Abbott paving a telecoms road to nowhere

Abbott paving a telecoms road to nowhere

Summary: Fish, barrel; fox, henhouse; Abbott, NBN. Mocking Tony Abbott's ignorance of telecoms has become so easy and habitual that his latest pronouncements would normally hardly merit a response.

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Fish, barrel; fox, henhouse; Abbott, NBN. Mocking Tony Abbott's ignorance of telecoms has become so easy and habitual that his latest pronouncements would normally hardly merit a response. But with his latest policy speech being seen as an informal roll-up to next year's election campaign, and Telstra's recent behaviour reaffirming the need for government intervention in the telco sector, it's important to once again weigh the implications of Abbott's cost-redirection policy against the reality of the situation.

Tony Abbott

Tony Abbott fronted the National Press Club in Canberra with a 19th century vision for the 21st century, but will it hurt or help his election run?
(Screenshot by Josh Taylor/ZDNet Australia)

Most glaring is Abbott's ongoing commitment to redirect NBN expenditure towards building roads to ease congestion. It's not the first time he has made this commitment, it emerged during the Coalition's response to last year's Labor budget, but the fact that he's still repeating it confirms that he really believes in its value.

Abbott completely disregards the fact that the Labor Government's practice of accounting for the NBN as an investment, rather than a straight budget expense, has been recently validated. By contrast, Abbott's plan would bring those off-budget investment dollars back into the budget, laying down hundreds of kilometres of roads to ensure that even the outer suburbs of Sydney can get access to CBD-style congestion. And all this, without a shred of suggestion on the costs and benefits of his vague roads plan.

Sure, he may well argue, the government could position its funding as a commercial investment by establishing them up as toll roads, thereby extricating money from taxpayers who would pay again for their passage on taxpayer-funded roadways. Yet that approach has had its share of problems, most recently and famously in the form of Sydney's Cross City Tunnel, which will remain in private hands until 2030 and has long been running at a loss, despite a myriad of price adjustments and road closures to force people onto the network. Traffic volumes have just not met projections.

Does this track record have ominous parallels for the NBN, which also includes methods to encourage customers onto the network and has been plagued by criticisms, most recently by a vocal Malcolm Turnbull, that its volumes will also not meet projections? Not necessarily: as a wholesale backbone, the NBN is a complete replacement rather than a costlier alternative network that customers can choose to bypass.

Abbott's hatred of Labor, and all it stands for, has driven him down a policy blind alley that continues to play out as a syllogistic nightmare.

Disregard for a moment the broader question of whether building more roads is a long-term solution to easing transportation congestion. If Abbott is advocating the funnelling of public money that will generate a return on the NBN, into roads that have been proven as loss-making time and time again, how can he claim that he's making better use of taxpayer funds? Heck, 12,000 would-be ex-public servants (whose jobs Abbott wants to cut) might suggest there would be a better return by helping them clothe and feed their families.

Abbott's hatred of Labor, and all it stands for, has driven him down a policy blind alley that continues to play out as a syllogistic nightmare. Consider the NBN as a modern manifestation of that 1990s-era term "information highway", then contrast it with the concrete highways Abbott wants to build. Both are trying to build more, and broader, roadways that will improve services to areas that can't currently get them. Both are intended to resolve currently abysmal congestion in the flow of traffic. But only one is likely to make even a modest return during the course of its public ownership, and it's not the tollways.

Where Abbott's latest proclamations veer from the ignorant to the offensive, however, are in his claims that "better broadband will once more be delivered through market competition". This is the Liberal Party line, but I and other commentators have repeatedly pointed out how the competitive market created by deregulation in 1997 has failed the country's telecoms environment, over and over again, and how relying on the private sector will never deliver equitable services in rural and remote Australia.

In a case of uncanny timing, Telstra was this week actively showing just how much today's competitive market will actually deliver better broadband: that is to say, not at all.

Turns out Telstra wasn't too impressed by the plans of Nextep, an NEC-owned communications services provider, to offer wholesale ADSL access to communities along the 6000km Regional Broadband Blackspots Program (RBBP) fibre-optic cable. RBBP, you recall, was intended to enable the delivery of competitive backhaul to regional areas that would never otherwise get it through private investment.

RBBP generated excitement when it allowed new internet service providers (ISPs) to enter the market in rural Geraldton, Western Australia. However, this sort of thing worries Telstra, which was faced with losing wholesale customers like Adam Internet and Internode to Nextep. In response, Telstra did what any good monopolist would do: it re-zoned its services so that the areas in question are now in a lower-cost pricing band.

If Telstra's changes mean Nextep can no longer justify the investment to build competing ADSL infrastructure ... what hope is there for Abbott's much-loved 'market competition' to deliver on his vision?

This may have reduced Telstra's wholesale revenues slightly, but it also torpedoed Nextep's business case. Nextep's negotiations with ISPs are now currently on hold. And if Telstra's changes mean it can no longer justify the investment to build competing ADSL infrastructure even where competitive backhaul is available, what hope is there for Abbott's much-loved "market competition" to deliver on his vision?

