Labor issues detailed evidence for Turnbull’s MTM delays, cost blowouts

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news The Opposition has published a detailed and referenced comparison table which appears to conclusively show that Malcolm Turnbull’s version of the National Broadband Network project is behind on almost every measure by its own measurements, as well as having blown out in costs substantially.

The table, found below, was contained in a media release issued by Labor late last week. Delimiter has included it above. The references that it refers to can be found at the bottom of this article.

In the table, Labor notes significant differences between the cost and rollout timing estimates contained in the NBN company’s Strategic Review and the current reality. The compilation of the Strategic Review was one of the first acts which Turnbull ordered after he took up the role of Communications Minister in September 2013.

The construction of the document was overseen by JB Rousselot, an executive appointed to the NBN company after Turnbull became Communications Minister. Rousselot has close links to Turnbull, having worked with the Member for Wentworth at a number of previous companies. The pair reportedly jointly own a yacht together.

The November 2013 Strategic Review, Labor said, estimated Turnbull’s Multi-Technology Mix version of the NBN as costing $41 billion, with a cost per home of $600 for deploying the Fibre to the Node technology preferred by Turnbull over Labor’s technically superior Fibre to the Premises model.

The Strategic Review had also estimated a cost of $55 million to remediate Telstra’s copper network, that 2.61 million homes would be connected to the HFC cable networks owned by Telstra and Optus by December 2016, that the NBN company would make $2.6 billion in revenues in 2016 and 2017, and that total IT systems capital expenditure would be between $1.78 and $1.89 billion.

The reality, according to Labor’s references, was far different.

The NBN company’s current estimates were that its rollout would cost up to $56 billion (up to $15 billion more), FTTN would cost $1,600 per premise ($1,000 more), it would cost $641 million to fix Telstra’s copper network ($586 million more) and that only up to a third of the planned premises would be connected to the HFC cable networks by December 2016 (1.7 million to 2.6 million premises less).

The NBN company’s projected revenues are $1.4 billion less than they were projected to be in the Strategic Review, and IT capex is slated to cost between $610 and $720 million more.

“The Strategic Review was Malcolm Turnbull’s justification from switching from Labor’s fibre NBN to his second rate copper version. Two years on, and it is now clear that Malcolm Turnbull made this decision based on a very dodgy report, that was hopelessly wrong,” said Shadow Communications Minister Jason Clare.

“Malcolm Turnbull is pretty agile but he can’t dodge responsibility for this. The NBN is rolling out slower than he promised and it is going to cost a lot more than he promised. This is no one else’s fault but his.”

Clare said the purchase of Telstra’s copper network and Optus’ HFC cable network was also “another big mistake”. Labor had planned to shut the networks down.

“In November a leaked document from NBN revealed that the Optus HFC network is not fit for purpose and NBN Co will need to spend hundreds of millions of dollars to fix it up or overbuild it,” said Clare.

“Last week a second leaked NBN document revealed that the cost to fix up the old copper network is more than ten times what Malcolm Turnbull said it would cost when he released the Strategic Review. The same leaked document also shows that the cost per home of Malcolm Turnbull’s second rate copper NBN has nearly tripled.

“Rumours have also surfaced that Malcolm Turnbull is trying to sell the NBN after the next election at a loss to cover his mistakes. Malcolm Turnbull calls his second rate NBN the MTM – Multi Technology Mix. A better name is Malcolm Turnbull’s Mess.”

Communications Minister Mitch Fifield yesterday avoided answering direct questions about the issues with the HFC cable and copper networks.

Delimiter invites readers to closely examine Labor’s references to determine their accuracy. We will commit to publishing in full any rebuttal of these points or provision of broader context received from the Government.

Labor’s references:

[i] NBN Co Strategic Review, page 17, at: http://www.nbnco.com.au/content/dam/nbnco/documents/NBN-Co-Strategic-Review-Report.pdf.

[ii] NBN Co Corporate Plan 2016, page 31, at: http://www.nbnco.com.au/content/dam/nbnco2/documents/nbn-corporate-plan-2016.pdf.

[iii] NBN Co, “IOP 2.0 FTTN Review,” page 10, at: https://delimiter.com.au/wp-content/uploads/2015/12/new-leaked-NBN-doc.pdf

[iv] NBN Co Corporate Plan 2016, page 67.

