analysis Shadow Communications Minister Malcolm Turnbull has this week again made a number of misleading and factually inaccurate statements in a series of interviews and comments about the Government’s National Broadband Network project, on topics ranging from the technology used in the project to its cost and retail broadband prices.
On Twitter this afternoon, the Coalition MP stated that the wireless component of the NBN, which is designed to serve a small rural percentage of the population to whom it would difficult to roll out fibre, wouldn’t offer similar wireless broadband as that available in city areas. “You won’t get the same as the city under NBN,” said Turnbull. “You get fixed wireless and not even at 4G/LTE — our approach would be better.”
However, as a number of Twitter users and NBN Co itself quickly pointed out, Turnbull’s statement was factually incorrect. NBN Co’s wireless rollout uses 4G/LTE standard equipment as provided by Swedish manufacturer Ericsson. NBN Co and Ericsson made this clear in a media release released in June 2011 (PDF), when they signed the contract for the wireless network to be rolled out.
Turnbull is correct that the peak speeds offered under NBN Co’s wireless rollout (12Mbps) will not match the peak speeds offered under the 4G mobile networks being rolled out by telcos like Telstra and Optus at the moment. However, the fixed wireless solution being used by NBN Co will deliver sustained speeds suitable for a household broadband connection regularly using streaming media. The 4G networks built by Telstra and Optus do not aim to match that ability and are generally considered more suitable for mobile or ad-hoc use, whereas NBN Co’s fixed wireless connection is intended to be comparable in quality to a fixed broadband connection.
Secondly, in a radio interview on Sydney’s 2GB Radio this week with host Ross Greenwood (transcript available here), Turnbull stated that he did not believe many Internet service providers providing retail services over the NBN would set the same price nationally for access. “Senator Stephen Conroy the Communications Minister today and I quote him: ‘Across Australia everyone gets the same price.’ Do you believe that’s true?” Greenwood asked Turnbull.
“Well, the Government can deliver the same wholesale price but whether, over the NBN, but whether retailers provide the same price remains to be seen,” Turnbull replied. “And of course from a customer point of view the only thing that matters is the retail price. Now Telstra I imagine will provide national prices but I don’t think many other companies will.” In this statement Turnbull was again factually incorrect. Major ISPs representing the overwhelming majority of Australia’s broadband customers — including Telstra, Optus, iiNet, Primus, Internode, Exetel and more have set standardised national pricing for the NBN, including in rural areas, due to the Government’s policy of providing a uniform wholesale national price. In fact, many existing ADSL broadband plans feature nationalised pricing schemes.
In a further statement, Turnbull alluded to accounting methods for the money being invested in the NBN project, responding to a question from Greenwood.
“So the $36 billion dollars the taxpayer has been promised that is off the balance sheet of Australia, do you believe ultimately that we’ll wake up one day and discover that the bill is more?” Greenwood asked the former Opposition Leader. “I think it’ll be much more,” Turnbull replied. “It is on the balance sheet, they’re just not running it through the budget statements, but it is definitely on the balance sheet. Now the problem is that the money they’ll invest in the NBN is going to be a lot more than it’s ultimately worth.”
Turnbull is correct that the Government has not included the cost of the NBN as an expense in its annual budget statements.
However, this is because — contrary to his second statement — the NBN is projected to eventually be worth more than it will cost to build. NBN Co’s projections, over several decades, show that the project will make an internal return on the Government’s investment of between $1.93 billion in the worst case to $3.92 billion in the best case. According to a research note recently published by the Parliamentary Library of Australia, Labor is technically correct to count for the NBN as an investment and not an expense.
In follow-up statements, Turnbull said that the Coalition’s rival policy would be “cheaper, because the approach we’re going to take will save billions of dollars”. “And it will be more affordable, because we will have spent less money on the network and so we won’t have to charge as much for access,” he added.
However, there is currently no available evidence to support the claim that the Coalition’s rival policy — which would see fibre to the node technology rolled out around Australia, instead of the more comprehensive fibre to the home approach favoured by Labor — would cost less than the current NBN policy, which is actually projected to make a return on investment — it will not be an expense and so will not “cost” anything. The Coalition has not released projected costs or return on investment for its proposal, but a recent analysis by Citigroup found that the Coalition’s policy would cost some $16.7 billion. The Citigroup report didn’t mention what financial return, if any, the Coalition’s proposal was slated to bring in on its own investment.
