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