Turnbull brings back Australian Broadband Guarantee



news Communications Minister Malcolm Turnbull has reinstituted a direct consumer subsidy scheme very similar to the Australian Broadband Guarantee program initiated under the Howard administration, in a move which will directly fund some 9,000 premises to access satellite services from commercial providers that are not NBN Co.

The Australian Broadband Guarantee was instituted in early 2007 and ended on 30 June 2011. Funded to the tune of $162.5 million, it followed the similar Broadband Connect program also instituted by the Howard administration, and sought to provide residential and small business premises throughout Australia with a high-quality broadband service regardless of where they were located. The service was typically taken up Australians living in remote locations for whom pricey satellite access was the only broadband available in their area.

The service was eventually ended under the tenure of then-Labor Communications Minister Stephen Conroy in 2011, as the Government changed its focus from direct subsidies to building out its National Broadband Network policy. However, existing users of the subsidy were able to continue using it.

To serve the needs of rural and remote users, NBN Co is currently building two major, brand new satellites with the assistance of Space Systems/Loral under a contract worth some $620 million. The company plans to launch the satellites in 2015 to provide high-speed broadband coverage to about three per cent of premises that fall outside the reach of the NBN’s planned fixed-line and fixed-wireless services. The locations include outback areas and Australia’s external territories such as Norfolk Island, Christmas Island, Macquarie Island and the Cocos Islands.

The launch of the satellites is widely anticipated in Australia’s rural communities. Currently, many residents and businesses in those communities are being served by either existing satellite services from other companies, or through NBN Co’s existing satellite services, which it operates through renting capacity on existing Optus satellites. However, the interim NBN satellite service has already reached its capacity cap of 44,000-odd customers, meaning many other rural customers will need to wait until 2015 to get upgraded services.

In addition, that interim satellite service is not just reaching its capacity in terms of the number of users who can connect to the service, but also in terms of the experience each user is able to achieve on the platform, with congestion starting to occur.

To deal with these issues, yesterday Turnbull formally announced measures he had already discussed in Parliament, including the fact that $18.4 million will be spent on delivering additional capacity to the existing 44,000 users of the interim satellite service.

“Each user will receive around a third more capacity, which will enable them to carry out tasks like email, Internet banking and Voice over Internet Protocol (VOIP) services, such as Skype, during peak periods,” the Minister said in a statement issued yesterday. “NBN Co and retail service providers continue to work together to ensure that the end user experience is consistent with expected outcomes.”

Secondly, new monitoring tools are also being put in place to allow the NBN Co to better manage existing capacity, in a new “fair use” policy approach. This means, according to Turnbull, that retail providers will be better able to manage “high end” users “unfairly” slowing the service levels of all other users.

However, it is the last measure which may prove the most controversial for the Minister. Turnbull also said yesterday:

“In addition, the NBN Co has agreed to establish a subsidy scheme to allow up to 9,000 homes, farms and small businesses unable to access the ISS to access commercial satellite services. Similar to the Australian Broadband Guarantee, the new scheme will subsidise the cost of in-premises equipment and its installation. Retail service providers will set the price of the broadband packages available to consumers.”

The news comes as NBN Co is also conducting a review of the future of the satellite and fixed wireless portions of its planned network. Several weeks ago, Sydney Morning Herald journalist Malcolm Maiden reported that new NBN Co chief executive Bill Morrow would seek to sell the networks to the private sector as soon as possible. Pure play satellite company NewSat has already made an offer to buy the satellite infrastructure. Yesterday Turnbull committed to releasing the fixed wireless and satellite review publicly “this month”.

It might seem like a small deal for NBN Co to initiate this direct satellite subsidy program. But it’s absolutely not.

The model which NBN Co has taken up until now was that of a national wholesale telco providing services to Australians. This is an “infrastructure” model which is seeing the company deploy its own telecommunications infrastructure. In contrast, the Australian Broadband Guarantee approach was a direct subsidy to end users to allow them to buy services from commercial telcos with their own infrastructure.

It’s no secret that the Abbott administration would prefer to take this approach to deal with rural and regional broadband users, rather than NBN Co building out its own infrastructure. Abbott and Turnbull, after all, were ministers in John Howard’s administration, which always preferred the subsidy approach, and the $100 million promised by the Coalition during the Federal Election to fix mobile blackspots is also a direct subsidy model.

However, seeing Turnbull reference the Australian Broadband Guarantee so explicitly here constitutes a clear signal being sent to the rest of the telecommunications industry: NBN Co is now being opened to the direct subsidy approach, and it will be used where the Minister deems it appropriate.

