NBN originally just a “media stunt”, says IPA


blog The story that Labor’s flagship, $37 billion National Broadband Network project was originally drawn up in its first, limited form on the back of a napkin in a Prime Ministerial plane flight has been a pervasive one in Australia’s telecommunications industry, even if evidence for this has been hard to find. But just how well-developed was the NBN policy, five or so years ago when it was first put together by Communications Minister Stephen Conroy and then-PM Kevin Rudd? According to free market thinktank the Institute for Public Affairs, not very well-developed at all. The IPA’s John Roskam and James Paterson write this week in an analysis of Rudd’s leadership style and the failures of the media (we recommend you click here for the full article, it’s actually worth reading quite aside from the NBN paragraphs):

“Because he had no faith in his ministers, Rudd encouraged his personal staff to make policy decisions without input from ministers and their departments. That was how the tragedy of Labor’s ‘pink-batts’ came about. One of the reasons the National Broadband Network, the largest infrastructure project in the country’s history, didn’t have a cost-benefit analysis applied to it was because the policy didn’t go through any sort of regular cabinet process. It was conceived only as an ‘announceable’-a media stunt for the political benefit of the government.”

Now, Roskam and Paterson based much of their commentary in this article on revelations about Rudd’s time at the top outed in a new book, Speechless: A Year In My Father’s Business, published by journalist and former Rudd speechwriter James Button. However, I bought the Kindle version of the book this morning and combed it fruitlessly for evidence of the IPA pair’s NBN claims. Button has almost nothing to say about the NBN. So we have to rely on Roskam and Paterson’s word alone for this one.

Personally, and bear in mind I have been a technology reporter continuously in Australia for most of the past decade, dating back to the days when Helen Coonan was Communications Minister, I do believe it is true that Conroy and Rudd didn’t do enough due diligence on the NBN proposal before they put it together — the NBN policy that they took to the 2007 Federal Election was quite threadbare.

However, it did contain the theads of great policy, and in April 2009, when it massively revised and expanded upon the advice of the Government’s then-NBN expert panel, the NBN policy became a very viable and very workable strategy which would solve many of the ongoing issues in the telecommunications industry while simultaneously delivering massive service delivery benefits to all Australians and even making the Government a profit. Since that time, the NBN has stood the test of time and criticism. So does it matter if the original NBN policy, and even perhaps the 2009 version, was something of an unfleshed-out “announceable”? Not at this point. It’s the end result that counts, in this case — not the nitty gritty of how we got there.

Image credit: Australian Civil-Military Centre, Creative Commons


  1. To be completely honest while I really really want the NBN the most important thing in my book is that it is 99.99% reliable. (Which the Labour NBN should be)

    My current ADSL disconnects 3 times a day, partially from the router but also the copper is barely capable of making a phone call.

  2. So does it matter if the original NBN policy, and even perhaps the 2009 version, was something of an unfleshed-out “announceable”? Not at this point. It’s the end result that counts, in this case — not the nitty gritty of how we got there.

    Bingo. The idea and how it was come by isn’t important as long as analysis and planning on it is done properly before being implemented. It has been and so far, continues to be. If it still continues along that line, there’s no reason this won’t become a very good policy decision….even if it WAS based on scribblings on a napkin….

    It’s amazing how many people can’t get past the fact that the conception of an idea might be informal or highly unorthodox, but its’ actual implementation can still be done well and the plan can still be efficient and manageable.

    • Clarifying my thoughts while I ramble a little.

      In general, we usually see a Govt (of all levels) announce an idea, send the idea to committee, before doing nothing whatsoever with the results of that committee. Then a while later repeat the process. Might be 5, 10, 20, or even 50 years before that initial germ of an idea sees the real light of day.

      For once, the idea has (broadly speaking) gone through that process (idea = ‘napkin’, committee = NBN panel), before something WAS announced that was both doable, and ready to start.

      Why do people complain that they actually followed through with their announcement? If they didnt, the complainers would have still been whinging, and called it a broken election promise.

    • > Bingo. The idea and how it was come by isn’t important as long as analysis and planning on it is done properly before being implemented. It has been and so far, continues to be. If it still continues along that line, there’s no reason this won’t become a very good policy decision….even if it WAS based on scribblings on a napkin….

