Key commentators agree the NBN should be broken up, sold off


news Several influential commentators on the National Broadband Network have publicly agreed over the past several days with Infrastructure Australia’s recommendation that the NBN company should be broken up into chunks along technological lines and privatised.

Last week Infrastructure Australia released what it billed as a 15-year Infrastructure Plan and associated priority list. The agency stated baldly that over the medium-term period, the Federal Government should “transfer NBN Co to private ownership”, including options for splitting the NBN company into chunks on either technological or geographical grounds. However, Infrastructure Australia did not include any rationale or evidence for why it had made the recommendation.

In the days following the release of the document, a number of key NBN commentators have come out broadly supporting IA’s recommendation.

In a post on his blog (we recommend you click here for the full article), former NBN company chief technology officer Gary McLaren pointed out that he had previously come out in support of splitting up the NBN and selling it off.

“I have previously come out in support of the Vertigan Panel recommendations and the earliest possible implementation of a split of NBN Co,” wrote McLaren. He directed readers to an article he had published in Business Spectator in October 2014, where he argued for the split.

At the time, McLaren argued that the best way to accelerate the deployment of telecommunications infrastructure — especially fibre — would stagnate under the monopoly utility model which the NBN company currently embodies.

“I have no doubt a competitive infrastructure model will result in more fibre being deployed over the medium to long term than relying on a multi technology monopoly. It will also be more efficient and innovative. New entrants will relish the opportunity to compete with incumbent carriers,” wrote McLaren at the time.

NBN blogger Kenneth Tsang has also come out in favour of splitting up the NBN company and selling it off.

Tsang posted a detailed thought piece last week (we recommend you click here for the full article), essentially arguing that although a Fibre to the Premises monopoly would have been the best way to ensure the upgrade of Australia’s telecommunications network, this model was no longer the form that Australia was proceeding with.

“… a Multi-Technology Mix is an effective way to drive infrastructure competition. However, it doesn’t work when it’s being built by a single entity — especially not a Government-owned enterprise,” wrote Tsang.

“Yes, I’d still argue that a Fibre to the Premises model would have been the ideal model. It would have made privatisation easier, it would have been far more elegant. But what’s done is done … if done correctly — splitting and selling the NBN is probably the best way forward for Australia.”

Tsang and McLaren, in supporting splitting up the NBN company, are adding their voices to a substantial list of other commentators who have also called for the same thing, ranging from ACCC chair Rod Sims, to the Vertigan Review carried out under Turnbull as Communications Minister.

The general argument being made is that by splitting up the NBN company along technological lines (eg, a company that sells HFC cable, a company that sells Fibre to the X broadband), the Government would create a natural incentive for each company to compete with each other and upgrade their infrastructure.

However, all parties have also noted substantial issues in the way to this end being achieved.

McLaren, particularly, this week noted that the NBN company’s operational processes and IT systems would need to be untangled from their current state, and that financial considerations would also come into play, with the company’s valuation making it unclear how it would be sold and what return private sector investors could expect.

Do I personally believe that the NBN company should be split up and sold off?

Fuck no.

There are many elements of the arguments made this week by people like McLaren and Tsang that I do agree with, and I respect them both highly. I also respect ACCC chair Rod Sims and even the Vertigan panellists. Each of these commentators have made a great deal of sense when it comes to their specific arguments for splitting up and selling up the NBN.

However, ultimately when it comes to the bigger picture … I fundamentally disagree with the fact that this approach would lead to a positive outcome in the short, medium or long-term. I believe it would screw up Australia’s telco sector even worse than it is already screwed up — and it’s messed up pretty royally right now.

I don’t always agree with Greens Senator (and my former boss) Scott Ludlam on all things. However, I do strongly agree with his long-espoused view that the NBN company should remain in public hands for the foreseeable future.

