news Shadow Communications Minister Malcolm Turnbull has sharply rejected a column by high-profile business commentator Alan Kohler this morning which argued the Coalition’s NBN policy as being “madness”, describing the Business Spectator founder’s words as “pure fantasy”.
In an article this morning entitled “The Coalition’s NBN policy is madness”, Kohler argued that the Coalition’s rival National Broadband Network policy was unworkable, as the Government’s existing fibre to the home-based NBN project would be too far advanced to stop before the next Federal Election and that the Coalition’s fibre to the node-based alternative would require negotiations with Telstra which would see the balance of power overwhelmingly shifted to Telstra’s side of the table.
“Don’t do it Malcolm. More importantly, don’t go into an election having promised to do it – you will soon find yourself in quicksand and eventually go down as the worst Communications Minister ever,” wrote Kohler.
In response, Turnbull published a statement on his site this morning entitled “Alan Kohler’s NBN fantasy”. Alan Kohler’s column today “The Coalition’s NBN policy is madness” is pure fantasy,” the Member for Wentworth wrote.
Turnbull pointed out that Kohler had predicted that by the time of the next election, the NBN would have “about a million” premises connected to its fibre to the home network. However, Turnbull said, NBN Co’s own corporate plan showed that there would be 54,000 premises in total connected to the NBN’s fibre by June 30, 2013, with only 341,000 premises passed.
“Even if he confused “connected” with “passed”, he is out by a factor of 3,” wrote Turnbull. “So where does the 1 million figure come from? Alan should explain it or publish a correction. He owes that to his readers, and of course to the shareholders of News International who just paid him $30 million for the Business Spectator. Further, it is far from certain that the 54,000 figure target will be met by June 30 next year – after all as at May 2012 the NBN Co had less than 4,000 premises connected to the FTTP network.”
According to NBN Co’s corporate plan (PDF, page 36), Turnbull is correct. By June 30, 2013, NBN Co is forecasting that it will have connected 286,000 premises in so-called ‘brownfields’ areas (where existing telecommunications infrastructure is available) and 55,000 in greenfields areas where it is not. The company estimates that by that date some 44,000 customers will be using the NBN’s fibre in brownfields areas, and some 10,000 on greenfields. However, NBN Co is also planning to have commenced construction to many hundreds of thousands of premises more by that stage — around a quarter of a million premises by the end of 2012, and more by mid-2013. By 2015, the company plans to have fibre under way to some 3.5 million premises in 1500 communities in every state and territory in Australia, according to its three year rollout plan.
Turnbull also took aim at Kohler’s claim that it would be difficult to reach an equitable agreement with Telstra over the Coalition’s rival NBN policy. “As far as Telstra is concerned a move to FTTN does not require major revisions to the deal with NBN Co (other than securing access to the D side copper) and would advantage Telstra because more customers would be switched over to the NBN network sooner and so the payments to Telstra would be accelerated with a consequent higher [net present value],” said Turnbull. “As an example BT in the UK passed 7 million households with its FTTN rollout in just the last year.”
Turnbull added that Kohler’s argument about a “two tier internet access regime” fundamentally misunderstood the nature of the Internet, “whose whole point is that it enables the propagation of signals over a range of networks and channels”.
“The Internet is a network of networks – fibre, copper (of many varieties), HFC, wireless, satellite – and it is that interoperability which is one of is greatest strengths. The issue for customers is not the particular medium of communication connecting their device to the Internet but rather the quality of the experience,” Turnbull wrote. “If bandwidth is sufficient for their needs, then whether it is on HFC or VDSL or GPON or wireless or a combination of some or all of them is not particularly relevant if it is relevant at all.”
“It has to be remembered that the speed of connection is determined by the slowest segment of the network between the customer’s device and the server with which they are connecting which in many cases may not even be in Australia.”
“And as for saying I should ensure the NBN is delivered “on budget” – if only there was a budget! The NBN Co has no budget. It has a project the scope of which was given them by the Government and they regularly provide estimates of what it will cost. There is no budget in the sense of a cap or ceiling on what they can spend. It is exactly like asking a builder to build you a house with no contract other than to pay him what it costs.”
So who’s right here, one of Australia’s most respected business and finance commentators, or one of Australia’s most respected politicians? It’s a Mexican standoff. Thankfully, we have an impartial adjudicator — yours truly ;)
In this case, if you examine the statements made by each side, the facts of the matter are that the arguments made by both sides are largely accurate, but neither tells the whole story.
Kohler is fundamentally correct that the Coalition’s alternative NBN vision would require a fundamentally risky and difficult reworking of the Government’s current NBN project. Yes, the NBN will be substantially advanced by the time of the next Federal Election. Yes, a new deal with Telstra will be tough. Yes, a combo FTTN/FTTH NBN rollout will result in a two-tier Internet access regime in Australia. These facts are all beyond dispute.
However, Kohler has probably exaggerated much of the risks in the Coalition’s NBN policy. For example, it is a fact that Telstra has stated it doesn’t see a reworking of its contract to be too big a deal, and it’s also a fact that the NBN’s schedule delay means the overwhelming majority of its network will not have been rolled out by the next election. In addition, if Turnbull is successful in delivering a nationwide FTTN network in a timely fashion, he will not be seen as Australia’s “worst Communications Minister ever”. Most Australians will probably be grudgingly happy (at least for a decade or so) with that result, delivering better broadband as it will.
Turnbull is also fundamentally correct in his assertions. Kohler probably wasn’t as precise as he could have been, in discussing the NBN’s rollout targets; Turnbull is correct that internationally, fibre to the node rollouts have been completed by companies like BT, and he is correct that the NBN’s budget is a movable beast and that many broadband customers don’t differentiate between technologies but between experiences.
However, Turnbull has probably exaggerated the simplicity of moving from a FTTH plan to a FTTN plan; he has completely ignored the fact that globally, most successful FTTN rollouts have been done by incumbent telcos, which wouldn’t be the case in Australia’s situation, and he has also ignored the fact that there is a huge qualitative difference between various broadband technologies (such as HFC and fibre), and that difference will only become more exaggerated over time as bandwidth needs increase.
I think this little skirmish between Kohler and Turnbull does much to illustrate the nebulous nature of much of the current NBN debate. By focusing on some key facts and omitting others, each side can easily make it appear as though they are the only ones in possession of the gospel truth. But the actual, objective truth is always a great deal more complicated, and usually incorporates aspects of both.
Perhaps my final comment on this issue would be that it’s not Alan Kohler’s responsibility to set national telecommunications policy, only to comment on it. But it very well may be Malcolm Turnbull’s, in about a year. However, Mr Turnbull has not yet disclosed key aspects of the Coalition’s rival NBN policy, and refuses to answer core questions about how it would function in the real world. This is objective truth. It is this fact which is behind much of the underlying tension in Kohler’s article. If Turnbull came clean on the Coalition’s policy, maybe he wouldn’t be constantly forced to defend its nebulous nature as he has done this morning.
Image credit: Office of Malcolm Turnbull