Its Politics as usual in NBN Land

We’re all rather used to politicians (of both sides, but mainly the current government) spruiking their achievements in rolling the NBN. However the latest one from Senator Mitch Fifield, the Minister for Communications and the Arts titled ‘3 in 4 premises able to connect to the NBN’, is so full of inaccuracies and half truths that I feel it needs a response.

 

Senator Mitch Fifield’s Media Release on the NBN

The media release talks about how they’ve achieved 3 in 4 premises being able to connect to the NBN and that they’ve done this more cheaply and quicker than Labor’s original FTTP rollout. He then goes on to quote some figures about why the Coalition’s MTM model is so much better than the original Labor plan.

The first thing to note is that regardless of the politics, the Labor party under Rudd actually went to the 2007 election promising a $4.7bn FTTN rollout in a partnership with private industry. However they soon came up against a recalcitrant Telstra (remember Sol Trujillo?) who essentially said:

“It’s our copper and you can’t have it unless you give us $20bn. We will then take that $20bn and roll out fibre to all the cities in competition with you”.

The country would have been left with a very expensive, poor quality network.

 

So the FTTP model wasn’t Labor’s initial option, but at the time the only viable one.

They managed to negotiate with Telstra (paid them a bunch of money and waved a big stick in the form of spectrum allocation) for them to get out of the access (delivery to the home) market. This then laid the foundation for the Coalition 6 years later to return to the FTTN model.

It is also worth pointing out that the previous Coalition government under Howard had created the problem with Telstra in the first place by, against a wealth of expert advice and experience in other countries, selling off the government’s controlling stake in Telstra without structurally separating it into retail and wholesale divisions. Indeed one of the early achievements of NBN was to force this structural separation.

 

Fifield criticises the Labor FTTN model:

“Under six years of Labor, 50,000 premises were connected. The Liberal National Government connects almost 100,000 premises every month.”

This may be technically accurate, but it is highly misleading. By measuring progress in terms of premises connected, they are completely ignoring the massive amount of planning and preparation that is required for a project of this size. IT systems, national network design, procuring construction contractors, designers etc – all that preparatory work needs to be done before the first premise is connected. This is not like building Snowy Hydro which is essentially a single project where each task is done once or just a few times.

Rolling out NBN is like operating a distributed factory – it is the same task over and over again in different places. Lessons are learned, economies are found, production ramps up. The feedback I got from engineers at NBN that they had reached their 3rd iteration of the design and were just hitting their straps when it all came to a halt.

“Labor’s NBN would have taken six to eight years longer to complete and cost an extra $30 billion. Every household would have been charged an extra $500 a year for broadband.”

Mike Quigley, the first CEO of NBN, fully expected the build to be completed for $54bn (about the same cost as the revised MTM cost) and to finish just one year later than the current MTM rollout – 2021. The cost savings and production ramp up, that Quigley expected to attain, have easily been achieved by Chorus in NZ, yet NBN and the government stick doggedly to their $4400/premise price for FTTP to justify their use of the MTM.

A recent article posted on The Monthly shares a very detailed reflection of Quigley’s views on how the Coalition broke the internet.

When the Coalition came to power the first thing Malcolm Turnbull (as Communications Minister) did was to launch an enquiry into the current FTTP rollout. They took the current rollout progress and simply extrapolated it to get their 8 years longer and $30bn more – clearly the enquiry was totally self serving and designed to justify their change to MTM. The old joke of a politician never announcing an enquiry unless they know the outcome seems very apt.

However the worst part of the whole thing is that Australia has spent all this money (same as the FTTP rollout) and we have been left with a dud – it may not be a complete dud now, but it will be in five years time. We got the expensive, poor quality broadband that the Labor government had originally considered and rejected. NBNCo is struggling to meet it’s revenue targets as people connect to the NBN at a lack lustre rate.

When rolling out infrastructure, which is slow and expensive, you don’t look at what the market needs now, but at what it will need in 10 or 20 years time. Anyone can see that our need for fast, reliable broadband is only increasing (40% per year according to the ABS). In the long term what the Coalition have done is set our economic future back at least 10 years. It will end up costing the country significantly more overall when we have to do the inevitable upgrade to full fibre (and no 5G isn’t going to cut it). This from the party that calls itself “the better economic managers”.

We will look back on this period as the greatest wasted opportunity. It’s an extraordinary shame that we failed to grasp it.

 

If you want to hear Mike Quigley talk about this much more eloquently than me, I highly recommend you watch his opening statement (the first 12 minutes) of his recent testimony to the Senate Committee. 

It is not clear what the long term fix for the NBN is, but the first stage has to be to recognise that we have a problem. The sooner we can get the politics out and the engineers in, the sooner we can make a start.

Damian Ivereigh
CTO Launtel
25/02/19