      Unfortunately there is plenty of evidence that with many of Labor’s grand schemes that they are poorly thought out and the beneficiaries are not who you might initially think.

      The classic example of this is the foolish decision to introduce speed tiers. You will hear Gillard and Conroy releasing press releases about Gbps speeds in response to Google’s fibre roll out in Kansas followed by statements about how the fast NBN will revolutionise areas like health and education. When you open the NBNCo Corporate Plan, you discover the reality is maybe 5% on 1Gbps in 2028 and 50% on 12/1Mbps. Then it dawns that the revolution promised by Labor won’t actually be seen by the majority because they are opting for the slowest speed because of financial constraints.

      The NBN is going to be great for the rich because they will be able to enjoy the fast services subsidised by a national rollout, but the poor will be left with slower speeds and may well opt for 4G because data plans come with their mobile and are faster.

      Policy planning does matter. Unfortunately Labor all too often ignore the public servants who provide valuable advice, to the detriment of the nation. The tax review is yet another example of policy advice being ignored.

      • Considering we are here to discuss tech/NBN etc, it’s sad when bigotry rears it’s ugly head :(

      • So was speed tiers a policy or business decision? Because you talk about the policy discussions and press releases by Labor and then go straight to talking about the business plan…

        • Keep in mind you are trying to have a rational discussion with someone confirmed to be incapable of reading basic graphs.

      • “Then it dawns that the revolution promised by Labor won’t actually be seen by the majority because they are opting for the slowest speed because of financial constraints.”

        In fact the majority are opting for the highest speeds with only a small percentage opting for the lowest speed, to teh point that some ISP’s aren’t even offering the lowest speed.

      • This is obviously a NBN fanzine, and by inference an ALP love-in. But if you’re ears are not deaf to this Telecoms expert then you might hear me when I say the NBN is nothing more than a re-incarnation of Telstra. It is Telstra Mk 2. The only possible competition between telco/SP’s is on price. The backhaul is common infrastructure shared by all.

        If you’re only experience of Telecoms is Australia, then I forgive you for thinking that the NBN is a “light at the end of the cable”. But everywhere else in the world people have come to realise that the only ultimate guarantee of service levels is free market competition. Look at what’s happening to Vodafone Aus (coverage issues) and apply the NBN approach to mobile, it wouldn’t matter who your SP is, because they all use the same masts etc. You can swap SP and pay a different price for the same service interruptions.

        Gov’ts should limit their role to regulating. Make sure the market is open to competition and customers are free to shop around with measures to make sure service providers must live up to their marketing schpiel. Make sure that incumbents do not use their influence to prevent competition or restrict customers and punish them commercially when they do.

        Left to the free market, you could have had NBN speeds and service levels for about 10Bn, and a proper choice between SPs.

        If the NBN is so good (and by that I mean commercially “obvious” to the consumer), why are take-up rates at ~10%? Is it because they’ve targeted ALP voting ‘burbs as priority – one of the most blatant pieces of pork-barrelling I have ever experienced.

        • The free market had their chance to make a fibre network. Instead, The Free Market made sure I was stuck on dialup until the late 00s.

          Also, how is this a reincarnation of Telstra? If anything it is like the old Australian Telecom.

        • An ALP love-in? You’re kidding right? The NBN is just the right policy. I don’t support any of the parties, but most liberal voters I talk to just want to ditch the Turnbull disaster and endorse the NBN as a bipartisan deal.

  3. That’s funny, I always though the IPA was a media stunt for the right wing elements in Australia. I guess when your a media stunt yourself, everything else looks that way to you…

    • Perhaps they should be more worried that the Coalition’s plan is still at the “back-of-the-envelope” stage and hasn’t yet moved past it…

      • “Perhaps they should be more worried that the Coalition’s plan is still at the “back-of-the-envelope” stage and hasn’t yet moved past it…”

        Which envelope would that be?

        Since it is supposedly (depending who you talk to) a mixture of different technologies in different regions that would actually have to be a whole heap of envelopes scattered around the place in various degrees of completeness with no overall thought yet being given on how to tie them all together and how they would be paid for.

      • I think I’d be happy for any policy at all from the Coalition, even if on the back of an envelope. Not much seems to come out of them except hot air from both ends. Least of all, a scribble of any kind. “Eleventy” doesn’t count.

