Turnbull, NBN Co won’t discuss Strategic Review


Thomas Klebestreifen

news Communications Minister Malcolm Turnbull and NBN Co have declined to formally respond to specific and ongoing allegations raised by the Opposition and other commentators that evidence shows NBN Co’s Strategic Review published last year is based on “flawed and unreliable” premises that undercut the Coalition’s case for radically overhauling Labor’s NBN project.

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).

Early last week 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 did not specifically address any of the points made by Labor with respect to NBN Co’s Strategic Review. Because of this, Delimiter directly invited Turnbull and NBN Co to respond to the specific allegations.

It initially appeared that Turnbull’s office was putting together a response to the specific allegations. However, it does not appear as though those plans have gone ahead. The Minister’s Office has not responded to several requests to respond to the specific allegations raised by the Senate Committee report.

Similarly, NBN Co declined to respond to the specific allegations raised by the report. Asked about the issue, the company issued the following statement:

“The Strategic Review was conducted by NBN Co with the assistance of expert advisors. These advisers were selected by the company as part of a standard procurement process. It was not conducted by the Government nor by people “hand-picked” by the Government.”

“The review analysed a series of alternative deployment scenarios for the NBN. The company’s preferred option, which resembles the architecture of similar broadband rollouts overseas, will deliver access to fast broadband to Australians sooner and at less cost to taxpayers. The company stands by the findings of the Strategic Review which will help inform the company’s forthcoming Corporate Plan.”

Delimiter pointed out to NBN Co that the company’s statement that its Strategic Review as not conducted by people “hand-picked” by the Government was inaccurate. The development of the Strategic Review was directly overseen by JB Rousselot, who was appointed as the company’s Head of Strategy and Transformation in October 2013, shortly after Turnbull was formalised in the role of Communications Minister.

Crikey reported as early as June that Rousselot was being set up for a role at NBN Co by Turnbull. Rousselot has a deep personal history with Turnbull, having formerly worked both at OzEmail, which Turnbull helped found, as well as Turnbull’s own boutique advisory firm Turnbull and Partners. It has also been reported that Rousselot and Turnbull jointly own a yacht.

In addition, Delimiter pointed out to NBN Co that the company’s statement did not address the specific allegations made by the Senate committee’s report, and invited the company to clarify its position. NBN Co did not respond to the request.

The Senate committee’s report last week does not represent the first time NBN Co’s Strategic Review has been criticised for containing what commentators have alleged was a selective version of the truth.

In several articles following its publication, telecommunications commentator David Braue pointed out a number of inconsistencies in the Strategic Review, including some of the same issues which were raised in the Senate Committee’s report.

“We have a Strategic Review, framed and paid for by the Coalition government, that says a network nearly half comprised of FttN services – it is important and fair to remember that one-quarter of Australians will still get higher-revenue FttP under Scenario 6 – will generate revenues nearly twice as high as an FttP-only model by 2021,” wrote Braue at the time. And then he added: “The Strategic Review does not talk about the period between FY2021 and FY2025 because it knows that those years will see the technological limitations of Scenario 6 become increasingly evident.”

In another article, the commentator pointed out that the Strategic Review selectively quoted from research on various telecommunications access technologies conducted by a French thinktank. “… the Coalition’s spin machine is working overtime to lend legitimacy to justify a pre-ordained conclusion – no matter what its implications,” Braue wrote.

As I wrote last week:

“… 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.”

It’s not a surprise that Turnbull and NBN Co are unwilling to discuss the specific allegations being made against NBN Co’s Strategic Review. A close reading of the document, as Labor and other figures such as Braue have undertaken, appears to show that it is full of holes. Even a cursory examination such as I and others have undertaken shows that one of the options in the Review would allow a full FTTP rollout to be undertaken with only modest cost and timeframe implications.

But of course, these are truths which the Coalition and NBN Co is not interested in hearing right now. The NBN Co Strategic Review only actually exists in order to cast a thin veneer of credibility over a Coalition broadband policy which was decided years in advance. One need only go back over Turnbull’s statements over the past three years to see his explicit focus on the HFC cable networks being re-used and the FTTP rollout shifted to Fibre to the Node.

Responding to the specific allegations raised by the Senate committee last week would only draw unnecessary attention to that fact and prolong media coverage of the issue. So of course Turnbull and NBN Co have already withdrawn into their shells.

