full opinion/analysis by Renai LeMay
13 August 2013
Image: Office of Malcolm Turnbull
Both Labor and the Coalition have evolved their National Broadband Network policies to the point where, on paper at least, they are viable and would deliver Australians substantial broadband service delivery improvements. But can either side be trusted to live up to their promises? History and analysis of the plans suggest that no matter who wins the election, very little will go as planned.
On last night’s edition of the ABC”s late night Lateline program, the Australian electorate got a real treat. Two senior politicians, one each from either major side of politics, sat down with a seasoned journalist, and got into a furious debate about something which really matters — how best to provide faster broadband to all Australians.
Both sides scored valid points during the debate. Communications Minister and Deputy Prime Minister Anthony Albanese was able to successfully push the Federal Government’s point that universal fibre represents the future of Australia’s telecommunications needs and that the Government’s existing NBN project would be able to provide for the nation’s broadband needs for the forseeable future.
For the Opposition’s side, Shadow Communications Minister Malcolm Turnbull also performed admirably, convincingly arguing that the Government was out on a limb with its costly and time-consuming fibre to the premises NBN rollout, and that it do better to follow international best practice being used in countries such as the US, UK, Germany and France and pursue a cheaper fibre to the node rollout style that would get next-generation broadband in the hands of all Australians much quicker.
Playing the part of adjudicator, host Emma Alberici also did an admirable job. In an age where it has become common for journalists to let politicians get away with blue murder, the Lateline host never let her subjects get too far out into pontificating before she reeled them back in. Alberici, who had obviously researched the NBN debate extensively, pinioned each side repetitively on key weaknesses in their arguments, probing for the truth behind the facade of political spin. The journalist was able to press Albanese hard on the Government’s NBN plan, while the Coalition’s financial estimates also came under fire. There were quite a few moments which reminded viewers why great journalism itself is always necessary — even if the institutions which host individual journalists sometimes do so much wrong.
What emerged from the debate between the two sides was something extraordinary in Australia’s political climate: A substantive, detailed, complex policy decision, displaying to perfection the key philosophical differences between Australia’s two major sides of politics. From Labor, as is its wont historically, Australia got a big-spending vision of a landmark infrastructure project which would serve the nation’s needs for many decades. From the Coalition, a more conservative, more market-based vision emerged — but one that had the promise of delivering on its aims more quickly and with less government investment. And all the while, the press kept the bastards honest. Gold.
Even I, as an expert commentator who has covered the National Broadband Network project for its entire life, found it very difficult to know which side ‘won’ the debate. Which option is better — Labor’s NBN vision or the Coalition’s? Both had many valid points, but there were also weaknesses exposed in each. I really have no idea how the electorate will be able to judge between the two policies and the two candidates for the future role of Communications Minister, when both visions are quite persuasive.
There was, however, one little problem with last night’s debate. As I watched it, I couldn’t help but think to myself: “Is this gloriously stimulating, intellectual debate just a whole lot of hot air? Will the parties actually be able to deliver on their promises? Is all of this just a tale, told by an idiot, full of sound and fury, signifying nothing?” The problem, you see, is that when it comes to actually delivering on flagship telecommunications policies, neither the Labor Government, with its current NBN project, or the Coalition Opposition, with its previous initiatives, actually has much form at all. And there is every indication that no matter who wins power in the upcoming Federal Election, neither side will actually be able to meet their promises in terms of their respective NBN rollouts.
Last night, Albanese stuck staunchly by the veracity of NBN Co’s corporate planning process, and its ability to meet its rollout targets.
However, if you go back to NBN Co’s 2010 Corporate Plan, or even the updated plan released last year, any objective observer would be forced to admit that the company’s ability to plan and deliver on its plans is somewhat laughable. In 2010, NBN Co was planning to have rolled out its fibre network to some 868,000 total premises by June 2013, with its wireless network slated to have reached some 269,000 premises. By 2012, the fibre number had come down dramatically to 341,000, and its wireless target integrated with its easier-to-achieve satellite target. In March this year NBN Co revised its fibre targets downwards again, from 341,000 down to between 190,000 and 220,000.