        • Plenty of time TechinBris, if the Coalition follow the Labor precedent of the 2007 election lead up they have even more time, the Coalition could go onto this years election with one policy then do about complete about turn and change it after they get in.

  4. To address the article though, don’t all great ideas go through a “back of an envelope” stage?

    Surly the IPA isn’t suggesting that large projects (heck, even small ones) just get coughed up as a fully fleshed proposal on a desk the day after someone suggested it?

    All these “think tank” types need to get out more…

    • Indeed.

      The project I am currently enshrined to started in November 2011, and was indeed scribbled up on a white board initially. The idea as it came from the customer, was an off-the-cuff dropped comment made by their CEO at a board meeting.

      People cottoned on to the comment, it became an idea, and we were engaged to deliver it. It started on a whiteboard and a couple of pieces of paper.

      When completed, it will be worth millions to us over multiple years.

      From little things, big things grow.

          • Nice one. Cant see the site from here at work (will check it out from home), but nice to see some prelim work.

            I think the point was that most of the time an idea starts small, and in general ‘on the back of a napkin’ anyway. Maybe not literally, but in general you wouldnt start with a fully worked up business plan, with funding and income expectations, and so forth.

            They come after the napkin, when you realise the idea might actually work. But some basic head scratching, and napkin scribbling has led to many a breakthrough.

        • Does Delimiter puplish weekly/daily,readership statistics and profit reports or stats on Renai’s demand, do we have an FOI request to get these valuable statistics immediately?

          • Delimiter is not a publicly owned corporation, nor is its traffic/commercial progress an important subject in the upcoming election :)

        • 1. Make web site
          2. ???
          3. Profit

          Think I have seen the Delimiter business plan before ;)

          • Actually I had a 20 page business plan with about 8-9 contingency plans for making revenue before I launched Delimiter.

            And I still screwed up almost everything in the first year. In the second year I gradually worked stuff out, and in the third year things settled down and we started making proper money and allowing me not to have to work 12 hour days :)

            Most new businesses seem to take at least two years before they achieve any degree of stability.

  5. tinman_au is dead right, R.

    (I stopped reading after this – “Nor have those prejudices been so unanimous as they are today, particularly when it comes to issues like climate change.” The IPA would obviously prefer the media to keep quiet about that which withers any credibility they might claim about depth of reporting…)

  6. I guess Gillard doesn’t trust her ministers and their departments either. She didn’t invite treasury to meetings with the miners to negotiate an agreement about the mining tax. So far the miners have paid zero.

    Who would have guessed that a bunch of miners might have more financial nous than a group of political staffers.

    • Mathew, as I understand it, the mining tax is two-fold – it’s not just about $’s/financial nous, which unfortunately is beyond some to comprehend :/

      If mining companies make obscene profits they will pay more and more tax… but if they choose not to rape Australia of our resources, they won’t.

      As such the mining tax must be working, as it’s deterring greed… as miners aren’t emptying us out and consequently not having to pay extra taxes. If they later decide to get greedy they will pay!

      Prior to the tax they were choosing to empty us out and still not paying… so which is prefereable Mathew?

      • +100

        Nice summary, wish I could have put it so simply over Christmas. As it is, with the price of iron ore going up again, it might still have an effect this year.

        Its almost doubled since Swan had to do his backflip re: a surplus, meaning the mining sector might still turn a big enough profit for them to pay the resource rent.

  7. Well Google, Apple and Pixar started in rented carports. Facebook started with the late night blog ramblings of a university student. XKCD started with bored student sketches on graph paper.

    If anything the napkin is a little bit too fancy. Although presumably it isn’t for James Paterson’s standards. Maybe he’s used to ideas being pressed in gold leaf on the finest silk ;)

  8. I stopped reading at “According to free market thinktank the Institute for Public Affairs”. (Ok, so I didn’t but i should have.)

    As someone well versed in Australian politics, I struggle to care less what the IPA have to say. I know what they are, I know who they are and I know what they want and none of it is useful, constructive or desirable. I don’t really see how they can continue to be published or quoted beyond the Murdoch press. You won’t find a more biased viewpoint anywhere.