[v] NBN Co, “IOP 2.0 FTTN Review,” page 10 (copper remediation $2,685 per node multiplied by 20,313 nodes = $54,540,405).

[vi] Ibid. ($26,115 per node multiplied by 24,544 nodes = $640,966,560).

[vii] NBN Co Strategic Review, page 97.

[viii] NBN Co Corporate Plan 2016, page 60.

[ix] NBN Co Corporate Plan 2014-17, page 49, at: http://www.nbnco.com.au/content/dam/nbnco2/documents/nbn-co-corporate-plan-2014-17-Nov11.pdf

[x] NBN Co Corporate Plan 2016, page 59.

[xi] NBN Co Strategic Review, pages 66 and 83. Page 66: “The Revised Outlook for IT Capital Expenditure, including OSS/BSS, is approximately $1.6 billion.” Page 83: “For NBN Co to extend its current OSS/BSS to support FTTN, the additional one-off cost is estimated to be $110-180 million. For HFC, this one-off cost is estimated to be an additional $70-110 million.”

[xii] “[NBN Co] will spent [sic] approximately $2.5 billion on IT capex by the 2021-22 financial year” (Malcolm Turnbull, Lessons from the NBN,” 11 June 2015, at: http://www.malcolmturnbull.com.au/media/lessons-from-the-nbn).

Image credit: Labor

46 COMMENTS

  1. Those claims from Labor are pretty solid. Clearly nbn have failed to come anywhere near meeting their own targets.

    But it sidesteps the more important question of whether the assumptions in scenario 2 and scenario 3 in the strategic review were solid. Since scenario 2 & 3 were a lot closer to what NBNCo were actually rolling out at the time, the assumptions were probably better than for the MTM – in which case, they would have come out better on virtually every metric.

    For reference, the strategic review numbers were :

    Scenario 2 (optimised FTTP) had completion in 2023, internal rate of return 1.7% to 4.0% (depending on revenue scenario), peak funding $64 Billion.
    Scenario 3 (Optimised FTTP + FTTB) had completion in 2022, IRR = 1.9% to 4.1%, Peak funding $59 Billion.
    Scenario 6 (MTM) had completion 2020, IRR 3.1% to 5.3%, Peak funding $41 Billion

    • Yeah the IRR of Scenario 6 was always extremely suspect… What does that look like now, with CAPEX and OPEX increasing and revenue figures falling? Is it negative yet?

    • Considering they already had figures of a rollout in progress which they overestimated in the SR for FTTP. The assumption for those rollout a out would be more accurate than the made up figures for the MTM.

    • David,

      “Those claims from Labor are pretty solid.”

      Except for the key factor, the most recent FTTP figures are missing.

      The updated peak funding FTTP figures in CP 16, from the original SR.

      $74B-$84B with a finish date of 2026-2028.

      How solid are the claims now?

        • So you know more about the cost of respective infrastructure rollouts in $A 2015 than the NBN Co do?

          It’s amazing how FTTN figures are never too high or not high enough but FTTP figures always are?

          • Oh yes the Coalition’s unquestionable (well 100% questionable to the rational) numbers are missing, eh alain… ROFL…

            And speaking of numbers… how are those pre-election promised adult surpluses each year going..?

            Oh dear like the NBN numbers which have totally fucked up, seems we didn’t get the promised surplus yet again, in fact we got more fucked up increases in the deficit…

            No wonder MTM is going along as it is…

            You’re welcome.

        • David,

          That’s lazy arguing, just to dismiss any figures that don’t suit you and the rest of the FTTP fans agenda without any evidence is what is not credible.

          So are FTTN or HFC figures credible?

          • I don’t trust anyones numbers, but at the time of the strategic review, they had more information about FTTP rollouts than they had about FTTN or HFC.
            Their $70 billion+ number for FTTP is for switching back now, not for not changing in the first place. They haven’t given any updated number for not changing in the first place. 2026 is 4 years more than the strategic review year of 2022. Could be accounted for by 2 years switching to MTM and 2 year refocusing on fiber, but of course they don’t discuss how they came up with their revised numbers, so who knows ?

      • You mean the most recent Mal’s yacht owning mate and Lib donator mates, figures, ROFL

        But David is mentioning the scenarios… remember those scenarios you didn’t even fucking know about alain…???