In July this year, the company revealed that it would finally hit a target, revealing that at the end of June it had passed a total of some 207,500 premises with its fibre network. However, even then there wasn’t much room for jubilation, with the company itself acknowledging that one third of the premises its network technically ‘passed’ were not actually able to access broadband services, as the premises concerned could be hard to reach, such as apartments or units in blocks. The company’s wireless figure was even worse — NBN Co had connected just 27,300 premises as at the end of June (remember, its initial target from 2010 was 269,000), and it had just 1,900 actual customers using wireless.
Now, there are many quite legitimate reasons for NBN Co’s slowness in rolling out its network infrastructure. The negotiations with Telstra took much longer than expected, the company’s construction partners have not expected as delivered, asbestos in Telstra’s ducts has halted construction in many areas temporarily and the Government itself has changed the game on the company several times — for example, giving it extra responsibility for greenfields (new housing estates) developments. In addition, NBN Co’s delays, in one sense, can be seen to be within normally expected variants for a massive infrastructure project of this size, which usually suffer slippages and cost over-runs.
However, that still doesn’t mean that the Government shouldn’t be held accountable for those delays. The politicians — especially then-Communications Minister Stephen Conroy and Prime Minister Kevin Rudd — made certain promises, and were unable to deliver on those promises. There is every indication that, should Labor retain power in the Federal Election, further delays in the NBN project are to be expected on virtually every front. New excuses will be found for those delays, including legitimate excuses, but that doesn’t excuse the politicians from being held to account over them.
When it comes to the Coalition, the deficiencies and vast assumptions in its rival NBN policy that will likely bring its implementation effort to its knees are legion.
In its first three years in office, the Coalition has promised to carry out several analyses and audits of NBN Co itself and its activities, as well as re-negotiating NBN Co’s highly complex arrangement with Telstra to migrate the telco’s customers onto NBN Co’s network and gain access to its ducting infrastructure. Its FTTN-based policy will also, in all likelihood, force NBN Co to re-negotiate billions of dollars of existing contracts with construction firms and network equipment vendors, due to the key differences between its rollout style and the fibre to the premises rollout style used in Labor’s existing policy.
And then there’s the rollout itself, which is dependent upon most of the activities mentioned in the preceding paragraph. The key policy commitment which the Coalition is taking to the election is that within its first three years in office, to the end of 2016 — essentially, its first term — it will deliver download speeds of betweeen 25Mbps and 100Mbps to all Australians. The Coalition will also need to deal with the technical difficulties associated with opening up Telstra’s HFC cable network to wholesale access; a process which has not historically been tried on a large scale in similar cable networks globally.
The difficulty with these promises, as many commentators have pointed out, is that the timeframes involved may not be workable in practice.
NBN Co’s existing contract with Telstra alone took several years to negotiate, and a fundamental re-working of that contract would be expected to take at least half a year, or perhaps more. The arrangement, although so-far unpublished, is one of the most complex contracts in Australia’s history, and any modification would require teams of lawyers to pore over every consequence. If the contract was varied significantly, say, to include the legal sell-off of Telstra’s copper network to NBN Co, and a variance in the remuneration involved, this could mean that Telstra would need to approach its shareholders again, as it did in late 2011, for their approval. This would probably involve an additional delay of several months to the Coalition’s plans.
Then too, many of the delays associated with Labor’s NBN implementation will also apply to the Coalition. Issues with Telstra negotiation, asbestos, NBN Co’s contractor workforce and even delays with the rollout of wireless towers due to community objections and local council planning processes will affect the Coalition’s NBN implementation in precisely the same way as they have Labor’s project. The fundamental nature of the challenges associated with building the NBN will not change, no matter which political party is in power in the Federal Government.