Then there's TPG, which alleges its customer churn to Telstra doubled after the company increased its wholesale rates, thereby eliminating TPG's ability to undercut its prices.

The fact remains: Telstra's continuing dominance of backhaul and last-mile services means it can make "market competition" unviable with nothing more than a few changes to a rate card. Even the best-intentioned private investors can't justify sinking money into this kind of market, and they will fall by the wayside as Abbott's blind faith in private enterprise masks the truth. When Abbott speaks of "market competition", he is really talking about Telstra and its ability to compete with any effort to unseat it. And that's hardly forward-looking.

On the eve of the 2010 election, 18 months ago, I took on Abbott's "lust" for the prime ministership, his willingness to compromise Australia's communications network for his own gain, and his support of deputies that discredited legitimate nation-building exercises by branding them "talentless".

Now, it appears we'll be dealing with a similarly constrained world-view as Abbott races towards a 2013 election while trying to avoid getting a well-deserved knife in the back. That this (metaphorical) knife would most likely be wielded by his communications shadow minister, Malcolm Turnbull, adds another element of intrigue to discussions about a policy platform that looks more and more irrelevant the more it's repeated.

Roads or information highways? Will Abbott's position hurt him in the 2013 election, or help him?

Topics: Broadband, Government AU, NBN, Tech Industry

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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Talkback

31 comments
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  • I love reading such a kiss arse support for the largest waste of money- the NBN.
    With poster boy Minister Conroy its amazing how such an IT moron has the ability to turn on his own computer.
    Build better roads and back off something that will be sold off anyway.
    No government funding unless it remains in 100% government control and prevents the Telstra business model - the bottle neck of whp controls the backbone.
    Remove the incentives for foreign owned companies ( re Singapore Government ) to be part of this mess.
    Hideous62
    • What are you even on about? Apart from your lack of understanding of the fallacy that is private investment in communications infrastructure in Australia is, I have a lot of difficulty even extracting an argument from your text.
      Camm-a0c75
      • I think from the hieroglyphics posted as English, the interpretation I gathered from the hideous (how apt) one was.

        1 He hates the NBN, because Tony said he must.

        2 He hates Conroy because he's from the party Tony isn't.

        3 He wants roads because Tony says roads good/interthingy bad.

        4 Government funding bad, Tony said

        5 Racism is good (I think that was his own...wow)

        6 Ugg - Tony said

        There simple.
        Beta-9f71a
    • Get lost Mr Abbot we know it's you. And stop smoking crack for breakfast.
      Jingles-8366c
      • Of Course it's not Tony. Everyone knows he doesn't know how to use a computer.
        xaduurv
    • When I read non sequiters like those from Hideous62, I feel more confident backing the NBN is the right course.
      Listohan
  • Or start offering services and benefits for companies (and government organizations) OUT of the cities...

    ....
    ...

    OH wait, then he'd be backing the NBN.
    IzzehO
  • I seriously can't wait till we get this NBN up and running. Anyone who uses the internet for media streaming and gaming like myself want this service! More roads = more congestion. I'd probably support Abbot if he was going focus more on public transport because this country has one of the worst in the world. We don't need to make this country bigger with roads we need to make it more efficient with either public transport AND/OR a high-speed internet network.
    jumbz55
    • Tony is prominently on the record as preferring private to public transport. And he tells us we want it too. iPads make driving oneself even less desirable than it is inherently. But Tony gets his ComCar, what does he care?
      Listohan
  • Indeed David, your last paragraph is the most pertinent. Recently Abbott has made an effort to be a serious politician, but all he could come up with was a promise that if he was elected prime minister he would spend a week every year living in a remote community, because opposition leaders don't need to know about that stuff now?

    But to the NBN, he obviously believes that data speeds will plateau because the trend since the invention of the internet can not last...? In his mind... But then there is a federal court decision today that says it's ok for Optus to upload live content (video) over the internet if it is for your own benifit... The rights to this content only cost telstra 1.25 Billion... Whoops!

    On top of this we also have speculation about Apple bringing out an iTV. Due to release this year, maybe? And with the dollar the way it is I'm guessing the average punter could buy one for under 1K.

    With these two revelations, it's easy to imagine that in a years time, Pay TV is redundant and every sports lover in the country has an iTV on his/her wall streaming HD over the internet? Those of you who have fibre that is . The rest of us will just have to settle for the screens on our iPhones. Unless Labor are re-elected???

    I think Malcolm knows this, as he is being a lot more cautious with his words than Tony.