        So probably best to leave the adult conversations to us adults OK…

        Good boy, toddle off now.

      • Alain

        those figures as morrow have said in the senate estimates is for is they stopped rolling out the MTM and go back to FTTP. So those figures are only accurate if labor going to go back to FTTP which they said because of the mess Turnbull has created they cannot. But then Labor can claim they can do FTTP in 3 years for only $29B because CP’s change lol.

        But then if you really want to compare the current $56B blowout lol to the SR only $64B if they had continued to roll out FTTP instead of the mess we have now lol.

        • It’s not a $56B blowout, really sad that the only argument you have is to deliberately misquote figures, is that the best you can repetitively come up with Rizz?

          • Stop accusing people of sock-puppeting Reality, it is incredibly tiresome a response.

            Yes, it isn’t a $56Bn blowout, its an up to $25Bn blowout from their $29Bn 25Mbit to all by 2016 fully costed policy they took to the election… Oh, we must not talk about that…

        • Yes Alain I deliberately misquoted the $56B blow because you deliberately misquoted the $74-$84B y26-28. Like when you though that there pre election policy used HFC lol.

          It’s very sad that it is all you have to discredit FTTP considering the SR had a full FTTP rollout fit just $8B more.

          But please keep tr

  2. As NBN PR would say
    “Nothing to see here, move along”
    :)
    Good job once again Renai for bringing this up to everyone’s attention.
    And stop working so many hours :P

  3. Why is the business community (small, medium and large) so conspicuously quiet about this gross negligence?

      • Sadly true in my experience. SMBs regularly ask whether they can make use of cloud services like Azure and cloud backup and they don’t like being told there is no reasonable way for them to make use of such services with the ADSL they have available. When they ask what it will cost to improve that, they are shocked at the cost of dedicated fibre, but when you try to explain what would have been available via the NBN, that they are no longer on the toll out map and that this is a direct consequence of the LNP’s changes, they start repeating the mantra of ‘well if Labor hadn’t been making such a mess of things it wouldn’t have gone so off track’. It is very difficult to continue that conversation in a professional capacity because people with such blinkered opinions automatically assume anyone making a political argument has an ideological axe to grind. I do so anyway, to some extent, because they’re paying me for my professional knowledge and expertise and I’m used to telling Directors things they don’t like to hear ;-) Because the reality is, as a business, the full fibre NBN would have provided tremendous opportunity for efficiency improvements and cost savings that is simply not possible remaining on ADSL or low performance FTTN, so that makes MTM and the tremendous delays and cost blowouts a business risk and cost, and by extension a LNP government is a business risk, cost and lost opportunity.

        But just try convincing ideologically capitalist business owners and operators to vote Labor – their immediate concern is that Labor will try to take a piece out of their super pie, or make employees more costly, both far more ‘real’ than supposed possibilities promulgated by someone who is ‘obviously’ a Labor supporter…

        • ‘well if Labor hadn’t been making such a mess of things it wouldn’t have gone so off track’. What happens if you say: “what mess was that? The same mess Malcolm Turnbull, whose reputation for accuracy in this matter is already trashed, has been telling us about?”

  4. I am very encouraged to see Labor finally taking the LNP (and Malcolm) to task over this. This needs to be hammered home until the media actually start reporting and discussing it – this isn’t just about the NBN, it speaks directly to Malcolm’s reliability, expertise and trustworthiness. It is a direct indictment on his rhetoric about fact based discussion and intelligent argument. Best of all, the facts are rock solid.

    But then, facts and evidence never stood in the way of LNP ideology before… :-/

    • They were waiting for an election year! Had they started when TA was in charge TA would be a back bencher now and Mr Turnbull would really be Mr Squeaky clean.

      That and we’d have been tired of the rhetoric by now too if it’d been going on for the last 2 years.

  5. “Clare said the purchase of Telstra’s copper network and Optus’ HFC cable network was also “another big mistake”. Labor had planned to shut the networks down.”

    So was Labor paying Telstra and Optus $11B and $800M and NOT get any infrastructure included a even bigger mistake?

    “In November a leaked document from NBN revealed that the Optus HFC network is not fit for purpose and NBN Co will need to spend hundreds of millions of dollars to fix it up or overbuild it,” said Clare.”

