analysis The National Broadband Network Company and the Federal Government should standardise on the “premises passed” statistic to measure the network’s progress and stop using the confusing and amorphous “premises commenced or completed” measurement to provide concrete detail on how well it is progressing against its network rollout targets.
Last week, Communications Minister Stephen Conroy and Finance Minister Penny Wong published a media release detailing the release of NBN Co’s latest corporate plan covering the years from 2013 to 2015. As it made a number of statements regarding the progress of the NBN in general, Delimiter subsequently invited readers to fact-check the media release, in the interests of keeping the debate over the National Broadband Network objective and based on fact. This article is a follow-up to that article and the discussion amongst readers it created.
On the whole, most readers agreed that the majority of the media release was factual, as it generally attempted to provide a summary of information available in NBN Co’s new corporate plan and didn’t venture too far into controversial statements based on opinion without evidence.
The plan does indeed detail, as Conroy and Wong laid out, the fact that the NBN project is projected to make a return on investment of 7.1 percent for the Government’s investment. It also lays out the possibility of falling wholesale broadband prices, a small percentage increase in the capital cost of the infrastructure build, and a six month delay in its rollout. Furthermore, Conroy and Wong are correct in that the finalisation of a number of contracts, such as NBN Co’s deals with Telstra, Optus and various construction and technology companies will give the project as a whole a greater degree of certainty. There was some minor debate around the issue of wholesale prices, but we don’t consider this to be substantial enough to call Conroy out on it.
However, there was one point which Conroy and Wong made which was debated by readers and which Delimiter believes to be misleading. This refers to the claim that the Government is “on track to meet its target of having work for 758,000 fibre premises commenced or completed by the end of 2012”.
The issue of how the NBN’s progress should be measured has been a controversial one for some time. In February, for instance, Shadow Communications Minister Malcolm Turnbull made the point that NBN Co and the Government had stopped publicly referring to the previous “premises passed” benchmark, and had started referring to a new benchmark, which referred to a figure which included those areas where its network was active, where rollout activity was currently underway, and where work was due to start up until the end of the year.
Using this figure, Turnbull said, represented an “Orwellian change to the NBN definitions”. “The NBN has stopped publishing when people can expect to have internet services switched on at their premises,” he wrote at the time. “The NBN is now measuring how many premises they are working on, planning to work on and are planning to begin planning for. This Orwellian change to the NBN definitions is cold comfort for the millions of households, businesses and consumers who have spent the past five years waiting for their broadband to be upgraded.”
Although the “premises passed or under construction” figure used by Conroy and Wong in the media release and also used by NBN Co in its publicity materials gives more of a well-rounded picture to illustrate just how much activity is currently under way with respect to construction of NBN Co’s fibre network, it does not represent a firm figure which shows how many premises NBN Co’s network actually reaches to right now, and it should not be used to judge NBN Co’s rollout progress.
It seems obvious that NBN Co and the Government could easily inflate the “premises passed or under construction” figure up at certain points by commencing very preliminary construction in some areas but not actually completing that construction in a reasonable time frame; meaning that it is not a suitable statistic to measure the NBN’s rollout progress by. If the public is to measure the progress of the NBN by its latest corporate plan, as Conroy baldly invited commentators to do in his media release, that progress should not be measured by using such a nebulous measurement.
In its corporate plan, NBN Co provides two other measurements with which to judge the pace of its rollout. The first is defined as “premises passed or covered”, which is defined as being a state where the “shared network and service elements are installed, accepted, commissioned and ready for service, which then enables an end user to order and purchase a broadband service from their choice of retail service provider”.
The second is defined as “premises with active service”, which is defined as being a state where a valid service order is received to install the dedicated optic fibre cable connection to the premises’ optical network termination device. In short, the first measurement is counted when NBN Co has finished deploying fibre to a premise, and the second when that premise actually signs up to use the service.
Delimiter is strongly of the view that NBN Co, the Government and commentators should only refer to the “premises passed or covered” benchmark to judge the speed of the fibre and wireless network rollouts. The “active service” benchmark is less appropriate because it includes factors outside NBN Co’s control — such as when users decide to actually sign up to the NBN connection already delivered to their premise. This can also be influenced by the marketing activities of retail ISPs. While it is an interesting statistic to gauge early interest in the NBN, it is also fairly irrelevant when you consider that almost all current fixed broadband customers will eventually switch to the NBN’s fibre eventually, as their existing copper and HFC cable connections are switched off by Telstra and Optus.
With this in mind, the following table, taken from its corporate plan, illustrates NBN Co’s premises passed targets for the next few years until 2016. This is the benchmark which Delimiter will be holding NBN Co accountable for, and we recommend other media outlets do the same:
To sum up: Ministers Conroy and Wong: Although such a measurement can provide additional colour, Australians do not fundamentally care about statistics detailing how many premises NBN is currently constructing fibre to. Australians do care about the number of premises which NBN Co has actually connected to its network and which are ready to start using fibre, as this is a hard measurement about actual progress of the NBN rollout and represents an accurate judgement of which areas of Australia are “NBN ready” and which not. Any other figure is too amorphous and open to interpretation to provide a real judgement on how fast the network is being rolled out. We recommend all concerned start referring only to the “premises passed” benchmark to measure the progress of the NBN.
Image credit: Sambo9, NBN Co Corporate Plan