news Malcolm Turnbull appears to have made a deliberate attempt to mislead the public about the cost of connecting to the National Broadband Network’s upcoming 1Gbps fibre service, claiming on national television last night that such connections would cost “at least $20,000” a month, despite the fact that the Shadow Communications Minister is aware the cost is likely to be much less.
Last night, the Liberal MP squared off against Communications Minister Anthony Albanese in an election debate on the ABC’s late night current affairs show Lateline. Among other issues, Turnbull was asked by Lateline host Emma Alberici whether the Coalition’s planned fibre on demand service would allow speeds of 1Gbps. Currently, Labor’s fibre-based NBN infrastructure only allows speeds of up to 100Mbps, but NBN Co has stated that it plans to launch 1Gbps speeds later this year.
“[Albanese] said that fibre to the premises can deliver one gigabit per second, 1,000 megs, and you’re quite right, it can,” Turnbull replied. “Do you know what it would cost to have a guaranteed one gig’ service? At least $20,000 a month. $20,000 a month in combined virtual circuit charges … The reality is this: if you want to have a guaranteed one gig service, your retail service provider will have to buy one gig of CVC for you and that is gonna cost $20,000 a month.”
“For the average household?” asked Alberici. Turnbull responded: “Well, for any household, which is why, by the way, nobody will buy it other than businesses that need a very big …”
The Shadow Communications Minister explained during the conversation that retail Internet service providers such as Telstra or Optus, who would be the ones actually selling NBN Co’s 1Gbps broadband services to the public, needed to buy what is called a ‘connectivity virtual circuit’ to link their customers’ broadband access back to the wider Internet.
Turnbull’s argument that 1Gbps NBN services will cost $20,000 per month appears to be based on the argument that ISPs will need to provision a 1Gbps CVC circuit in order to provide guaranteed speeds to retail 1Gbps services.
In a post on Delimiter in June, iiNet chief technology officer John Lindsay noted that the cost of such CVC circuits from NBN Co would normally be $20,000 for a gigabit connection per month. Normally, that circuit would be shared between several customers, because it is not likely that each customer would need the 1Gbps speeds continuously ; for example, 10 customers, all with 1Gbps theoretically connections may share a 1Gbps CVC circuit, meaning that the cost of the CVC circuit to each individual customer would be only $2,000 per month.
This so-called ‘contention ratio’ formula — 10 to 1 in the above example — represents normal practice when it comes to providing any form of broadband in Australia. Contention ratios of between 10:1 and 20:1, for example, are common in the provision of ADSL broadband, while higher contention ratios may be used by cut-rate ISPs in order to save money and provide customers with a slightly degraded quality of service compared with ISPs which charge higher charges. Contention ratios of 1:1 are only used for guaranteed very high-end corporate broadband services and are not expected to be used for retail broadband services under the NBN, or even the vast majority of businesses. Only a very small number of broadband customers, typically large corporations, will require such contention ratios.
There is also another charge with relation to broadband services — what is called the access virtual circuit or AVC. This charge relates to the monthly access costs which ISPs pay per customer to connect customers to the NBN. Taken together, these two costs — the AVC and CVC charges — represent what it will cost retail ISPs like Telstra, Optus, TPG and iiNet to connect NBN customers.
In the case of the 1Gbps service, NBN Co has announced (PDF) that it will charge retail ISPs $150 per month in terms of its AVC costs. Taken with its CVC pricing, this means that retail customers, both businesses and consumers, could conservatively expect to pay in the realm of $1,200 to $2,500 for a 1Gbps broadband service, based on contention ratios of between 10:1 and 20:1. It is also possible, given the high quality of the fibre to the premises network which NBN Co is currently building, that higher contention ratios may be possible, which would drive down the monthly cost of 1Gbps further, below $1,000. These are estimates.
