Turnbull, NBN Co invited to respond to Strategic Review criticism



news Communications Minister Malcolm Turnbull and NBN Co have been invited to formally respond to specific allegations raised by the Opposition yesterday that evidence shows NBN Co’s Strategic Review published last year is based on “flawed and unreliable” premises and was in fact designed by Turnbull to constitute a “pre-ordained political outcome”.

Under Labor’s previous NBN policy, some 93 percent of Australian premises were to have received fibre directly to the premise and the remainder satellite or wireless, with a new government wholesale monopoly set up in the form of NBN Co to both deploy and operate the network. The model was directly aimed at delivering Australians the best possible national fixed telecommunications network, while also resolving long-term structural problems in the sector such as the vertical integration of former national telco monopolist Telstra.

However, NBN Co’s Strategic Review published in December last year changed the paradigm, with the company recommending (and the Coalition supporting) a vision in which up to a third of Australian premises will be served by the existing HFC cable networks of Telstra and Optus, with Fibre to the Node and Fibre to the Basement used in other areas not already covered by Labor’s FTTP approach. Satellite and wireless is to be used to cover some rural and regional areas as under Labor’s previous plan. This new model is known as the “Multi-Technology Mix” (MTM), or “the Coalition’s Broadband Network” (CBN).

Yesterday the NBN Senate Select Committee, which is controlled by Labor and the Greens, published an extensive 194 page interim report into its initial findings regarding the revamp of the project. You can download the report here in PDF format. Former Communications Minister Stephen Conroy said that the report showed there were seven major problems with NBN Co’s Strategic Review, including:

  • The review assumes a delay in the time taken to complete Labor’s fibre build that is at odds with NBN Co’s current run rate, but is used to strip out $11.6 billion in revenues and add $13 billion to peak funding
  • The review excludes approximately $4 billion in ‘business as usual’ architecture savings from Labor’s fibre build, which were signed off by previous NBN Co management
  • It assumes higher costs for the fibre build would add $14.4 billion in capital expenditure, a claim which is at odds with evidence from NBN Co and the Department of Finance and does not allow for normal and reasonable build efficiencies
  • The review includes overly pessimistic revenue assumptions for the fibre build that do not reflect existing strong demand for NBN services, or the high data usage patterns of Australians using the NBN and ignore demand for important elements of broadband quality, particularly reliability and upload speeds
  • The review adds a third satellite to NBN Co’s deployment, without direct explanation and with a launch assumed at such a time (FY2021) to include costs but exclude revenues from scenario comparisons
  • It includes scenario comparisons which include costs and revenues for the Multi Technology Mix build at assumed completion, but exclude revenues worth $15 billion from a fibre build after 2021
  • It acknowledges that the MTM model will need to be upgraded, but then refuses to outline the costs for these upgrades, dramatically reducing the real cost of the MTM

The Coalition’s dissenting response to the Opposition’s statements on the issue is also contained in the committee’s report. However, the dissenting response does not specifically address any of the points made by Labor with respect to NBN Co’s Strategic Review. Because of this, Delimiter has directly invited Turnbull and NBN Co to respond to the specific allegations.

In its response, the Coalition complained heavily about what it described about “an abuse of process” relating to the publication of the Senate’s Committee. The Coalition’s section of the report states:

“Coalition Senators find the Chair’s report to be grossly misleading and untruthful in its portrayal of the evidence provided to the Senate Select Committee. Coalition Senators additionally find that the process of preparing this interim report of the Senate Select Committee, including the provision of a deliberately falsified version of the majority report to the Coalition, to constitute an abuse of process. The 140-page majority report – which is replete with misrepresentations – and its self- serving recommendations were provided to Coalition senators one hour before the deadline for publication. This can only have been to deliberately limit Government members’ ability to respond to the falsehoods and self-serving distortions littered throughout the report.”

“During the Committee’s work it has become abundantly clear that Labor Senators have no interest in examining or learning from the systemic and material failures of NBN Co, which by September 2013 had reached 3 per cent of Australian premises at a cost to taxpayers of $6.5 billion, and was on a course that would have resulted in every Australian household and business paying $43 per month more for broadband on average.”