The only problem of course, is that the issue as a whole is not going to go away. The Australian public organically wants a full FTTP rollout across Australia. And even this specific issue regarding the NBN Senate Select Committee’s report is not going to go away easily. I hope to have further analysis of the specific allegations being made over the next week. Let’s keep on discussing the credibility of NBN Co’s Strategic Review. Because its credibility goes to the heart of the credibility of the Coalition’s Broadband Network plan itself.


  1. Pathetic is the only word to describe those hiding from their leadership roles.

    To think that part of the LNP platform was about honesty and accountability.

    • It’s all about honesty and accountability…before the election. After it’s all about sweeping unsavoury bits under the carpet and hoping noone really pays any attention. I’ve said it many times on many forums, go back and watch Yes Minister, it is the training bible for all aspiring politicians. The problem being, they don’t see it as satire.

  2. “credibility goes to the heart of the credibility of the Coalition’s Broadband Network plan itself”

    Mal lost any/all credibility he had long before the election took place, unfortunately people just wanted Labor out of government more.

    Lesser of two evils i guess.

    • In my opinion, the lesser of two evils would have been to keep the progressive Labor government that would have carried on with the FTTP rollout, which was starting to ramp up and sort out its teething problems.

    • Something I don’t understand. I am pretty much apolitical, don’t care for one over the other generally, unless there are specific issues that interest me. So it’s not like I deliberately work and associate with Labor or Liberal voters. But based on comments from work people, friends, aquaintences, and when asked about people they know also, well, where are all these Liberal voters? Other than a few forum trolls, a 72 year old accountant, and the company sales arsehole, I don’t know any. Out of hundreds of people, only 2 voted Liberal, the rest either voted Labor, or voted Greens in protest against Labor. Where are all these Liberal voters?

      • The other option is they voted either independent or minor party, both of which would have had preferences going somewhere.
        Revenge voting is not a good way to make sure a country runs well. It also didn’t help that the Noalition didn’t help Labor run the country efficiently.

        The joys of democracy. Cause as much crap to your opponents as possible so they look bad and you get voted in.

        • I’m sure it was all the Liberals plot to get the ALP to backstab Rudd, insert Gillard, backstab Gillard and re-insert Rudd and “make them look bad”.

      • Reading the Daily Telegraph in maccas and listening to Alan Jones in their macmansions… they come out at election times and usually take 3 hours to find their local polling station which is 5 minutes away…

  3. And meanwhile in China:

    > MIIT aims for FTTH networks to pass nearly 200m households by end-2014

    With the mining boom apparently drawing to a close you’d think that we’d have the right smarts to… you know. Have a plan that transitions us into a bit more of an information economy.

    Untold billions are going to go into VDSL2 and for what exactly? Isn’t it a much better use to fill black spots with ADSL2+, GPON and fixed wireless at insanely less capital expenditure and then going to GPON? You’re talking about taxpayer money being invested here, you’d want the maximum return for the taxpayer. Not Cisco, not Netcomm, not Alcatel, not FOXTEL and definitely not Telstra.

    I can only hope that the politicians a few generations from now will treat the flow of data in the same way as the flow of water or electricity or cars or money as being vital in an economy that’s meant to compete on the world stage. If politicians cared about our roads like we treat our fixed line telecommunications network, there’d be a coup within seconds.

    • In any case, I’m looking forward to Australia doing an HFC rollout/expansion as far away as 2020.

      We’ll probably be the last country anywhere ever to do any such thing and it’s so entirely absurd a proposition, especially in a country that’s one of the world’s wealthiest as to seriously border on a parody.

      Guy rolls up in 2020, “Hi, we’re here to hook up your coax.”. Meanwhile the rest of the world, especially Asia, is thinking “WTF, did they get left behind about 25 years or something. No, seriously, WTF!?!??! Why the hell are they doing coax?” It’s like building new steam locomotives (thanks, Paul Budde, for the analogy) in 1975. Never mind investing taxpayer money in it.

      But I guess it gives FOXTEL a good technical justification for taking up half the capacity on it, if not more, and getting a free taxpayer-funded expansion of its network. Rupert, you’re a hero.

      I wonder if we can get some more confirmation bias in here:

      > In a wide ranging interview with The Australian yesterday, Cisco vice president Australia and New Zealand Ken Boal said HFC cable — which is used for cable TV networks — was “perfect” in terms of the Coalition’s policy for rolling out the National Broadband Network.

