I am currently looking at in the US is starting looking more and more attractive as there is the threat and a risk of another 12 years in a vacuum.

      • The NBN Business Plan requested by the Coallition is of equal value. Next to useless except to justify the n of the NBN project. For my own business & marketing plan the report as a result of the Parlimentary inquiry was sufficient.

        We will never get politicians and their journalist side-kicks to understand the economics and of ITC industries and innovation. The NBN business plan wouldn’t be able to forecast private sector development and venture capital in ICT startups etc. Evidently have not been very good at it in the past 12 years!

        Hell! Maybe an Australian developer might invent the next Facebook or Google, not that we need another one of either. We have emerging technologies to deal with.

        In the US, on the other hand, the Obama Administration is injecting a ton of economic stimulus into Silicon Valley and told all to get cracking and innovate and combination with their US$350 million National Broadband Plan.

    • “This makes me wonder where these journalists live.”

      Not in Australia, that’s for sure, this is what the EIU website says:

      “Our team includes over 120 full-time country specialists, economists and business analysts, based in London, New York, Singapore, Shanghai, Beijing, Tokyo and Hong Kong.”

      Australia is not on the list.

    • Yes, Snow Crash, but read the detail. They had to complete some expensive system rejigs started by Sol, and to reorganise for their future revenue streams from broadband services. Yesterday they launched unmetered Foxtel over broadband for their 200,000+ TBox customers, which will only work for half of them when the fibre arrives since their ADSL is too slow.

      I repeat my prediction of last year that Telstra shares will hit $5.00 this year after shareholders approve the NBN deal.

    • In any case, nothing is going to be done until Telstra shareholders approve the decoupling of wholesale & retail structure. The NBN Project can still easily be ambushed. Share price has not budged.

      • Telstra’s share price plumetted to $2.56 mid-November when the coalition looked like sinking the enabling legislation. At the time I predicted that it would double within a year if the deal went ahead.

        It has risen from $2.77 to $2.88 this month (touching $2.91 today), and the late news of the agreed technical details might have an impact tomorrow, but I do agree it can still be derailed with misinformation.

        So without a deal even signed, we have already seen a 14% share price rise in three months as awareness has grown of the golden future for a retail-only Telstra of services over the NBN, plus its own revenue from leasing facilities to NBNCo, and cost savings on infrastructure maintenance and universal service obligations.

        • Hi Francis, I enjoy reading your comments and I too have been telling the usual TLS suspects for over a year (who cling to NWAT) to get onboard the NBN, but…

          Here’s a run down of todays results

          Sales revenue declined 0.5% or $60m to $12,263m
          EBITDA declined 13.9% or $737m to $4,580m
          EBITDA margins declined by 5.8 percentage points to 37.3%
          EBIT declined by 24.1% or $756m to $2,376m
          Earnings per share of 9.6 cents was down 35.6%
          Free cashflow declined 22.9% or $599m to $2,020m

          Results on guidance:
          Sales revenue declined 0.5% or $60m to $12,263m
          EBITDA declined by 12.5% or $663m to $4,654m
          Free cashflow declined 35% or $919m to $1,700m

          Financials declined and down…and this will continue without the NBN vote being successful, imo.

          So what do we now see…?

          Comments being posted on comms blogs with a link to a website… Help TLS Shareholders Stop The NBN… LOL!!!!!!!!!!!!!!!!!!!!!!

          And what do they ask – “how dumb do they think we shareholders at Telstra are”?

          A. Well, you bought TLS, nuff said!

          • RS, Telstra acquired huge numbers of new customers in late 2010 with better offers.

            Customer acquisition is expensive (sales staff, technical setup, bundled hardware to be cost-recovered over 2 years), but it pays off in the back half of a 24 month contract and beyond if they don’t churn.

            Every customer on Telstra’s books when the NBN rolls by will probably remain a Bigpond customer, but on NBN infrastructure instead of Telstra copper. These new customers are gold, so it was money well spent this year.

            They also spent a lot repositioning themselves for a retail services future, such as the 200,000+ TBox customers who can now buy (Telstra-half-owned) Foxtel over broadband, which will only work properly as bandwidth improves (ADSL having an average speed of 2.8 Mbps in Australia according to the ABS).

            As for the shares, Telstra 2 was over-rated, but Telstra 3 was lunacy, and I advocated strongly at the time against selling off the publicly owned copper network. But having bought a chunk of Telstra 1 I did pretty well, and eventually sold just in time at about $8.50 when it started its decline.

            Now is absolutely the time to buy Telstra again under $3, but I just haven’t got any cash sloshing around as I am now blessed with a beautiful young family and a mortgage.

