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