Assessing Turnbull's voodoo telconomics

For all his composure and charisma, Malcolm Turnbull is often clutching at straws when arguing against the NBN. His response to the latest OECD broadband figures are based on an entirely inaccurate reading of Australia's broadband statistics. The result is 'Voodoo Telconomics' — a philosophical approach to telecoms that, like America's free-market 'Reaganomics', is fundamentally incompatible with the NBN's real objectives.

It's as certain as the sunrise that every time new broadband statistics come out, Stephen Conroy and Malcolm Turnbull will rush to use them to support their respective opinions.

Just like last time, Conroy seized upon the latest Organisation for Economic Co-operation and Development (OECD) figures lambasting Australia's global broadband standing to support the National Broadband Network (NBN) roll-out, while Turnbull dived into a long and fundamentally incorrect analysis that comes off as an argument for the mediocrity that is our existing broadband.

Turnbull's diatribe is available for your perusal here, but suffice to say that it's less than accurate. Consider, for example, his reference to Australian Bureau of Statistics (ABS) statistics that, he alleges, show that Australians already have plenty of broadband. Indeed, Turnbull tells us, even the ABS suggests that 73 per cent of Australians are "accessing speeds between 1.5Mbps and 24Mbps".

Not only is this as useless as saying that 73 per cent of Australians are driving between 6km/h and 100km/h, but it's absolutely incorrect: open up the ABS Excel file yourself and you can see that the speeds Turnbull is quoting are advertised speeds, not actual speeds. Suggesting that they reflect anything like the speeds Australians are actually experiencing is like saying, as I did two years ago, that my car can go 220km/h just because that's what it says on my speedometer.


Accept everything you read without questioning? The Faroe Islands have better broadband than Australia. (Hvalba image by Erik Christensen, CC BY-SA 3.0)

Not only is he quoting advertised speeds, but he's fudging the figures to support his own argument. By the ABS figures, 189,000 (8 per cent) of business and government users are still getting online at less than 256Kbps — only slightly less than in 2007. Some 49,000 (2 per cent) business and government users are in the 256Kbps to 512Kbps range, 125,000 (5 per cent) at 512Kbps to 1.5Mbps and 1.2 million (51 per cent) in ADSL's 1.5Mbps to 8Mbps range. Only 697,000 businesses (32 per cent) are currently connecting using ADSL2+, and are therefore theoretically able to access the 10Mbps to 20Mbps speeds about which Turnbull rages. And just 73,000 (3 per cent) have faster connections.

The figures for home users are more depressing: 518,000 households (6 per cent) are still connecting using dialup or, for argument's sake, slow ISDN; 229,000 are in the 256Kbps to 512Kbps range; and 837,000 (10 per cent) between 512Kbps and 1.5Mbps. ADSL and ADSL2+ penetration are just about equal, at 2.867 million (35 per cent) and 2.833 million (35 per cent) respectively. And 828,000 (10 per cent) of us are buying services advertised at 24Mbps or greater.

In other words, far fewer Australians are getting online using services advertised as faster than 8Mbps than Turnbull would like to admit. And I don't think I'm going out on a limb to suggest that many of those would really like to have faster services.

Far fewer Australians are getting online using services advertised as faster than 8Mbps than Turnbull would like to admit. And I don't think I'm going out on a limb to suggest that many of those would really like to have faster services.

I laughed when a reader recently suggested that my Full Duplex columns remind him of The X-Files' "I Want To Believe" mantra. Well, the truth definitely is out there if you take the time to look for it — and it paints a much different picture than that painted by Turnbull, who seems to feel that 73 per cent of Australians already have enough broadband. He may honestly believe that all Australians are enjoying the kind of performance he sees in his wealthy and relatively well-wired electorate of Wentworth — where, as I demonstrated a while back, small size and careful placement of Telstra exchanges would seem to have delivered relatively high broadband speeds.

I suspect that Turnbull's office doesn't get many complaints from residents that their broadband is too slow — but that doesn't mean the experience is the same everywhere else. As industry figures well know, the performance of those alleged 24Mbps lines is quite often one-tenth of that speed or less, and the Coalition's suggested remedy will not fix this.

Yet this doesn't stop Turnbull from spreading these falsehoods as fact at every opportunity. Consider his debate on ABC's The Drum this week, where he challenged American "visionary" Mark Pesce to name applications that require 100Mbps.

"Having 100Mbps doesn't do anything for you unless you've got applications you can use," Turnbull pressed Pesce. "If you're a telco and you've sold somebody a package like an ADSL2+ type of equipment, and you go to them and say 'I want to upgrade to 100Mbps', the canny householder is going to say 'what's in it for me? What can I do at 100Mbps that I can't do at 20Mbps?'"

The correct answer, of course, is "I have no idea; can you get me a service that actually delivers 20Mbps so I can find out?"

If all this seems to you like déjà vu, you're not alone. I've already addressed the fallacy of discussing the NBN in terms of speed many times, and offered hands-on proof that 100Mbps doesn't actually mean 100Mbps, but Turnbull continues to use the same throwaway lines and prodding NBN advocates how they can possibly support a case for telecoms industry change.