            [Thanks for the comments about my comments. I enjoy many of yours too, but we probably both need to stick to correcting factual errors and not criticise the messenger quite so often. Some posters think Malcolm Turnbull is saying what he really thinks about the NBN, for instance, when he is merely desperate to undermine the only major program Labor is delivering well.]

          • “Every customer on Telstra’s books when the NBN rolls by will probably remain a Bigpond customer”

            Not really sure I agree with this. What incentive will there be, when the NBN rolls out, to remain with Telstra, and its woeful billing systems? Apart from bundling offers with 3G mobile broadband?

          • I can think of a couple off the top of my head:
            -Like many of my older relatives, most Telstra shareholders (is millions of Australians) would never consider moving away from the Big T, it would be unaustralian! ;) Cue Sydney Lawrence!
            Unrefutable evidence of Stockholm Syhdrome.

            -ACCC gives the OK on volume discounts, making Telstra a bunch cheaper than everybody else. YES-I realise that Quigley has said this won’t happen, BUT – as you could tell from the NBN staff squirming in the room at the Sydney NBN forum when questions were asked about increasing the number of POIs, Quigley doesn’t call all the shots.

            Interesting times ahead.

          • Renai, you’re absolutely right that Telstra needs to maintain it’s current unfamiliar focus on customer service and price!

            I believe that many Telstra customers (especially older ones with rose-coloured memories of the PMG and Telecom Australia) will simply accept a costless changeover of their Telstra landline and/or web service to Telstra fibre (or for the tiny 7%, to 12 Mbps fixed wireless or satellite).

            So initially I would expect most not to change providers if the offer they are on is customer-focussed, or offers a cost-effective bundle with broadband television or mobile phones.

            However, when their first NBN-based contract comes around for renewal more of them will consider their options.

  5. Are you also reading a massive number of new customers, mostly Vodafone defectors? Startup costs for new customers are hefty (including sales staff time, technical setup and phone/modem hardware to be cost-recovered over 24 months).

    Every Bigpond customer is money in the bank both now, and in future when Telstra migrates them onto NBN fibre. Bother to read the full Telstra media release and you will see spending in order to save in future. Just like the NBN build, actually.

  6. I’m actually in Korea at the moment on holidays. The idea that you can compare Australia and Korea in terms of broadband costs and coverage is totally laughable.

    First of all, even if you assume that 90% of Australia’s population occupies 0.2% of it’s landmass, that’s still around 120 people per square kilometre. That still pales in comparison to Korea’s 440 people per square kilometre.

    Secondly, everybody – and I really do mean everybody – in Korea lives in high-rise apartment buildings. Korea’s initial fibre roll-out was actually only FTTB – Fibre to the Basement. The last 100 metres or so is served by VDSL to the fibre node in your apartment building’s basement. As The Economist noted, Korea are currently undergoing a network upgrade, essentially brining the fibre all the way to the premises. Australia is simply skipping the FTTB step and going FTTH straight away.

    Finally, the report actually notes that the cost of Korea’s network is roughly the same as the cost of Australia’s NBN. The difference is that Korea’s network was largely funded by the private sector, whereas Australia’s is largely funded by the government. The Economist’s real beef is not the actual cost, but just the public/private funding split.

    It’s also interesting to note that Korea’s upgrade from 100Mb/s to 1000Mb/s is being largely funded by the private sector. If you ever needed any evidence that the idea that “100Mb/s is more than anybody would ever need” is not true, then I would say this is it.

    • Note that their can be other reasons why the private sector is upgrading from FTTB to FTTP, for example it would save them the cost of powering the VDSL cabinets in the basements, which for apartments can amount to quite a lot of money

      The reason why FTTH is so strong in Japan was for a similar reasons (in this case telcos in Japan had to pay for the power for DSLAMS and whatnot)

      • I can find no sources which indicate that Japan even HAD a FTTN network that they’re upgrading to FTTH, let alone that they’re doing it because of the cost of running the nodes in the buildings. For example, two sources which claim it’s a simple matter of being able to offer faster speeds:

        I can also only find sources that quote the increased speeds as the reason for Korea’s upgrade:

        • I wasn’t talking about FTTN (in regards to Japan), I was talking about their ADSL2+ service. In Japan the ISP’s have to pay for the power consumption of the DSLAMS, which equates to a very high cost (for the ISP’s), where as its a different story with FTTH. The similar reason I was referring to was in saving power

          This is the article

          Of course the major reason why high density countries are able to deliver such high targets is because of density reasons its actually commercially viable. There has been little evidence that such speeds being rolled out to residential areas have been for demand reasons

      • NBN Co confirmed last week that at this stage, that their current thinking in terms of MDUs is that they will almost certainly run fibre to each and every premise within an MDU, rather than an “FTTB” solution with VDSL (or something else) inside the building.