“Instead, the Committee has degenerated into a highly politicised and at times farcical face-saving exercise where Senator Conroy, has sought to distort the history of the NBN and deny or disguise his direct personal culpability for massive economic damage to a crucial input industry and the destruction of taxpayers’ money on an unprecedented scale.”

“The majority interim report seeks to discredit the various independent analyses of the NBN undertaken since the September 2013 election. Instead it asks the public to believe that the NBN was on track and just around the corner – after six years where Labor’s walk never once matched its talk. The plausibility of this narrative is a matter for the Australian public to judge for themselves.”

“But according to all of the evidence available, the NBN represents the single largest destruction of value for taxpayers in the history of the Commonwealth – and, it must be repeated, Senator Conroy bears direct personal responsibility for this outcome.”

Regular readers may well ask, given the huge amount of information which has been presented by Labor (and to a certain extent, the Greens must also take responsibility) this week in the interim report of the NBN Senate Select Committee, and in various speeches and media releases, why I have chosen to focus on the specific allegations contained in the committee’s report which relate to NBN Co’s Strategic Review.

The reason for this is that I am attempting to focus on facts and evidence, not on the politics of the situation.

Anyone who’s followed the NBN debate for more than a few weeks will be aware that it is a highly politicised arena. Politicians on both sides are not always legitimately debating issues associated with the NBN, but are often using the project to bolster their own political fortunes and score points on their opponents.

However, in the points outlined by Conroy in his media release this week and included in further detail in the committee’s report, Labor has made a series of very specific allegations which, if true, call into question the fundamental basis on which NBN Co’s Strategic Review was put together, and its legitimacy as a document guiding the future of the project.

If these allegations can be shown to be correct (and bear in mind that their architect, Senator Conroy, has the deepest knowledge of the project possible, having set it up from the start and overseen it for the better part of five years), then the justification for the Coalition to pursue its Multi-Technology Mix approach to the project will be significantly undercut.

If the Coalition and/or NBN Co do not respond to these specific allegations, then, again, the legitimacy of the MTM approach to the NBN will be significantly undercut.

Labor’s attack this week on the NBN Co Strategic Review is not the only time the document has been attacked. Regular readers may well recall that the document’s construction, right from the start, was politicised, with Turnbull having parachuted several executives in to NBN Co who he has had deep personal connections with going back many years.

Then, too, observers have long wondered why NBN Co and the Coalition focused so specifically on the MTM option included as part of the review, when other more viable options. As I wrote in December last year (Delimiter 2.0 article), a close reading of NBN Co’s Strategic Review shows the former chief executive of the company, Mike Quigley, was overwhelmingly correct: A predominantly Fibre to the Premises National Broadband Network can still be rolled out with only modest cost and timeframe implications.

Regardless of what happens, I will commit to conducting further analysis of the specific allegations raised by Labor over the next several weeks. The legitimacy of NBN Co’s Strategic Review goes to the heart of the NBN debate right now. Let’s put that debate squarely where it should be: Around the facts, and nothing else.

Image credit: Screenshot of ABC broadcast of Turnbull press conference yesterday


  1. The review was always going to deliver the same outcome for as long as the review was neither handled by, or scrutinized by independent agents. It was written to deliver a predetermined outcome.

    It did so with some effect.

    Whether it was for Liberal or Labor governments is almost irrelevant.

    I believe Turnbull’s response would be “why would I listen to fibre zealots?”. Barely ever listens. Only talks.

    As for Ziggy? He’ll keep doing what he has always done; continue experiencing a lack of vision.

    We’ll still be discussing this in 3 years. And apart from committed areas Turnbull can’t undo, very little else will have happened.

    There’s a lot of ammunition here. I would hope something positive will eventuate but based on the current trend – we’re screwed for another 3 years, at least.

    • (we’re screwed for another 3 years,)
      2.5 years and counting, either way its still a long time.

