news Shadow Communications Minister Malcolm Turnbull has delivered a blistering end of year attack on the Federal Government’s flagship National Broadband Network project, detailing an extraordinary range of areas in which he believes the project is failing.
In a lengthy statement on the matter published this week, which appears to be the text of a speech given by the politician, Turnbull said he suspected that the Coalition’s core criticisms of the project would be “familiar”, following regular statements on the matter over the course of the year.
These ranged from the fact that the project was too expensive (costing “50 billion and very likely more”), as well as driving higher consumer prices anti-competitive due to the planned closure of broadband services over Telstra’s copper and HFC networks and Optus’ HFC networks, poorly targeted as the NBN will take a decade to reach the two million premises in Australia currently with poor levels of broadband, and put the Government in a conflicted position as the owner of a large company in a market it regulated.
“Broadly these were our objections when the current version of the NBN and its startling price tag were unveiled in April 2009,” wrote Turnbull. “In the two and a half years since, none has been adequately answered by Senator Conroy or any other devotee of Labor’s current policy.”
This week, Turnbull added a range of other criticisms to that list.
From the outset of the project, the Member for Wentworth wrote, “the Labor Government has done its best to minimise scrutiny of the NBN”. Labor had, he stated, refused to have the project evaluated by either Infrastructure Australia or the Productivity Commission, had largely exempted it from Freedom of Information laws, had declined to release NBN Co corporate documents without redacting portions of them and limiting Parliamentary committee hearings.
“Many details of this $50 billion gamble of taxpayer funds are not visible to members of Parliament – even those on multiple committees overseeing the NBN, such as myself – or to the taxpayers who are funding construction of the network and the generous salaries paid to executives,” Turnbull said.
As examples of this claimed lack of transparency and accountability, Turnbull pointed out that the lack of quarterly reporting on NBN Co’s part meant it was unclear what the company’s revenues were from the past quarter, when it had started selling commercial services to customers; how many customers the company had in total at the moment. In addition, Turnbull argued that NBN Co chief executive Mike Quigley had shown “a similar reluctance to provide Parliament with even the most anodyne details of commercial matters”.
The Liberal MP also gave two further examples of what he said was NBN Co’s lack of transparency; mistakes he said it had made in disclosing how many housing development residences its infrastructure had been rolled out to, as well as the release of a review by consulting firm Greenhill Caliburn of NBN Co’s most recent corporate plan. “Over its last 25 pages only 15 full paragraphs were entirely free of redaction,” wrote Turnbull.
Financials and the rollout itself
Turnbull also levelled harsh criticism at NBN Co over its financial projections, in terms of both costs and revenues.
The Greenhill Caliburn report estimated NBN Co’s total capital expenditure between 2011 and 2028 as being $50.6 billion — which Turnbull said was far in excess of the Federal Government’s $37 billion figure. Communications Minister Stephen Conroy has suggested that this amount is incorrect as it takes into account maintenance costs — a claim Turnbull denied.
Turnbull also attacked NBN Co’s revenue and operating expense claims, highlighting what he said would be a variety of problems with the company’s estimates — ranging from questions about its average revenue per user estimates to a failure to completely project the amount and timing of payments which would be made to Telstra and Optus as part of NBN Co’s deal with the two telcos to move customers from their networks onto its own.
“Given NBN Co’s financial data is so opaque, it is hard to tell which costs are counted where – but the organisation should respond to these questions with a sense of urgency and release more accurate, realistic and clear financial projections,” said Turnbull. “To fail to do so would be to treat taxpayers with a contempt that no listed company would ever dare show towards its shareholders.”
“So, Senator Conroy, one simple question: what exactly is the latest estimate of the peak capital requirement for the NBN? As it is the NBN Co projects a defensive and non-transparent approach which seems like a cross between the Kremlin and the Church of Scientology.”
With respect to the NBN rollout itself, Turnbull claimed “the only rationale for an NBN in the first place” had been to ensure that regions with substandard broadband were properly served with infrastructure. However, he said, NBN was now choosing sites for its early rollouts based on access to Telstra infrastructure or where it had deals with its construction contractors — “not on how urgently households and communities need access to good quality broadband”.
Turnbull pointed out that Labor MP Ed Husic had complained about the project’s failure to target his electorate in a recent statement. “It is simply unbelievable that after bungling its first tilt at an NBN and wasting its first term, the Government now cannot get its wholly-owned taxpayer-funded monopoly to prioritize the neediest areas,” said Turnbull.
The Member for Wentworth added even in areas where the NBN was being rolled out, uptake was poor.
“Internal NBN data from mid-October obtained by The Australian showed only one in nine of the premises passed by the NBN’s fibre had connected to a service at that date,” he said. “Take-up rates were as low as 2 per cent in Armidale, 5 per cent in Townsville, 6 per cent in Brunswick (where NBN Co was overbuilding an area with HFC pay TV cables, providing comparable broadband), 9 per cent in Kiama and a slightly healthier 19 per cent in Willunga in South Australia. The figures show higher take-up rates ranging from 12 to 25 per cent in longer-established Tasmanian trial sites where broadband options were far less plentiful – underscoring the value of focusing the rollout on poorly-served areas.”
“In the long run, if it continues being rolled out, NBN has little to fear from sluggish take-up given existing or prospective rival fixed-line infrastructure will be decommissioned or legislatively deterred. If consumers or businesses want a fixed line, they will have to use the only network available. That is why the monopoly has been imposed.”
Turnbull concluded his attack on the NBN by summing up the NBN project as spending far too much money and delivering a massive, anti-competitive monopoly to the telecommunications industry.
}There are still only a handful of Australians connected to the NBN. The approach taken by NBN Co and Senator Conroy is utterly at odds with the best practices of carriers and governments in almost every other comparable market. It’s not too late to take stock, conduct the cost benefit analysis and get this project right.”
Image credit: Office of Malcolm Turnbull