    There is no doubt that Abbott's failure to embrace technology will be his downfall. Just be patient..
    omega-b9c3d
  • Being in an ADSL black hole 30KM from Brisabe CBD, I can't wait for the NBN, I just with they would get on with the job, far enough that if Abbot gets in he can't wipe it
    wehatetelstra
  • I too live in an ADSL blackhole, although I am only 500m from an Exchange. Telstra were going to install ADSL, but 5 years ago canned it in favour of the government (Tax payer money) building NBN infrastructure for them. Thankyou Government! As for the NBN would you not rather have ADSL services now rather than having to wait in some cases until 2020 to get fibre! and as for the fixed wireless part of the network, you will get 12 mbps by 2016, Telstra 4G is 35 mbps now and will be near 100mbps by 2016! The previous government project would have been completed by now and everyone in regional areas of Australia would have had a service equivalent to ADSL2. All the main service providers would still be providing high speed cable and Fibre services at their own cost to compete with each other. This government should stop Dreaming and you should stop kidding yourselves that it will be completed by 2020.
    Foneguy-28998
    • Talk about dreaming...

      Telstra and other private companies neglected you for years and you believe they were going to , "but"...LOL

      And now you blame the one's who will actually do something for you...

      Oh please stop, my sides are splitting, with uncontrollable laughter.
      Beta-9f71a
      • I'm talking about regional broadband.... under both governments regional australia is getting fixed wireless. The NBN is essential for backhaul capacity to these regional areas. It's the fibre to the home that is the expensive part and has an unrealistic time frame of 2020. If you live in the major cities ADSL2+ and 4G Networks will give you fast enough internet for now. Private companies will invest their own money in the big cities ie 100m/bit cable etc as they can make lots of money in these areas.
        Foneguy-28998
    • I'm curious here, you mention that you can get 35mbps off Telstra at the moment. So if I switch my 400GB/month plan from iinet ADSL2+ to Telstra then I'll be able to get faster speeds, better coverage and all for the same price. It's strange I really haven't seen this advertised anywhere, wait a sec I'll just check Telstra's website, hang on I can only get 15GB within 5km of the centre of Sydney? For $80.00 a month? How is this even remotely close to offering a service that can rival the NBN?
      aargh-d8245
      • If you can get ADSL2+ There is no need for you to worry about internet. Let the rest of Australia catch up at a reasonable price say $10bn and spend the extra $35bn on something worthwhile. Fibre is only needed for hard core gamers and people watching live TV on the internet! ie a waste of government money!
        Foneguy-28998
    • "This government should stop Dreaming and you should stop kidding yourselves that it will be completed by 2020."

      So the completion date slips to 2022. oh noes henny penny teh skies is fallings!!!!!




      "The previous government project would have been completed by now"

      Why would the previous government need to complete anything? You said "Telstra were going to install ADSL"




      "but 5 years ago canned it in favour of the government (Tax payer money) building NBN infrastructure for them. Thankyou Government!"

      5 years ago no one knew where the fibre was going, the government hadn’t even started the tender process for what was originally a FTTN patchwork plan. So Telstra must have canned it for different reasons and unless you tell us where this "ADSL blackhole" is we will have to assume you are full of it.



      "All the main service providers would still be providing high speed cable and Fibre services at their own cost to compete with each other."

      Sure they would. LOL.




      btw you say also say:

      "ADSL2+ and 4G Networks will give you fast enough internet for now"

      Are you anticipating a need for faster speeds in the future?
      Hubert Cumberdale
  • 4G is no way near those speeds. Thats is an idealistic set by telstra. It still comes down to, how many people are on the cell, how many are downloading. Wireless cannot compete with the laws of physics. There is nothing faster than the speed of light. The expensive part of the laying fibre is digging new trenches for regional connection fibre backbone that doesn't exist. The NBN deal with telstra allows access to existing conduit, its not expensive to take one cable out and put one another in its place. The more harder parts of it would the installation of the ONT Box, which everyone needs anyway, and the connection to the cabinet.
    Tiberio-d2a73
    • Yeah, if it's that easy that's why it's taking 10 years to rollout the fibre to the Premise. I suppose you think your ADSL connection at the exchange has an unlimited backhaul capacity. That's why we need an NBN fibre to the node, to supply backhaul to ADSL exchanges, Wi fi networks and 3G/4G towers.but we do not need fibre to the premise. We live in a mobile world these days! It is just too expensive!
      Foneguy-28998
      • So let's get this straight.

        You live 500m from an exchange but we are in 2012 and Telstra (or whoever) refuse to even offer you basic ADSL (released in 1999 iirc)?

        So they have refused to upgrade you for whatever reasons - I'd guess they can gouge you with a sh*tty plan - which you aren't complaining about, instead you blame the NBN. And then (after being neglected and possibly gouged for over 10 years) you whinge that the NBN, which greatly surpasses ADSL, may be a few years away?

        BTW - it will take 10 years because any job worth doing is worth doing properly... and guess what? That takes time and money.

        Mobile LOL... seen the uproar of NBNCo trying to build towers rurally, let alone wireless being widespread. They are complementary technologies.

        Why I bet you have both fixed and wireless products yourself, as do I. Go on say you don't and make my day.
        Beta-9f71a