The Australian public has a shedload of its own money and a shedload of policy capital invested in the NBN project. It is incumbent upon the Federal Government to retain the project in public ownership until the long-term future of the project becomes clear and it is delivering on its aims. Malcolm Turnbull’s Mess has muddied the waters substantially for the NBN over the past few years. We need matters to clear up so that the future becomes clear before we flog the whole lot off to the private sector.

If we don’t consider this matter very carefully, we risk repeating the mistakes of the past. And I’ve written about far too many of those mistakes to want to see them come around again.


  1. “Fuck no!”

    That about sums it up – for me anyway.

    Have the previous 2 decades taught us bothing?

    We have had 2 decades of privatisation – the networks have not been maintained, we have had 20 different policies from the LNP in 14 years and they have managed to double their time frames and budget with a lower roi – how is this anything but an unmitigated disaster from the LNP?

    Have the cable wars taught us nothing – we can not have infrastructure in this country.

    The nbn isn’t even built yet – lets build it and look at how much revenue it makes and how this could improve our financial position.

  2. It sounds to me as if anyone who’s on board with selling it off is in agreement that the LNP turned the potentially world-leading NBNCo into a lame duck that’s best decoupled from the government train and left to fend for itself in the jungle of the private market.

    The LNP has either completely succeeded at destroying the NBN or utterly failed to make their vision commercially viable.

    What a waste.

  3. Telstra will use the money we gave them to buy nbn back and we’ll be f’d again with no recourse this time.

    • why would they want it back (short of it being priced too good to refuse)? returns for wholesale assets compared to say mobile are far far slimmer etc.

      Imho I’d see them maybe buying FttH and then just overbuilding the rest with more fibre.

  4. Is Renai old enough to remember what the Telecom monopoly was like, when there was no competition to drive prices down and if the Telecom product didn’t suit your needs, you had no alternative?

    Fuck no.

    • Does Mr Shark recall that very same monopoly was:

      A/ the only reason we had a national PSTN
      B/ the libs (JWH) are the entire reason we needed and NBN policy in the first place

      Back under your bridge LibTroll!

    • “Is Renai old enough to remember what the Telecom monopoly was like, when there was no competition to drive prices down and if the Telecom product didn’t suit your needs, you had no alternative?”

      Yes, yes I am :)

    • Yes I remember the monopoly I worked for it from the day it was the PMG and you Shark have no idea you must have been born in the last 20 years!
      This is how it was
      It cost you one price for your phone no matter how much it cost to put it on and you got it even if they had to put in 20 poles to get it to you.
      Now you have to pay for every pole!
      If your phone did not work and you were a doctor, hospital or older person it had to be fixed in 24hours even if that meant working overtime.
      Now it could takes two weeks or more the best you get is a mobile phone sent to you that older people have trouble using.
      The monopoly cabled your building now you pay for it.
      I could give many more examples but what is better with this free market private company rubbish give examples instead of trotting out political bullshit!

    • Yes, because the NBN is exactly like Telecom was being the only supplier of both the wholesale and retail side….

      You’re a loon.

    • It was a fully vertically integrated, legislated monopoly, of course it was bad. NBN is not that, it is a wholesale only network, with some (though not many) competitors.

      One of the early, and very big policy mistakes made when deregulating the telecommunications industry was to not split Telecom into separate wholesale and retail entities. Had this occurred, we very likely would have avoided many of the subsequent mistakes, and we may not be the telecommunications backwater we are today, and we probably could have avoided the need for and NBN altogether.

    • But of course, Mr Shark, privatisation has served us so well!

      Our services work flawlessly with little downtime, yes?
      The infrastructure is maintained to a high standard, yes?

      Oh yes sir, privatisation has served us so well – In fact, so well that we had to buy the infrastructure back from telstra at a ridiculous cost, just to spend more money than some countries entire GDP, to get it to a “decent standard”, which in this case involves a clusterfuck of different technologies, all in the name of saving a dollar. Or making one, if you’re a shareholder!

      Then what – sell it back again?

      If you want a pristine example of how well private companies look after our infrastructure, just have a good ‘ol gander at our power systems!