    The NBN Co have not officially stated what they are going to do with the Optus HFC, the cheapest option is overbuild with Telstra HFC at $150M, which is not “hundreds of millions of dollars to fix it up or overbuild it”, it is $150M to overbuild it by extending the Telstra HFC.

    That leaked document is headed DRAFT, the figures could change or the modelling scenarios could change, but apparently DRAFT documents are as good as the officially released CP 16.

    So what’s the figure if Labor overbuilt Optus HFC with brownfields FTTP Jason, you know as per the original Labor plan?

    Also as per usual key statements from Labor have gone absent without leave.

    How about some comparative FTTP figures in the table to show everyone that FTTP is without question the most cost effective alternative, in fact the term FTTP seems to have been dropped by Labor completely recently.

    If Labor want the NBN to be a vote winner they need to tell us all what they are going to do about the so called Coalition ‘MtM mess’.

    1. Are you going to drop Telstra and Optus HFC and overbuild it with FTTP, you have just said it was a ‘big mistake’ so is that what you are going to do or are you going to sit on the political fence and see how well HFC residence activation is by election time 2016 and then decide how much of a ‘mistake’ it really is?

    2. Are you going to use FTTdp or is it just something only the Coalition should be doing?

    3. Are you going to overbuild FTTN areas with FTTP or FTTdp and if so in what time frame?

    • @alain
      So was Labor paying Telstra and Optus $11B and $800M and NOT get any infrastructure included a even bigger mistake?

      The alp did not make a mistake, they bought revenue generating customers vs your lib mates who bought not one but three obsolete high maintenance copper networks!

      • They are only revenue generating customers if you shut down the HFC and overbuild it as fast as possible with FTTP, at the end of six years of the Labor NBN rollout the FTTP rollout target figures were half of what they originally estimated.

        So it was a overbuild scenario that was no where near a start build date let alone completion, HFC areas were almost at the bottom of the build priority list.

        HFC is a high maintenance copper network?

        • Alain
          After 3 months Coalition rollout target figures were half of what they originally estimated. After 2 years there were halved again lol.

        • “at the end of six years of the Labor NBN rollout the FTTP rollout target figures were half of what they originally estimated.”
          Uhm, you’re saying after six years Labor was only promising FTTP to 46.5% of Aus?

    • MASSIVE MAINTENANCE COSTS + MASSIVE POWER COSTS + MASSIVE COSTS TO UPGRADE + MASSIVE OVERBUILD COSTS, etc, etc… over and above the $800m…

      Yes I am shouting so that planet alain, DUH can understand…

      Oh sorry, we know you actually can understand, but you simply aren’t allowed to understand and must oppose… good dog… sit.

    • “Labor want the NBN to be a vote winner they need to tell us all what they are going to do about the so called Coalition ‘MtM mess’.”

      OOOH Another opportunity for me to post this and for you to ignore it!

      “Again with the “Until Labor announce their policy, they aren’t allowed to complain or comment about the current Liberal policy”

      Tell me again when the Liberals announced their policy, and remind me… Did they suddenly just start complaining when they announced their policy? Oh… they didn’t?

      What’s good for the goose isn’t apparently good for the gander.”

    • “So was Labor paying Telstra and Optus $11B and $800M and NOT get any infrastructure included a even bigger mistake?”
      Of course not. It would have saved them $1b a year in maintenance.

      “the cheapest option is overbuild with Telstra HFC at $150M, which is not “hundreds of millions of dollars to fix it up or overbuild it”, it is $150M to overbuild it”
      What kind of slimy contradiction is that?!?

      “the figures could change”
      Yes, there could be a $15b blowout. Who knows? Certainly not nbn.

      “So what’s the figure if Labor overbuilt Optus HFC with brownfields FTTP Jason, you know as per the original Labor plan?”
      Irrelevant, given there was a guaranteed and more than healthy ROI with the clearly superior infrastructure.

      “If Labor want the NBN to be a vote winner they need to tell us all what they are going to do about the so called Coalition ‘MtM mess’.”
      They already have. They will attempt to remediate what little of the mess they can, but much of it is now contractual and untouchable. Maybe they can clean up 30% of it if they’re lucky.

      “1. Are you going to drop Telstra HFC”
      Can’t be done, as you are well aware.