Personally, I strongly expect the upcoming review of NBN Co’s satellite and wireless operations to outline the sale of at least the satellite division, including the upcoming birds to be launched. Most likely they will be picked up by Optus, which is already managing much of the operations to do with the new satellites, as well as the interim satellite service. We’re seeing this signposted pretty clearly here, both though the direct subsidy hints as well as Turnbull’s mention that the satellite and wireless review will be released publicly, and Malcolm Maiden’s shadowy article in the Sydney Morning Herald last month.

Privatisation, direct subsidies, winding back government ownership of infrastructure. It’s a clear pattern and I don’t think anyone in the telecommunications industry should be surprised to see this approach coming from the Abbott administration, which is taking the exact same approach in several other areas.

Image credit: NBN Co


  1. *sigh*

    So it’s the standard “throw money at private sector and it will go away” head in the sand route again?

    Gee.. that worked wonders for the last 20 years of broadband didn’t it? Call me back in another 20 years when the bottleneck gets us to these same arguments/discussions.

      • First the money goes away, then the private sector goes away once the money is gone. Leaving only the problem behind.

  2. Is Telstra going to get structurally separated? if so, then the direction the Liberals are heading with this mess would make more sense. It still doesn’t make sense in actually providing next generation broadband equally to all (93%) of Australians, but in terms of the Liberals private ownership model. A private ownership model cannot operate on a level playing field in the presence of a vertically integrated monopoly such as Telstra.

  3. Maybe I’m late to the party that I’m about to describe, but I need to describe it to better understand it myself:

    The problem is ideology. A Government owned “asset” that’s as large and expensive as Labour’s NBN goes against the very base ideology of the Liberals. It’s not that Malcolm Turnbull can’t see the logic of Labour’s NBN or that he can’t hear what the Australia public, by majority (according to statistics published or referred to on this site) want, it’s that the Labour NBN is on the wrong side of the ideology wall, and therefore CANNOT be the correct outcome no matter what.

    When you’re in this mindset, if seemingly logical arguments point towards Labour’s NBN as the best outcome there MUST be some flaw in their argument, whether you can see it or not. Even if the last straw is to say that “Government ownership of such an asset is flat-out wrong therefore your argument is invalid”, that straw will be clung to until death do us part.

    I can find no other meaningful explanation as to the position of Malcolm Turnbull and the Liberals on Labour’s NBN plans and their continued destruction thereof. (Other explanations such as being in News Ltd’s pockets are too conspiratorial to be taken seriously, whether they’re correct or not).

    • Absolutely correct.

      There are numerous studies of “motivated reasoning” and how it impacts rationality. Partisans and ideologues have been proven to be irrational.

      This isn’t even something where it is open for debate. People’s brains have actually been scanned during the process of taking in information and processing it. Partisans literally cannot process information that is contrary to their ideology; not in any rational way. The parts of their brain which would allow this are totally bypassed.
      Again, this isn’t theory. It has literally been observed in these scenarios that there is no activity in the parts of their brains which allow for critical analysis.

      The public buy into it, one way or another, because our own brains are just as faulty and divorced from reality.

      The destruction of the NBN was 100% irrational. It was an emotional indulgence that will cost Australia tens of billions of dollars directly, and much more than that indirectly – not to mention the intangible (but not insignificant) social costs.

      It is a horrible, massive but ultimately unsurprising reminder that we are merely somewhat clever apes.

      • Funny, I thought the irrationality was people believing they were going to be connecting to the network at 1Gbps services as promised by Labor, when their own Corporate Plan predicted that 50% would connect at 12Mbps and in 2028 less than 5% would be connected at 1Gbps. It is sad that so many were and are still distracted by the promise of 1Gbps that they ignore the reality of what Labor promised and failed to deliver all because they dreamed of fibre.

        • Of course…

          Well… since 1gbs is now a pie in the sky in the new setup we will never know how much people would have used it would we?

          But hey lets also conveniently forget the fact that more than 30% of all the adopters opted for the higher end 100mbps band. And slightly less on the 12mbps band shall we?

          Let’s just harp on about *conservative* esimates when it “looks bad” and ignore real world take-up rates. So of course that 5% estimate would be conviently “wrong” and “skewed” and we can also harp on about the 12mbs being “the absolute truth” on take up rates

          Your constant latching on that estimate has gotten really old…

          • > Well… since 1gbs is now a pie in the sky in the new setup we will never know how much people would have used it would we?