      Are our electricity costs at record highs? Yep! Is it because we’re consuming more electricity? Nope, we’re consuming less! Are our metering and servicing charges at record highs? Yep! In fact, for many households, the service charges are the largest single charge on a bill, thanks to the smart metering program and private companies gold plating our power infrastructure.

      Fuckwits like “Richard” complain about “gold plated” telecoms infrastructure – wowee, it would be great if he applied his same vehement arguments to our power infrastructure!

      But then, not all power companies are gold plating our power assets and passing the bill, are they.

      Ausnet has turned out to be the sole cause of the black saturday bushfires, australias worst national disaster where the blame lies completely and utterly at the feet of a private company. 173 people dead, thousands injured, billions in damages – because they knowingly did not maintain infrastructure.

      Oh yeah, privatising our assets is a great fucking idea, eh.

  5. Yes the NBN should be broken up and sold off.
    But only in return for unbiased equal access (including pricing) to all ducts, pipes and exchanges nationwide.
    Thats the only way the “free market” will investment and create competition in the Australian telecommunication sector.
    Ducts, pipes and exchanges should be held in commonwealth hands, not the cable inside!

    • That only applies some parts of cities there are still a lot on poles and now even more with the NBN fiber going on the poles and what about those who live in sparsely populated areas of places like Sydney where you have 5 acre or more properties they still get nothing because there is no profit in those areas.
      No the whole network that carries the data be phone or anything else has to be government owned the services that connect to it can be private and that is what was correct about the original NBN now its just a mess!

  6. No good can come to regional and rural Australia from selling off the NBN. Turnbull has already ensured there will be a massive digital divide already. Selling off parts of the NBN would leave the unprofitable regional and rural areas out in the dark. No one will want to buy those areas which will largely be FTTN. They wont want to have to spend billions upgrading the copper when they wont get the return. We will be back to he bad old days of differential pricing, and much worse services for those who will be paying more. We have already seen how bad that was for those areas.
    Its about time the Libs got some future vision and looked at the big picture. Through successive Liberal government, this has sadly been lacking. (Yes, I ignored the Nationals because they are the Liberal Party now. They haven’t don’t anything to stand up for their constituents, which are predominantly in regional and rural areas. Whatever the Libs say goes and their constituents are getting royally screwed!)

    • That failure of the free market to provide decent broadband Australia-wide was one of the core reasons Labor went with their NBN vision in the first place.

  7. I can’t see why it cannot remain a monopoly although I think that 49% should be sold off and the first shares be offered to the Australian public before anyone else. That 49% could be used to buy back the Aussie bonds, lowering the NBN debt and some could be used for future upgrades. To me the idea of selling of different parts of the NBN could well end up with multiple monopolies.

    • That’s the thought that crosses my mind when I hear the “broken up and sold” mantra. Lot’s of mini monopolies who have a stranglehold on their customers. There will be no innovation or competition because that implies that people will be trading their properties to change their wholesale service provider…fat chance that will happen. Innovators WON’T be laying infrastructure into the minimonopoly’s areas because the costs are too prohibitive for the limited returns when tackling an incumbent…guess, what, the government will come up with a great new idea to regulate the market to allow competition…I know they’ll create a GBE that will have the role of removing the incumbent’s stranglehold on infrastructure and…

      • except the Cu ‘monopolies’ will simply get the profitable area’s over built by those buying the fibre part, assuming anyone actually buys the Cu parts at all!

  8. Any time someone says that privatising something will promote competition, especially for infrastructure, they are either lying or don’t know what they are talking about.

    Assuming the NBN is broken up along technological lines, if you are some unfortunate who is stuck with Liberal Brand shitty fibre to the node there is fuck all chance that any other company with put up the funds to roll over competing infrastructure *unless* your location is a prime spot to cherry pick. We already had this bullshit with the Optus/Telstra cable roll out with them skipping streets and houses.