The reality is this: the average "canny householder" would probably be asking why he's bought a 24Mbps service but only gets 4Mbps — and would be on his knees thanking the broadband gods if he could get anywhere near the 20Mbps speeds Turnbull's arguments take for granted. That is the reality of Australian broadband — the inconvenient truth that Turnbull repeatedly ignores because it absolutely guts his arguments against the need for better broadband. Pesce, were he better informed about our local telecoms environment, could have beaten Turnbull into the ground on this point — but instead the opposition spokesperson on communications came off looking smug and cocksure.

If you want to know the true state of Australia's high-speed broadband, look at results of real-world testing like the aggregate global results at NetIndex.com — where Australia's average 8.13Mbps is well below Turnbull's bottom-line figure of 10Mbps. Remember, also, that the figures for NetIndex are derived from Speedtest.net, which is often used by people who have just gotten a fast internet connection and want to stretch its legs; unless snow-covered Greenland, the isolated Faroe Islands and poor Caribbean nation of Trinidad and Tobago really do have better overall internet speeds than Australia (a worrying prospect in itself), I suggest that this figure is skewed towards faster services and if all Australian internet users were considered, actual throughput would be much, much lower.

Be still my bleeding heart. Turnbull's entire NBN platform usually relies on the same specious arguments, focusing the discussion on speed whilst ignoring the real issues: penetration, reliability and the importance of a robust back-channel. Yet he's now also gunning for the mantle of social-economic saviour by asking "why lower-income households should be subsidising higher income households, presumably with lots of kids, who can afford multiple devices in multiple rooms, all of which are using high bandwidth applications simultaneously."

This borders on the ridiculous: NBN Co has long argued that it will provide price-comparable low-end services — which have been borne by early Tasmanian NBN Co pricing that starts at $29.95 per month for a 25Mbps/5Mbps service that's three times faster than what even Australia's Speedtest.net-using geeks are getting now. This is comparable to what any household — whether low-income or high-income — would currently be paying for ADSL2+.

I acknowledge that final NBN pricing may be different when all is said and done, but competitive pressures on retail pricing should keep entry-level services at that rate. Yet Turnbull seems to be implying that lower-income households wouldn't be able to afford premium 100Mbps services under the NBN; odds are that they can't afford those services now, either. And remember, Turnbull believes nobody needs 100Mbps, anyway — so to ignore the 25Mbps and 50Mbps options and then condemn the NBN because 100Mbps will be more expensive is simply piling deception upon misleading rhetoric.

Like Reagan's conservatives, [the Coalition] believes the telecoms market should be left to the four winds of profit-minded private enterprise ... and the private sector will somehow magically decide to wire the bush now when it has failed to do so for so long ... This is the empty idealism of Turnbull's Voodoo Telconomics.

What of Turnbull's claim that "the biggest barrier to Australians taking up broadband is its cost"? Since $29.95 ADSL2+ bundles are already well established in the market, I think we can all agree that this is just pure, unadulterated bunkum. No, I'd venture that the biggest barrier to Australians taking up broadband is actually something far simpler: They can't actually access broadband. It's just not possible. They would if they could, but they can't. That 27 per cent of Australians are still buying internet services advertised at speeds outside the 1.5Mbps to 24Mbps is not a pricing issue; since most Australian broadband is running over Telstra wholesale ADSL or ADSL2+ services, it's more a reflection of the market inequities perpetuated by Telstra's go-slow broadband policies over the last decade.

One of the biggest weaknesses of the Coalition's NBN perspective is that it is rooted in a philosophy that believes free, private-sector markets will eventually solve any problem and make everybody's lives better. This was the core of the highly optimistic, ultimately unsustainable supply-side economics of America's Reagan years, when the conservative government pushed to remove barriers to growth — for example, taxes and regulation — and let the private sector invest for its life.

The result, of course, was something different: private-sector firms invested, alright, but ignored low-profit areas in favour of high-profit areas and pocketed the profits. Castles were built on sand that quickly washed away in the stock-market collapse of October 1987 — supporting George Bush the Elder's description of Reagan's supply-side policies as "Voodoo Economics".

Nearly three decades later, our Coalition is trying to apply the same standards and policies to the NBN. Like Reagan's conservatives, they believe the telecoms market should be left to the four winds of profit-minded private enterprise. Constant rallying against government-owned monopolies, a long history of hands-off regulation of Telstra and the idealistic belief that the private sector will somehow magically decide to wire the bush now when it has failed to do so for so long — these realities all discount the empty idealism of Turnbull's Voodoo Telconomics.

Interestingly, Turnbull's colleague, Liberal MP Paul Fletcher, has published an entirely logical analysis of the NBN business case and the reasons why private-sector operators would never fund it in a million years. What he implies is that, because the NBN would not attract private-sector buyers, it is not worth building — but what he implicitly concedes is that those are exactly the reasons the government must build the NBN: because nobody else will.

Although a fibre-to-the-node approach might have delivered a good intermediate result that was more financially attractive, that opportunity was lost long ago. There simply is no other way that we can move towards the future, and disingenuous and deceptive politics offer no help. If it is accepted that the country needs a nationwide, competitive telco infrastructure market as well as a competitive retail sector — well, then, all of this jabbering is just so much flatulence in the wind.

What do you think? Did Turnbull's argument convince you? If you consider his mistake, does it still?

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