In addition, like Labor’s NBN policy, the Coalition’s rival policy would also see a substantial payment made to Telstra for the use of its copper network. Estimates of that cost vary, but are likely to also run in the billions. In a separate interview with ABC Radio National this morning (transcript available here), Turnbull said he didn’t believe Telstra would be paid “any more” under such an arrangement (it will receive $11 billion from NBN Co under the current deal), but it would get paid the money sooner as the network build would go faster if it was using fibre to the node technology, which doesn’t reach all the way to premises.
It is theoretically possible that the Coalition’s policy would make a return on investment proportionately greater than that of Labor’s NBN policy, but this would not be able to be estimated until the Coalition releases projected costs for its proposal.
In the same ABC interview this morning, Turnbull also said that although NBN Co’s mandate, allocated to it by the government, was to build a fibre to the home network to cover 93 percent of Australian premises, the organisation was being financially irresponsible. “They’re doing that without regard to cost, there’s never been a budget set for it and it’s going to cost whatever it will cost – it will be a lot of money, many billions of dollars as we know,” Turnbull said.
However, on this matter, Turnbull is again incorrect.
The NBN rollout does have a detailed budget. That budget is disclosed in the organisation’s corporate plan, which incorporates forecasts covering the three years from 1 July 2010 to 30 June 2013. The organisation is expected to shortly deliver an updated plan, following the release of the past plan in December 2010. According to NBN Co’s business plan, the NBN will cost between $36.5 billion and $44.6 billion to build over the next ten years, depending on how high variable construction costs range in that time.
In a separate statement made yesterday, following the announcement that the Australian Competition and Consumer Commission had approved Telstra’s plan to structurally separate its operations and migrate its customers to the NBN, Turnbull made further inaccurate statements. “Yesterday’s announcement of ACCC approval for Telstra’s Structural Separation Undertaking (SSU) does not, contrary to the claims of Julia Gillard and Stephen Conroy, effect a structural separation of Telstra,” he wrote.
It’s unclear as to why Turnbull made this statement. In follow-up paragraphs, he notes that structural separation of Telstra means that the customer access network (in Telstra’s case, the copper network used to provide telephony and broadband) is separately owned and managed from the retail business of Telstra. In short, to be separated, Telstra cannot have both wholesale and retail customers on its copper network. However, as Turnbull also notes, Labor will achieve this aim through building the NBN and shutting down Telstra’s copper network, with Telstra’s retail customers to be migrated onto the NBN infrastructure. This will have the effect of structurally separating Telstra’s operations — making Turnbull’s initial statement on the matter incorrect.
To be fair to Turnbull, the majority of his statements this week have been either correct or subject to debate. Opinions vary about the extent to which the NBN policy will have an impact on long-term competitive outcomes in the telecommunications industry or to what extent Telstra would be keen to assist a Coalition Government in building a fibre to the node network, for example, and it is impossible in many areas of the NBN debate to say who is precisely wrong or right. In this article we have sought to isolate and correct a number of demonstratably incorrect statements by Turnbull which made up a minority of his comments about the NBN this week — but we didn’t address the majority of his truthful or legitimately opinionated statements.
In addition, the Coalition has not been the only side of politics to have misled the Australian public about issues related to the telecommunications sector this week, with Communications Minister Stephen Conroy on Tuesday appearing to consciously state several factual inaccuracies with respect to the current implementation status of Labor’s controversial Internet filtering project.
However, the incorrect comments made by Turnbull this week also represent only the most recent occasion on which the Liberal MP has made factually incorrect statements regarding the NBN.
In several radio interviews in early February, for example, Turnbull stated that the National Broadband Network project would cause consumer broadband prices to rise higher than those currently on the market. However, unfortunately this statement was factually incorrect, given current NBN pricing. Opposition Leader Tony Abbott, also in early February, made several incorrect statements about the NBN’s funding model.
With all this in mind, as Delimiter has previously written, we would hope that the Coalition would tighten up its speech about the NBN in public in future — or at least provide some evidence to refute currently available evidence about the NBN. The debate about an important national project such as the NBN should not be a debate based on incorrect statements, but on fact.