    One of the key reasons for a national broadband network was so that everyone got a connection, not at the whim of some number crunching pricks in suits who are more interested in their yearly bonus than providing a vital piece of infrastructure to the community.

  9. No, it shouldn’t be privatised, if private entities actually gave a fuck about service we wouldn’t even have needed an NBN.

    Want another example of private entities caring about service? Look at the problems with clean drinking water in US towns.

    • Exactly right, corporations only like privatised gov assets because they are usually monopolies and provide a captive market that they didn’t have to develop themselves.

  10. The general argument being made is that by splitting up the NBN company along technological lines (eg, a company that sells HFC cable, a company that sells Fibre to the X broadband), the Government would create a natural incentive for each company to compete with each other and upgrade their infrastructure.

    That won’t work, HFC as a example passes through our lucrative high density capitals suburbs, the incentive for owners of adjoining suburbs with infrastructure like FTTP and FTTN to increase market share is to overbuild HFC, the HFC owner will want to increase market share by overbuilding into adjoining FTTN and FTTP areas.

    Areas that are not so lucrative will be stuck on whatever NBN technology that was originally rolled out, there is no real incentive to upgrade everyone to a higher speed because you have a captive fixed line customer.

    Oh and there is the little matter of the ACCC in all of this vainly trying to set a wholesale price and access conditions across all these mini monopolies, for all RSP’s.

    • Where in the world is someone overbuilding a fibre network with a Cu one? I mean seriously!

    • “Areas that are not so lucrative will be stuck on whatever NBN technology that was originally rolled out, there is no real incentive to upgrade everyone to a higher speed because you have a captive fixed line customer.”

      You have just highlighted the entire reason the NBN was proposed in the first place. Congratulations.

      Years of stagnation of private companies not willing to build infrastructure in non-lucrative areas.

      • Well there was only one company capable of building any sort of fixed line infrastructure to the degree the NBN is doing now, Telstra, no one else except for the Optus brief limited rollout HFC for the now defunct Pay TV product was interested.

        There was and still is a shitload of Telstra resellers ‘innovating’ their product range with rebadged ADSL2+ like Naked DSL, but that had nothing to do with new infrastructure rollout, it was just reselling dirt cheap Telstra Wholesale ULL from their own exchange based DSLAM’s.

  11. About the only way this could even ‘work’, is by splitting up and selling off NBN Co. to the States and Shire Councils. And requiring them to not sell off what they obtained.

    And even then, that’s a right royal mess.

    There’s a few reasons I’m saying this, but it’s way too hot today for me to bother explaining why.

  12. I wouldn’t have objected to a 93% FttP network being sold off because its 1 entity that doesn’t need to cherry pick because its covered all the area’s already. Ideally the govt would wait until the profits meant the NBN covered as much of that last 7% with fibre too because I doubt private enterprise would do it otherwise.

    Still who is going to buy the HFC? FttN is even a fairly big stretch atm too, at least at prices that we wouldn’t be taking losses on :/

  13. The government should compulsorily reacquire the entire Telstra network, pay out all shareholders their existing worth for this, so it’s fair,
    and regain control of vital national infrastructure.
    Telstra could then continue to be a retail service provider / competitor, just like anyone else.
    Perhaps rename the NBN to NTN (National Telecommunications Network).
    Telecom Australia / PMG was a great company when it was publicly owned, great infrastructure, (one of the best telecommunications networks in the world back then), well maintained, and employed many many thousands of people in good, long term jobs, all over Australia, metro and regional.
    Now we have minimum service, for maximum price, and a dilapidated copper network that hasn’t been properly maintained for many years now. There’s also lots of idle / little used rural exchanges, microwave towers etc that could be used as part of a network upgrade.
    Selling off the NBN would just be a repeat of the Telstra fiasco. Cherry picking the high profit areas, and ignoring others. Minimizing service and maximizing ‘value to shareholders’.

  14. Sell off the NBN network, but the Australian government should work with local, state and federal governments and ‘confiscate/reclaim’ all pipes, pits and transit conduits as a government asset.