        It gives each premise (whether it be a single house or a single apartment in a 80-floor apartment complex) the same level of service.

        • They can definitely enjoy trying to do that, a lot of MDU’s are going to be ‘difficult’ to rewire, and thats putting it nicely

          • Last I heard from NBNCo regarding the issues of MDU’s, they were going to only do FTTH in premises where it was feasible to do so, else they would do a FTTB

            Australia, unlike countries like Singapore, Japan and South Korea, has a lot of old style built MDU’s along with high standards when it comes to cable installation. I know that I place I own, they would literally have rip through every room in the MDU (at a minimum) if they were going to do an internal replacement of the copper with the fiber

            Of course they could do an “outer” installation of the FTTH (usually on the outer portions of the building), which means they wouldn’t do an internal installation, however a lot of landlord bodies (including Strata) wouldn’t wan’t that (for obvious reasons).

            Of course they “could” do it, but difficulty equates to cost, and annoying the hell out of the people living in the MDU at the time

    • I will bet you South Korea’s freeways are jammed with traffic and its hard to find parking. I don’t buy that arguement or the population arguement.

      Next thing these boneheads will be doing is comparing the NBN plan with the National Broadband Plan recommendations in India announced by the Telecom Regulatory Authority of India December 2010.

      According to a news report on the tele tonight, this proposal has been given the “green light”.

      • Actually, they can compare many National Broadband Plans from around the world. A global and universal strategy with many changes.


  7. Comparing the Japanese to us now eh?

    But over at ZD when another poster used California as a comparison in relation to subterranean power, your answer…

    “No an article from America isn’t valid at all because California is completely different from Australia in regards to national disasters, population density and whatnot, and how the energy sector + governments are set up are also completely different”.

    Ah, contradictions… the FUDsters second best friend, behind lies!

    • “Ah, contradictions… the FUDsters second best friend, behind lies!”

      Fear, uncertainty and doubt (FUD) is a tactic used in sales, marketing, public relations, politics and propaganda. FUD is generally a strategic attempt to influence public perception by disseminating negative and dubious/false information designed to undermine the credibility of their beliefs.

      This is very apt description of the situation.

      FUD is a term invented by the ICT Industry back in 1975, when Gene Amdahl left IBM to found his own company, Amdahl Corp. Microsoft are the masters of FUD. The thing is when anyone non-ICT acts this way, it looks blantantly obvious.

        • LOL, after weeks of avoidance, you finally reply, when you believe at last you have a sniff…LOL!

          So where are the reports you keep claiming to be using (especially at ZD)…

          Until you can PROVE anything you claim… not just say I am a UNI student at UNSW, so I know everything about everything (then you intentionally forward “incorrect” damming NBN figures and “laughably” don’t even understand the difference between the Senate and HoR)…

          Umm, you are supplying nothing but FUD… exactly as per your very own URL… dear oh dear..

          Back to Uni son, you have a hell of a lot to learn!

    • The tried and proven way to counter FUD is to look carefully at the lies and half-truths and formulate a concise response that sets the record straight. Its hard to argue with the facts.

      Don’t risk your integrity by countering with more FUD. This will make you look impartial.

      Focus on driving the project forward. Not only your success will your revenge, it gains you a broader audience and therefore a bigger platform for advocating change.

      • eg. Open source FUD

        Open source is risky
        Destroys your profitability
        Turns you into a communist
        Inclusion on an international watchlist
        You should be quarantined.

  8. My question is simply this: how long can we as a nation continue to play games with our economy until it finally comes home and we have to confront the issues that politicians have either swept under the carpet or have deceived us with their lies and subterfuge.

    • Our debt is a ‘whopping’ 0.3% of GDP, and 10% of annual government spending.

      What exactly is the problem?

      Sure, we are $30bn in debt, but debt is only bad if it is not unmanageable. Debt sounds scary, but if you can repay it easy, it’s really not too bad. How many people have a home loan? car loan? credit card? Why should governments be any different? ;)

      • Because this debt is enormous and the ability for NBNCo to pay itself off in the best case circumstances has massive risk as outlined in the business case

  9. It also says paid back in full by 2034 (in the business case)…!

    The same business case which you either laud or call toilet paper, depending upon which day and which “losing” argument you are trying to drag yourself out of…!

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