Greens Communications spokesperson, Senator Scott Ludlam, has described NBN Co’s recent rollout downgrades signs of “either high-level delusion or basic contract mismanagement”. And independent MP Rob Oakeshott, who describes himself as a strong supporter of the NBN, has said that he doesn’t believe Australians can have faith in the rollout figures being provided by NBN Co any more. And even retail telcos such as iiNet and AAPT are getting fed up with the slow pace of NBN Co’s rollout.
We must also consider the Coalition’s past history when it comes to telecommunications. Perhaps the most substantial accomplishment by this side of politics, in this area, was the 1997 deregulation of the telecommunications sector, which allowed many new players to challenge the dominance of the incumbent, Telstra. However, in the decade between that point and 2007, when Labor took over, the previous Howard Government abjectly failed to take necessary steps such as structurally separating Telstra’s wholesale and retail operations, dealing with blackspots and competition in regional areas.
Its last attempt to deal with this issue — the ill-fated OPEL project, which would have seen a consortium of Optus and Elders roll out ADSL2+ and WiMAX in rural and regional areas — was delayed, achieved little and was ultimately abandoned when Labor took power, and the Coalition didn’t win any hearts and minds back with its botched 2010 NBN policy, which stacked up poorly next to Labor’s more ambitious vision. Turnbull himself has been able to claw back a great deal of respectability for the Coalition in the telecommunications portfolio by embracing many aspects of Labor’s policy and taking a financially conservative approach to the rest, but the Coalition still has a poor track record in the telecommunications field, and I don’t think many industry observers have forgotten that.
“… the wonderful thing about the NBN dream is that it’s a panacea: A universal remedy to all of Australia’s long-term telecommunications problems, designed to fix, once and for all, problems with dropouts, crappy speeds, poor telephone call quality, a lack of mobile reception, exorbitant prices or even an inability to get fixed-line broadband at all in certain areas.
The NBN is still a wonderful dream; wonderful enough that anyone from overseas who visits Australia tends to praise it as a fantastic undertaking that they wish their own government had undertaken.
But let’s be real about this: For the foreseeable future, the NBN is going to remain just that — a dream. The NBN is not coming to your house or business any time soon, and in the next five or so years Australia can expect the current disgraceful level of political infighting about the project and delays in its rollout to continue. This dreadful situation is not going away any time soon, and neither are the problems with your broadband connection. So get used to the dropouts.
The NBN has always been a fantastic dream. But all dreams must end as we wake to grisly reality. This project has been mismanaged by Labor, and is about to be screwed over wholesale by the Coalition. At this stage, the suggestion by then-Telstra chief executive Sol Trujillo back in 2005 that the Government pay Telstra a few billion to deploy FTTN itself (and lock out competitors along the way) is looking more and more like it would have been a winner, comparatively. We may not have had competition in the telco landscape, and we may not have had fibre to the home. But at least we would have had something.”
It’s a truism that real-world project governance is different from policy-crafting; that a much greater effort must be placed into actually rolling out infrastructure than promising to; that it’s just a much harder task to deploy broadband technology than it is to say that you’re going to. We’ve clearly seen this from the past decade in Australian telecommunications, where very few political promises have actually been delivered. But I’m not sure that fundamental difference is well-understood at the moment. Perhaps we should be having a debate about each sides’ project governance credentials, and to what extent they can keep any kind of NBN Co project on track — rather than about the theoretical speeds and feeds which each sides’ concepts on paper will be able to deliver.
Right now, both sides of Australian politics are great at making election promises about the NBN. But when it comes to actual delivery — actually rolling out better infrastructure around Australia, on time, on-budget and in a way that actual Australians can actually order better broadband — neither side has a great, or even good, track record. Their abject failures are legion, and we can expect more of the same in future. Both sides have great ideas, but great ideas are cheap. What Australia needs right now is a Government that can actually do what it says it will in the area of next-generation broadband — not one which has glorious plans which never make it into the real world.
TL;DR: Politicians are great at promising better broadband to Australians. I’m yet to see much action, and until I do, I won’t place much trust in either side.