    • yes this is really where its at for the time being i think. i remember that article too, and its part of the basis for what i suspect – if the acquisition of copper costs at least 10 bn and there are identified missed funds for the original rollout not included in the first SR costing then it looks very much like 41bn +10=56 plays 71 bn -15bn=51bn. at a 5 billion differential and considering long term maintenance costs, why the hell does the MTM have the traction it does?

      particularly when as pointed out, you look a little harder at the other SR option offering a majority FTTP rollout – which if these claims about gaming of figures are correct, most likely is also ahead of the MTM option as well, were it to be audited properly.

      i actually feel the point about independent audit by KPMG and E&Y is important too. this govt came to power partly by carping on being a transparent government; if they truly believe the MTM is so evidently, inarguably the rollout to go with it should stack up to scrutiny, shouldn’t it? and if you refuse an independent look i refuse to believe the best decision on the merits has been made.

      btw for my part and i suspect others, the alternate SR FTTP option would certainly politically be good for the libs, if public polling shows majority support for a FTTP network – in that respect i dont understand why they are fighting so hard for the MTM when there is clearly political hay to be made simply following one of the other of their own SRs recommends? it would probably cut away some of those seven issues Conroy et al spoke to as well, particularly high tier earnings and the whole MTM upgrade muddle. their persistence to that end (MTM) over all else bugs me.

      • There are other variables at play, as well. Given the cost of the commodity feedstocks involved, I wonder what the cost per metre of glass fibre vs. the cost per metre of equivalent copper will be over five years?

        Personally, I’m mystified at the assumption that glass fibre is a more expensive solution to the home than upgrading the existing copper infrastructure would be. It just doesn’t make sense.

    • It is a good article. I am glad the Interim Report covered off on the Strategic Review metrics.

  2. “But according to all of the evidence available, the NBN represents the single largest destruction of value for taxpayers in the history of the Commonwealth –”

    Well that is what you get when you take a revenue neutral(or 7% RoI) infrastructure project and turn it into a decade of industry subsides, I don’t get how that is Conroy and Labors fault.

    • > “But according to all of the evidence available, the NBN represents the single largest destruction of value for taxpayers in the history of the Commonwealth –”

      I hate that line too.

      Their logic appears to be that Conroy has forced them to spend $30 billion on FTTN, about as colossal a waste of money and resources there ever has been. Nothing could be further from the truth.

      In fact, better shut it down and just do an fairly low-key OPEL 2.0 instead of an NBN if you’re going to insist on dumping money down the FTTN hole. I’m serious. Either FTTH to 80%+ or OPEL2.0 – anything between those two things is, in the commercial and regulatory environment we have had for a long time a waste.

  3. So, for arguments sake, lets say that MC suddenly puts his hand up & admits that the Strategic Revue was in fact a complete farce & the real numbers do in fact point to a FTTH NBN (done by the Coalition) being the best, most cost effective way to get broadband to the masses. Is there actually anything to say they have to change the plan? It’s not as if we can sue them, can we? Is there a legal obligation or any way to force the Coalition to follow a FTTH NBN if this were to happen, or is it a moot point?
    Please excuse my ignorance of the Australian Political system.

  4. Facts? The facts have always been out there.. It’s just that the Lord of Fraud has always preferred assumptions.
    There will not be any serious response to the committee and expect to see more double speak and skipping around..

  5. “However, the dissenting response does not specifically address any of the points made by Labor with respect to NBN Co’s Strategic Review.”

    To put it another (slightly less flattering) way, the LNP put their fingers in their ears and start shouting loudly and incoherently when faced with legitimate criticism.

    • Turnbull isn’t working for the electors, simply because he doesn’t have to.

      He could invent Internet over Yesterday’s Socks and most people would not give a monkeys. They were voted in to boot the last lot out – policies were all but irrelevant in that situation.

      He’s on cruise control because he can afford to be. Labor lost it’s spine, Greens are too few in number to mount a decent opposition.