  9. Allow me to be just a teeeeeny bit sceptical about (e.g. outright disregard) what a right wing thinktank claims about Labor policy.

  10. Right-wing think-tank? Isn’t that, by definition, also known as a septic tank? *scratches head*

    • I’d take the Septic tank over the Right -wing Think Tank. It’s more useful in processing shit. The other just produces more of it.

  11. To my mind the publicity stunt is IPA sledging the nbn to get their name in reportage, their name under peoples noses and possibly eyeballs on their website (I’m not going to help them with a link). They have been getting involved lately I’ve noticed, and my thought is as a think tank they are trying to get traction for their ideas – free marketism basically.

    Renai may have obliged in putting their name up but I fully agree – whatever the genesis of the nbn the fact is the work done to get it where it is, lack of cba notwithstanding, is anything but a stunt and certainly delivered services are genuine high grade internet products.

    They can take their free market hobbyhorse and shove it.

  12. I would suggest that there should be some kind of impartial third party who grants permission for groups to refer to themselves as ‘think tanks’. The most obvious criteria would be the ability to produce thoughts that had any merit.

  13. Fortunately all LNP policy comes straight from the originators brain directly into a CBA, detailed design, and business case.

    I mean look at the detail we have available about theLNP broadband policy. It’s all there. Like the way you can see the detailed technical design to the point where we know how many and where the street cabinets will be installed, to the number of klms of fibre that will be installed to set up all the nodes, the details of the cost of acquiring Telstras copper network and how long the negotiations will take, the precise rollout dates from inception to when everyone will be switched on, the cost to the taxpayer for the subsidies provided to communications companies to build it, and of course the expected ROI.

    It’s all there, down to the last detail, or at least I think it is, if only they’d show us.

  14. No one seems to have picked up this error: the article talks about Rudd and Conroy, but the photo at the top is Rudd and Mike Kelly (the Member for Eden-Monaro).

  15. So a right-wing club says “the NBN was badly considered at the start”. Are they saying it’s bad now? Are they saying the opposition’s policy is better (something I would expect the IPA to say of any opposition policy)?

    From Wikipedia:

    “The Institute of Public Affairs (IPA) is a libertarian public policy think tank[1] based in Melbourne, Australia. It advocates free market economic policies such as privatisation and deregulation of state-owned enterprises, trade liberalisation and deregulated workplaces, climate change skepticism (through its environmental subsidiary the Australian Environment Foundation), and the accountability of non-government organisations (NGOs).”


  16. Does anyone really believe anything that comes out of the Industrial Propaganda Association (IPA) anymore?
    After all, the written articles from them have the logic of a team of full-frontal lobotomized Sociopaths in an Asylum for the incurably insane. Good for a laugh, but frighteningly horrific if you took their rantings seriously.

  17. This article is a somewhat revisionist interpretation of what really happened. If you recall that when Rudd got elected in 2007 he first proposed a far cheaper (and a little slower) fibre-to-the-node network. The network was estimated to cost $15 billion including a government contribution of $4.7 billion. After the election, Rudd issued a request for proposals to the private sector to build the fibre-to-the-node network. Problem was that no company could come up with the odd $10 billion required as well as meet all the governments requirements – in other words, the government didn’t have a clue about the commercial realities involved and the private sector didn’t want to touch it with a barge pole. Additionally it was suggested that $15 – 20 billion would need to be paid to Telstra in compensation. Only then did Rudd terminate the request for proposals, having wasted everyone’s time and money in the process. Knowing he would face of lot of heat from the media he and Stephen Conroy came up with a quick fix. After all why spend $4.7 billion of taxpayer dollars when you can spend $40 billion? The new and improved NBN fibre-to-the-home policy was announced to the media in absence of it going to cabinet, Treasury, the Productivity Commission, etc, and in absence of any cost/benefit analysis. It was a political fix for Rudd and nothing more. I’m pretty sure if we had gone with FTTN it would have been finished by now and we would have lots of money left over to fund the NDIS and we wouldn’t have had to cut back on welfare for single mothers…

    • you know they cut the payments for single mothers for the stupid surplus commitment, right? the government makes plenty of mistakes but you’re conflating them.

      the money is not all spent at once either.