      Oh, there it is. I’m sure Cisco isn’t just saying that because they’re one of the biggest DOCSIS vendors out there and can then double-dip with the inevitable upgrade to GPON or 10GPON. Nope, no way.

      > http://www.theaustralian.com.au/technology/cisco-on-nbns-future/story-e6frgakx-1226859912967#

      Just don’t forget to treat the real masters:

      > Chris Griffith travelled to Melbourne as a guest of Cisco.

  4. This is where the Senate has the option to use legislative pressure.

    Responding to the specific allegations raised by the Senate committee last week would only draw unnecessary attention to that fact and prolong media coverage of the issue.

    With respect Turnbull could claim the Internet will be built from spaghetti and that it will cost 13.9 trillion dollars and MSM would not give a sh*t. I wish I was kidding.

    The only people questioning are Brue, yourself and now (begrudgingly) Lynch. Everyone else is still happy to blame Labor for the Coalitions ongoing series of failures.

    Turnbull can say ‘get bent’ with zero repercussion from a media perspective. The only avenue left is for the Senate to exercise it’s position to hold him and NBNco accountable.

    • Well.. there’s nothing more “transparent” than hot air!

      So I guess the Coalition and Malcolm are sticking to their promise of “more transaprency” =P

  5. a) One wonders how public opinion can be so ignored. It’s unfortunate that once either of the two major parties are in power they are allowed to lie, cheat and dodge all promises made to get into office with no ability of the Australian people to influence change in policy; something that a minority government would actually be able to achieve.

    b) and how the Coalition can throw stones at Labor for Union corruption when they’re just as bad with their Rousselot’s, preferential deals, and ‘advisory boards’.

    It’s a sad indictment on democracy.

  6. “.. Let’s keep on discussing the credibility of NBN Co’s Strategic Review. Because its credibility goes to the heart of the credibility of the Coalition’s Broadband Network plan itself.”

    Credibility…………. What Credibility!

  7. This government will go down in history as one on the most incompetent governments Australia has ever had…and that’s saying a lot after the Labor circus they replaced…

    • One would certainly hope so, but I’m not so sure. I’m willing to bet there were people like us back in 1997 during Howard’s first year who said his was the worst government in Australia’s history, and yet he went on to govern for another 10 years. The thought of Abbot running the country for a decade is truly frightening and while it certainly seems far fetched right now, we still have 2.5 years to play out until the next election. A lot can change in that time and if there’s one thing I’ve learned over the years it’s never underestimate the shortsightedness of the average voter.

      Back on topic though, this non-response by Turnbull and NBNCo is only to be expected. They’re not interested in answering these accusations. Why would they be? They’re in power – they can do whatever they want. They could tear up all the fibre that’s already been rolled out and sell it off if they wanted. Who’s going to stop them? If Labor and the Greens had any say in the matter at all, this farcical MTM nonsense would’ve been thrown out the door as soon as it was suggested. Basically, the only hope for the real NBN now is either Telstra and Optus refusing to play ball (which won’t happen because they both stand to gain a lot of money from the CBN) or the Coalition getting booted out in 2.5 years’ time (which is a slim possibility at best).

  8. On the 28 November 2013, the telco unions of ETU and CEPU gave testimony to the senate select committee.

    I missed watching this days testimony of the senates committee, and the link at https://www.youtube.com/watch?v=BubtC6hZKYA has only the last few mins of testimony.

    So I decided to download the full vid off parlview, clip them, and append them together.


    It should be noted that the movie they show (which is actually a slideshow), has different pictures of the pits all the way through. And this is the network Malcolm wants to use for FTTN.

    You should note the lack of coalition senators at this meeting. Also the dept of comms, who only just concluded their testimony that day.

    It’s well worth a view.

  9. Well what else would you expect from a minister like Turnball and an Abbott led government, if you want to protect the Labor NBN, now is the time, for all you WA voters you can start by voting for Labor tomorrow and hopefully minimize the damage this government could create until the next election so Labor can be voted in and the fibre rollout can continue and be completed.

  10. There is some hope.
    After today’s senate election the PUP may have enough votes in the Senate, when combined with Labor and Greens, to keep running inquiries into the NBN.
    Clive Palmer won’t miss a chance to annoy Rupert, and page 17 of his party’s policy states they support a “world-class communications infrastructure”.
    I live in hope.

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