      This is the first time I have seen a concerted attempt to hold Turnbull to account. And it’ll almost certainly fail to gain traction in the community and within the press.

      Renai, Brue and now Lynch are really the only people left asking questions.

      • Turnbull personally also holds one of the safest liberal sites in country and is also one of the richest electorates in the country. So unless he is caught sodomizing the queens corgi he personally isn’t going to be out of a parliamentary position, soon as long as what he does broadly what the party asks for. He would also likely be able to parachute out into some nice board positions once he leaves politics.

  6. “Regardless of what happens, I will commit to conducting further analysis of the specific allegations raised by Labor over the next several weeks. The legitimacy of NBN Co’s Strategic Review goes to the heart of the NBN debate right now. Let’s put that debate squarely where it should be: Around the facts, and nothing else.”

    Looking forward to it Renai. I for one, am over the whole politicisation of the project, and when you take the politics out of it, it’s was obvious the previous NBN was the better choice, regardless of who though of it.

    • When you consider the broader picture, I’m not sure that it is obvious that Labor’s plan was/is the better choice.

      If said Google Fibre is the better choice then I would agree with you. If 93% of the country had access to 1/1Gbps fibre then I could see that sparking innovation and enticing companies to use Australia as a test bed. Labor’s plan would have delivered 1/0.4Gbps to a select few (less than 5% in 2028) and seen us well down the rankings in price, speed and data.

      I’m still yet to see someone explain the reasons they require speeds faster than 25Mbps for that fit the criteria of being in the national interest and also justify why they consider it acceptable that Labor’s plan which didn’t deliver that speed to half the population.

      The sad fact is too many people have been caught in the glare of shiny fibre and not seen past the political spin. The correct approach should have been to document the use cases (refer to NBNCo Corporate Plan (2010) for an example of speed and data requirements), estimate the costs and evaluate the benefits. I don’t think that either side of politics have done this.

      • “I’m still yet to see someone explain the reasons they require speeds faster than 25Mbps for that fit the criteria of being in the national interest and also justify why they consider it acceptable that Labor’s plan which didn’t deliver that speed to half the population.”

        Um, what?

        Mathew, if you can’t accept that there are valid reasons why many people require speeds greater than 25Mbps now, let alone in the future, then I don’t think Delimiter is a site for you to be commenting on. In addition, your statement that Labor’s plan wouldn’t deliver that speed to half the population is idiotic. The rollout was, and is, still in progress …

        Think carefully about how you reply!

        • And that’s ignoring upload speed requirements. I could use 25Mbit+ up right now and so could anyone who uploads photos to social media. Uploading a couple of dozen photos can be quite the long task on ADSL and it won’t be hugely improved by VDSL (@ 25/5).

          That’s not even thinking about my Job or the work I do for myself.

      • It is called UPSTREAM… Ever tried to work from home, upload content (youtube as and example people will be familiar with) for information or pleasure, been a web developer trying to upload/migrate/update a site?

        Fiber has been the main solution put forward, so I agree that 25mbps is probably enough for almost everyone right now, but is that also going to include >1mbps UPSTREAM?

      • @ Mathew, is that 25Mbps per person, the average household is 4.5 people and some have many more, there are households that have many people on the internet at once and they will buy plans that fit there need. Fibre is the only one that can provide that type of bandwidth now and into the future.

  7. In the NBN Co Strategic Review, what I found totally loopy was comparing the cost of a full FTTP roll out with FTTN, the FTTN is only half of what FTTP is. You can’t compare half a comms system with a full comms system, this is just total madness. These people arn’t fit to govern.

  8. The same people who complain we don’t need fibre and it’s speeds, are the same people who will gladly use a commercial airline service to get from point a to point b, rather than via rail, car or boat.

    That will purchase fast-food rather than prepare a meal, when in a rush, or time is constrained.

    It’s an answer (we don’t need the speed) to a question that all but does not exist (why should I use a plane when a train will do) elsewhere.

    Why would I use the most logical solution for a particular task, when it is available, rather than use something possibly cheaper in the short term, but slower?

    You tell me.

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