      • Pretty sure they didn’t meet their surplus commitment even though they spent three years repeatedly banging on that they would. I think when it comes to taxpayer dollars it is reasonable to conflate the various ways it is spent as it illustrates a government’s priorities. In this case it is more important for the government to spend an extra $35 billion on a gold-plated FTTH NBN instead of on people with severe disabilities and those that are struggling to make ends meet – all for the government to save face over an initial botched attempt back in 2007. Had we gone with FTTN instead we would have both the NBN *and* an NDIS in place by now rather than having to wait to 2017 for both.

        • again, it reads like you think they spent 35 billion in one go. this isn’t starcraft, its a government budget.

        • Totally ignoring of course Ian, that as politicians aren’t comms experts, a panel of actual comms experts was assembled to advise on the RFP….and their conclusion…”FttN is unviable”!

          • So why go to the 2007 election with FTTN then? Why spend a year and millions of dollars on the RFP in the first place? Why have a ‘panel of comms experts’ decide ‘FTTN is unviable’ only after the RPF had collapsed? Why not before the RFP had gone out?

          • So why go to the 2013 election with FTTN then? Why spend a year and millions of dollars on a CBA in the first place? Why have a “panel of communications and financial experts” decide that “FTTP has a better cost/benefit than FTTN” only after the CBA has concluded? Why not listen to telecommunications experts before engaging in a CBA?

            It takes time, especially when you consider politicians make decisions based upon limited information, to come to any sort of political conclusion. You would be wise to accept this, and just allow the process, unless you have a better idea for a political system?

          • Because they needed the PoE to adjudicate on the FttN (remembering too the actual RFP asked for FttN or FttP) option they took to the electorate.

            It was the PoE who found FttN not a viable option, so the government listened and rightly improved it.

            So if you want to bag them for admitting they got it wrong… FttN was no good after all, feel free. But I’d personally prefer governments of either persuasion to listen to the experts in thier field and eat humble pie than stuff up.

    • What ‘really’ happened, was not what you just wrote, that’s “your own take”, sans pertinent factual aspects. Arguably the most important aspects, which makes your comment at best questionable.

      Firstly FttN is not a “little slower”? It is markedly slower because of the need of copper – fact.

      “The Government didn’t have a clue about commercial realities”. Regardless of whether that’s true or otherwise, recognising that they didn’t have the necessary expertise in the ICT field, they brought together a 7 member, Panel of Experts (PoE) who did/do have the expertise, to adjudicate on their behalf … Fact and a most important fact, which you ommited and one which therefore, pretty much makes most of your comment invalid.

      “Problem was that no company could come up with the odd $10B”?. Fact – there were 5 “compliant proposals submitted” (Acacia, Axia, Optus, TransACT & Tassie Crown) requests which although not comprhensive, met the basic requirements. There was also 1 non-complaint request (Telstra). However there is some credence to your comment (from the PoE) – “There has been a once-in-75-year deterioration in capital markets that has severely restricted access to debt and equity funding. As a result all national proponents have either found it very difficult to raise the capital necessary to fund an NBN roll-out without recourse to substantial support from the Commonwealth or have withheld going to the market until they have certainty that their Proposal is acceptable to the Commonwealth.

      Interestingly, when we speak of CBA’s, biz plans etc and how wonderful private enterprise is, here’s what else the PoE said of the proposals – “All Proposals were to some extent underdeveloped. No Proposal, for example, provided a fully developed project plan. None of the national Proposals was sufficiently well developed to present a value-for-money outcome”.

      “I’m pretty sure if we had gone with FTTN it would have been finished by now and we would have lots of money left over”. Vs. the panel’s findings (remembering again: no FttN proposal presented value-for-money) – “The Proposals have also demonstrated that rolling out a single fibre-to-the-node (FTTN) network is: unlikely to provide an efficient upgrade path to fibre-to-the-premises (FTTP), because of the high costs of equipment associated with rolling out a FTTN network that would not be required for a FTTP network (i.e. FTTN is not a pre-requisite for the provision of FTTP); and ” likely to require exclusive or near-exclusive access to Telstra’s existing copper sub-loop customer access network (CAN), the so called ‘last mile’, thereby confirming that strong equivalence of access arrangements would be essential. As well, providing such access to a party other than Telstra runs a risk of liability to pay compensation to Telstra. The Proposals have this risk remaining with the Commonwealth but they have not addressed the potential cost to the Commonwealth of any such compensation. In any event, the Panel considers that no Proponent could accept the cost risk and continue to have a viable business case.