            With direct fibre, there is still the hope of 1Gbps.

            > But hey lets also conveniently forget the fact that more than 30% of all the adopters opted for the higher end 100mbps band. And slightly less on the 12mbps band shall we?

            What those figures emphasise is the digital divide that Labor’s plan would have created. The largest block (47%) haven chosen the slowest plan, while the next biggest block (26%) chose the fastest plan. It is also worth noting that as more people connect the percentage of slower plans is increasing. Let’s just harp on about *conservative* esimates when it “looks bad” and ignore real world take-up rates.

            > Your constant latching on that estimate has gotten really old…

            The 47% at 12Mbps & 26% at 12Mbps are no longer estimates – they come from the NBNCo Corporate Plan (2013 draft).

          • You conveniently ignore the fact that the level of speed you are on is a CHOICE.

            You are not forced to accept any particular plan…you can get whatever you wish to.

            Time to put your straw man away….

  4. The “Privatisation Model”. Sell Taxpayer funded/built infrastructure , cheaply and with profit guarantees, to private enterprise. The taxpayer then funds, by the act of subsidy and below real cost/value sales of same, a enterprise that continues to charge excessively and run as a monopoly.

    Looks to me like I will continue to have no provider choice, no service type (performance) choice, a continuing excess price structure (cost to me) and pay $billions$ of my (taxpayers) money to private enterprise.

    Oh! The comms pit on my footpath was recently refurbished with (what looks like) a “treated timber” lid. I need gloves, if I wish to inspect the interior, to see how much mud, slush and rubbish it contains. Still it was an overgrown broken up mess for years. The quality (performance) of the streets ADSL and cable broadband (yes we have access to both) must of received so many complaints (I was one of the complainers), that they had to fix the old pits.

    Like my comms pit, this “broadband political mess” is going to take years and lots of $$$$ to fix unless “The Earl” and “TA”, get their digital act, together.

    Privatisation of this type of infrastructure, does nothing but burden the taxpayer, increase cost (consumer and business), remove equality of service and further increase the digital divide. If you have a home or business that needs more than “carrier pigeon” standard communications, it is time to move off shore.

  5. I’m glad I don’t live in the sticks, because it seems like they’re about to get screwed again.

  6. See this SMH article on the windback – http://goo.gl/oceAvs. David Braue also references it in his latest ABC article.

    So the only thing NBN will still own is HFC, Fttn, Fttp and backhaul that it implemented to fix blackspots.

    Telstra will still be the predominant backhaul provider (though TPG is probably edging in there as well with Pipe resources).

    To be honest I’d love to ask Malcolm to sell me the backhaul to my area and put a consortium together to do it ourselves.

    If he’s going to do this half assed then he may as well auction it all off, and spend the money on structurally separating Telstra instead.

    On the structural separation issue; surely all the govt is liable for here are costs to separate the business? Shareholders would get 1:1 scrip in the new infrastructure entity so it’s not like they lose out.

    • The day is still young, a branding change from NBNco, to OPEL – could be pinned on the former government for shocking naming choices. Like everything else.

      There should be, now, no confusion over Turnbull’s apparent competency in his current ministry (there isn’t any).

  7. More “Back to the future” stuff in the “new era of transparent government”. At least Tony was right when he said we “would get a “no-surprises” government.”…

    The only real surprise (to me at least) is actually how incompetent they are at actually running anything…

    • Turnbull is addressing yet another failure in NBNCo planning by sourcing private satellite capacity to deliver real services to regional areas requiring Internet access.

      Your alternative seems they’d be require to wait until 2015, hope the launch goes successfully and NBNCo manages the connections better than they have for any project they’ve been involved with previously.

      Competition and the efficiency of the private sector delivering more than talk.

  8. >”Privatisation, direct subsidies, winding back government ownership of infrastructure. It’s a clear pattern and I don’t think anyone in the telecommunications industry should be surprised to see this approach coming from the Abbott administration, which is taking the exact same approach in several other areas.”

    The real point is, “how long will it last”.

    Not long.

    The “free market will save the day” is not the panacea it once was.

  9. I thought the point of the subsidy was to enable new customers to get access now, rather than telling them to wait until next year?

  10. Wouldn’t ongoing direct subsidies cost more than a model which aims to generate a modest return? How is this part of MT’s “cheaper” plan?

    • The subsidies are still there under Labor’s NBN. It is just that they are hidden between opaque financial models where it is not possible to determine if the cost and consider alternatives.

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