    Telstra can keep the exchanges but must allow others ‘rent space’.

    Then we might see others rolling out fibre networks to compete and it would make the wholesale condition void.

    If everyone can use the ducts/pits to create a network without the restriction of wholesale requirements, I believe we would have a infrastructure war for the last mile. Google might even jump on board.

    I still don’t understand the logic of Telstra owning the pits outside everyone’s house. It’s on local council land and I’m definitely sure a contractor of Telstra or the connecting tech did not dig the pit. It would’ve been the developer that provided for the pit.

    • I agree.
      No one will invest in Australia because the key assets needed for any competition are all still held by Telstra.
      The real issue here is absurd prices Telstra charge in pit/duct/exchange lease fees to any competitors.
      Remove Telstra from controlling key public assets and watch competition expload.

      • They are not public assets, they are Telstra assets, if you want them to become public assets make them a offer.

    • “If everyone can use the ducts/pits to create a network without the restriction of wholesale requirements, I believe we would have a infrastructure war for the last mile. Google might even jump on board.”

      Until you get older areas that don’t have pits… Or the pits get filled with other cabling and there isn’t room for more than one or two providers. Besides, we have seen this already. It was the HFC wars in the 90’s, there is very little incentive for another company to rollout infrastructure in an area that another company has already rolled it out. They end up spending a lot of money with the risk of not being able to steal customers from the other company.

  15. How exactly these companies will compete? And why? Every company will service specific area and other companies are not allowed to operate in others.

  16. After they have fixed up the faulty copper at tax payers expense then sold back in a fire sale. Complete money laundering. Daylight robbery.

  17. Let me guess the telstra board members who own telstra shares agree it should be sold off.

    Core infrastructure should never be sold off into private arms EVER, that’s all the lib party do every single time they come into power is sell everything.

  18. So the question that needs to be asked, why MUST there be competition in infrastructure? This is infrastructure. It is the perfect Natural Monopoly. The stupidity is blindly following the ‘monopolies are bad, competition is good’ mantra because it only shows how shallow and ideologically driven the argument is.

    We, as a society are not better off one single bit by having duplicated telecoms infrastructure. It only makes things more expensive. The sum of construction and maintenance of multiple networks means from a fixed market size, people will be paying more money to support those networks which is a far worse case than having a single network.

    • What blasphemy! Don’t you know we need competition everywhere?
      I’m still waiting for my second local council to build a second road past my front door. I’ll put my bins on the median strip and ill pay my rates to whoever collects them faster and cheaper. Surely more competition is always the best outcome for the consumer….

    • The usual argument for infrastructure competition is that it worked for the mobile networks, so it obviously is going to work for fixed-line networks.

      The flaw in that argument is that firstly mobile networks are much cheaper to build. It takes a lot less labour to build a mobile tower than to dig trenches to lay conduit and pull fibre (or copper in the NBN’s case). A mobile tower may service a huge area, possibly many square KM, and for metro areas, a lot of money can be saved by building the base stations on the roofs of large buildings, but for fixed-line networks you have to physically run a conduit past every premises you want to service, and ensure you pull enough fibre too. This takes a lot more labour, which is the most expensive part of building fixed-line networks.

      Which brings me to my second point, that mobile networks can cover many more users far more easily than fixed-line networks. As I said above, fixed-line networks have to be physically built past every premises they want to service, whereas mobile networks can cover many hundreds or thousands of premises with a single tower.

      Mobile users are also much more fickle, they can jump to a different network by simply walking into a store. The tendency with fixed-line networks is to charge customers exorbitant installation fees, or lock them into ridiculously long contracts. And if they do want to change, it will take days or even weeks to get a tech out to install the new connection. These are major barriers to customer mobility, which puts any new entrant to the market at a distinct disadvantage.