      “The Productivity Commission/CBA” – this one always makes me giggle. Because people such as yourself come here telling us that governments and GBEs have no idea about commercial realities, leave it to the experts in the private sector – when, the PC you want to adjudicate is a GBE.

      Finally termination of the RFP/NBN = political fix nothing more – The PoE’s final dot point. “The Panel can see a way forward to achieve the outcomes sought by the Government and has provided that advice in confidence to the Government because of the commercial sensitivities arising.”

      Some 3 months later, the current NBN announcement was made!

      So please Ian. If you are going to quote “what really happened”… please actually do so. Thank you :)

  18. ‘People such as yourself’? Gee – thanks for the prejudice :) Ultimately your arguments are are actually your opinion and slamming the word ‘fact’ at the end of various sentences will necessarily make them a fact. It seems a little odd that you consider yourself in a position to unilaterally decide which opinions on this article are ‘valid’ or ‘invalid’. Surely you mean those that you agree with or disagree with?

    Here are some facts: http://en.wikipedia.org/wiki/National_Broadband_Network

    The point regarding the Productivity Commission is that when the private sector risks large amount of capital they perform a cost-benefit analysis. If they get it wrong – they go broke. When then government risks large amount of capital they typically seek input from the Productivity Commission. In this case, they didn’t.

    BTW, FTTN is not markedly slower than most the plans being offered by the NBN.

    What I think is interesting is your strident defence of all things ALP including the poorly designed mining tax.

    • Mate you tried to pass off half the story “as what really happened” and were found out. I just gave the info and all of it – I didn’t omit the important bits. No prejudice intended – apologies if I offended, not my intention.

      I also don’t recall mentioning Labor or the Coalition by name once (either positively or negatively) and if you can’t accept that, it shows it isn’t me who has the political rose coloured glasses problem.

      As for the mining tax, it’s failed as a tax, but not as a deterrent.

      BTW – thanks for the URL, but don’t rely totally upon it, because people such as us can add info ;)

    • Pro-tip: If you’re going to call someone out on a allegedly hypocritical comments presenting opinions based as fact do not utilize Wikipedia to do so. Wikipedia, due its nature, is just as likely to be fulled with political bias as either of your comments.

      BTW, FTTN is not markedly slower than most the plans being offered by the NBN.

      And while we’re on the subject of presenting opinions as fact, let’s look at this little nugget objectively shall we?

      First off, a little graph: http://www.buckconsult.co.uk/fttx/graphvdsl2.png

      Now, this, my dear friend, is the result of a little property known as attenuation. All signal transmission mediums suffer this from some degree, however copper is particularly bad compared to optical fibre.

      As you can see the longer the distance, the less of the signal successfully makes it to the target destination. Unfortunately having shorter line lengths results in increased cost and works because of the cabinets that have be installed. Cabinets that need to have fibre installed in them.

      So, your statement is entirely dependent on one major factor: the density of the nodes. If you chose to set the maximum line length at a kilometer, for example, you will receive about 35Mbps, or 20Mbps if the client chooses not to upgrade their modem. However to ensure everyone can get a more reasonable 70Mbps you need to aim for a maximum line length of 500 meters.

      There is actually a point where the works saved by utilizing FTTN is countered directly by the fact that you need to use active nodes for FTTN instead of passive nodes, like you do with a PON based FTTP solution. Now I don’t know exactly where this break even point is unfortunately but the proposals made by the Coalition are getting very close to it.

      With a PON solution, which suffers less problems due to attenuation and can actually deliver the promised 2.5Gbps/1.25Gbps shared bandwidth (via the GPON standard that NBN intends to use, there are other, more efficient standards) to all 32 users connected to that GPON, regardless of where they happen to be.

      In other words, if you want a faster connection, you can get it. With VDSL2 based FTTN solutions, what you get is quite simply what you get and there is nothing you can do about this.

      So, your statement is correct, provided you add the following footnote: “with adequate provision made in order to minimize line length”. However, your statement is also misleading, for reasons outlined above.

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