It is believed that Turnbull is aware of these charges and of the detailed cost modelling which NBN Co has made public with regard to its wholesale costs. The Liberal MP has extensively discussed NBN Co’s wholesale financial modelling in public on several occasions. In addition, the Liberal MP’s awareness of the $20,000 CVC cost for wholesale NBN access, and his use of the term “guaranteed” and discussion of contention in the Lateline debate indicate that Turnbull is aware that the $20,000 cost represents the extreme high end, and not likely real-world charges, of what retail NBN customers may charge for 1Gbps services.
Because of this, and because Turnbull directly stated that “any household” will need to pay the $20,000 monthly costs under the NBN, and the primarily residential context of the segment of the Lateline discussion in which the comments were made it appears that the Shadow Communications Minister attempted to deliberately misrepresent the cost of connecting to NBN Co’s 1Gbps service.
The news comes as both sides of politics continue to make attempts to mislead the public when it comes to each other’s NBN policies, ahead of the upcoming Federal Election. Last week, for example, Communications Minister Anthony Albanese appeared to have issued a media release deliberately misleading Newcastle residents about how the Coalition’s rival NBN policy would affect the area, with the Labor MP falsely stating that the NSW city would “miss out” on upgraded broadband entirely under the Coalition’s plan.
Labor MPs in general are also engaging in misrepresentation when it comes to the Coalition’s NBN policy. A number of ALP election advertisements have inaccurately claimed, for example, that Liberal policy would see Australians forced to pay up to $5,000, or else they would be left “on the old, slow copper network”, while connection to Labor’s fibre-based NBN would be free.
However, the Coalition has also made a number of misleading statements about Labor’s NBN project over the past several years. In one of the more blatant examples of misleading commentary, Federal Shadow Education Minister Christopher Pyne inaccurately claimed on national radio in October that the National Broadband Network had not connected any customers at speeds of 100Mbps, despite the fact that in fact, 44 percent of NBN customers connected to the project’s fibre infrastructure at that point had taken up such speeds. There have been several dozen other similar examples over that period.
In a more recent example, several weeks ago Opposition Leader Tony Abbott inaccurately claimed that the rollout of Labor’s National Broadband Network in Tasmania will take “80 years” to complete, in what Labor’s Regional Communications Minister Sharon Bird immediately labelled a deliberate attempt to deceive residents and businesses in the state.
Similar to the misleading infographics distributed by Labor MPs over the past several months, an infographic currently published on the Facebook page of the Liberal Party of Australia misrepresents Labor’s policy. It conflates Labor’s initial, $4.7 billion policy outlined in 2007 with its reformed 2009 policy, falsely alleging a blowout from $4.7 billion to $90 billion in the project, and a decade-long project timetable extension.
Malcolm Turnbull has been invited to respond to the statement that his claim on Lateline last night was a deliberate attempt to mislead the public about the residential cost of connecting to the NBN at 1Gbps.
There were a number of misleading statements made by both sides in last night’s Lateline debate. I started making a list as I was watching it, but then gave up as both sides just made too many little deceptions to keep track of. Most of what was said was true, of course, but I’d say something like between five and ten percent of the statements made could be substantially challenged in one way or another. I am aware that both Albanese and Turnbull were a little taken aback at times by the questionable statements each were making.
However, of all the statements made last night, Turnbull’s claim about 1Gbps services costing $20,000 per month is the most false. His use of the phrase “guaranteed” to fit in the deception over 1:1 contention ratios, which you almost never see in the real world, was a nice little trick, but the $20,000 figure was rightly questioned immediately by the host, Emma Alberici, and I laughed out loud when I heard Turnbull claim that “any household” would need to pay that cost. If that was truly the case, then “any household” would also need to be paying exorbitant fees ranging from several hundred of dollars into the thousands for 1:1 “guaranteed” contention ratios under Turnbull’s fibre to the node plan. Clearly that won’t be the case.
$20,000 per month for a 1Gbps residential NBN fibre connection? Nope. That just ain’t going to happen.
Image credit: Office of Malcolm Turnbull