      • ““the cheapest option is overbuild with Telstra HFC at $150M, which is not “hundreds of millions of dollars to fix it up or overbuild it”, it is $150M to overbuild it”
        What kind of slimy contradiction is that?!?”

        Well, he’s right… it ISN’T HUNDREDS of millions… its only ONE and a HALF hundred million… He will twist and turn his way all the way to “One hundred and ninety nine million” and continue to claim it isn’t “hundreds of millions”.

        Then if it hits two hundred million, will claim he never said anything about “hundreds of millions” or just ignore it when brought up ever again, like he likes to ignore so many other commenters when they press him on his hypocrisy.

    • Alain
      “If labor wants the NBN to be a vote winner they need to tell us all what they are going to do about the so called coalition MTM mess”

      Well they should take a page out of Turnbull book and claim they can do FTTP in 3 years for only $29B. Wouldn’t you agree as it doesn’t matter when they get elected because CP change lol.

  6. @ Derek O, + Rizz. Gents, I understand that you have fundamentally differing opinions to Reality, but do you really have to stoop to the childish personal attacks every time he makes a post.

    Please cut it out, it’s getting pretty tiresome.

    • Yes thanks Steve…

      So he isn’t childish and “you” (the magical new guy) who comes to alain’s rescue…is, what adult?

      • One could surmise as alain always does, that SteveH is actually…???

        But one is not as low as him to suggest such a thing, Derek :)

        So we’ll just take newbie SteveH on face value and assume he doesn’t know the full story of the alain lies, BS and contradictions and as such consider his comments virginal…

        For now… :)

  7. Since the NBN was first announced, I thought it was an amazing policy that would change the landscape of the telecommunications sector in Australia. No longer would one be at the mercy of weather or would the length of your line dictate what “speed” you could receive.

    What you brought was what you got, the only difference was a little loss of speed due to overheads.

    Now onto the good stuff! Truth and Facts!

    When you speak honestly about the truth and with facts, it just comes out naturally as you have nothing to hide nothing to spin and nothing to lie about. We could all see this disaster happening even before the election was called. With what has come to pass now, this is entirely the LNPs fault.

    We have elections to elect people into positions of government, which is meant to govern for the prosperity of the nation and not the pockets of a select few. If you do a bad job in the private sector you get warnings and then the sack, possibly earlier if it is a major issue. The problem I see is that if these people(politicians) we elect into power start doing some crazy bullshit crap which is not in the benefit of the nation, the citizens have no way to sack said person for doing a lackluster job. We have to wait until another election.

    I was in the 1yr rollout plan for FTTP in 2013, 2 years later and nothing except that my area is now slated for HFC. This is further stupidity as my street does not have any HFC down it and it would require doing the EXACT same thing as FTTP, running fibre down the street and into the home. If FTTP was delayed in my area alone for 12 months and 12 months to build I WOULD BE ON FTTP BY NOW!

    If this shit continues the tax payers and citizens of Australia will always lose, the waste of tax payers hard earned, the rich getting richer and poor getting poorer. Heck I’m no where near as qualified as others out there, but at least I can tell the difference between shit and brown clay…

  8. Oh look turnbull/lib bashing NBN article #937363 by Renai LeMay, how original! I’m by no means a lib lover or happy about the NBN situation, but it really is hilarious just how biased this guy is in his reporting.

    • Wow, you must have read a different article to me. The article is a straight report of news using the information provided and seeking rebuttal to these facts from the Government. Sure, the comments are biased (as comments always are), but they are not the report.

      Perhaps you could re-read it with an open mind?

    • @Knowitall so what you are saying is that our politicians should not be held to account?

      I’m sure the libs would love that, then they can really set about screwing ordinary Aussies for the benefit of their big business mates.

    • “Facts… are the center. Facts. We don’t pretend that certain facts are in dispute to give the appearance of fairness to people who don’t believe them. Balance is irrelevant to me. It has nothing to do with the truth, logic, or reality.” – Charlie Skinner, The Newsroom

    • Biased towards reporting facts as they occur? It’s unfortunate, then, that the Liberals are showing their colours on a bi-daily basis…

      EDIT : There wasn’t even any commentary attached to this news story about a Labor document. Get a grip, man.

Comments are closed.