      Not to mention the fact that mobile use is far more wide-spread than fixed broadband. Everyone’s got a mobile. In fact, there are more active mobiles in this country than there are people! Whereas s of June 2015 there’s barely 6.5 million fixed-line broadband subscribers. (Of note was that fixed wireless statistics were “not available for publication” in 2015, whereas they have been in previous years – I’m guessing NBN Co have stopped supplying statistics that make it look bad to the ABS).

      And there’s many other reasons why the argument that infrastructure competition on mobile networks works is not applicable to fixed-broadband networks. But as you alluded to, fixed-line broadband is too much like a utility to sustain infrastructure competition.

      • also profits and returns in the mobile sphere far eclipse the meagre ones in the wholesale fixed line networking world!

  19. Dividing the NBN by technology won’t increase infrastructure competition. It didn’t work in the US, and doing it to the NBN here will leave us in a worse situation than the US.

    Until very recently, high-speed broadband in the US was basically made up of regional monopolies. This was due to the fact that the cable companies almost never overbuilt each other. They each focused on their own areas, and practically never expanded. Dividing the NBN by technology will essentially do the same thing here. The company servicing FTTN users won’t expand to areas served by other technologies, nor will FTTP or HFC, since the increased competition in those areas will make it difficult to recover the cost of overbuilding those competing networks.

    Oh, but the telcos in the US are now upgrading their networks to FTTP and stuff, right? Yeah, at a snail’s pace, and only where the population densities are high-enough to make it worth their while, but they’re certainly trying to avoid overbuilding each other wherever possible.

    So why will it leave us in a worse situation than the US? Because at least they have cities with population densities to interest third-parties like Google in investing in FTTP. We certainly don’t have that here. And the entire point of the NBN was to upgrade everyone, not just the most profitable areas, so it would basically leave the wireless and satellite users out in the cold for a very long time.

  20. Just like the selling of the power infrastructure and generators before large scale storage and cheap solar generation maximises returns to the taxpayer, once completed, the HFC, satellite and 4G networks should be sold off.

    Wait 12 months or so, then start rolling out to every premise in Australia with FTTP.

    Such a move would be particularly sweet if Telstra had gone ahead and purchased these assets.

  21. I think a sell up of any of the NBN infrastructure would be hard work, first of all the Government of the day would have to discount the buy price well under what it cost to build/upgrade it in the first place, which makes it a hard sell to the electorate.

    The electorate are also rightly highly cynical of the sell off of public assets to private interests who are only in it to make a ROI for their investors quickly, what this means is that infrastructure upgrades and maintenance is way down the list of priorities.

    Another key factor that will make it a hard sell is the role of the ACCC, a new NBN infrastructure owner has to factor in that their infrastructure is available for wholesale access to all RSP’s, not only that the wholesale pricing is out of your control and set by the ACCC, so what is the payback period?

    Of course there is the prospect of a conflict of interest when the infrastructure owner is also a RSP which is highly likely, it’s possible to structurally separate Telstra, not so easy to impose that on a overseas based company.

    • Another key factor that will make it a hard sell is the role of the ACCC, a new NBN infrastructure owner has to factor in that their infrastructure is available for wholesale access to all RSP’s

      Hmm…that give’s me an idea, what about if they sold it to all the RSP’s? Sort of like a farmers co-op.

      Just need to work out a way to make it equitable for smaller RSP’s to get an equal say in how it’s run.

  22. How’s the contrast between privatising the NBN and creating legislation to control ISP core network infrastructure decisions because National Security™?

    I can see how some people could rationalise that, but I disagree with their logic. Still, this is only commentators, it’s not the government actually saying they’re going to do it.

  23. “New entrants will relish the opportunity to compete with incumbent carriers”

    Gary McLaren *must* have been living under a rock for the past 40 years, because that is precisely what has *not* happened in Australia during that period. This guy has no credibility with a statement like that. None. He must have been asleep during the Optus HFC versus Telstra HFC fiasco in the 1990s. How these people hold down such a high-paying job is disgusting. How offensive to see these clowns directing such important Infrastructure projects.

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