Libs rewriting the laws of physics and finance

Summary:Turnbull can hardly be budgeting for a return on an FttN NBN investment; how could he when he has made it clear that there is no viable business case around the NBN?

Far from its "12Mbps-is-more-than-enough-for-anybody" policies of not too long ago, the Liberal Party is now going to great pains to raise expectations around its alternative NBN policy — Malcolm Turnbull now regularly tries to argue that his FttN alternative is going to deliver most of the speed of Labor's fibre.

Yet, as Turnbull continues to ratchet up the rhetoric, his determination to position his still-vague policy as a viable NBN alternative has gone from the ambitiously misguided to the painfully deluded.

I refer, of course, to Turnbull's claims in delineating what he believes will be the service bands for a VDSL-based local loop: 80Mbps for those living next to an exchange or node, 50Mbps for those a bit further away, and 25Mbps for those living furthest from a node.

Turnbull would, one hopes, be aware that the bandwidth profile of VDSL tapers off dramatically with distance. This would be a death blow for VDSL on Telstra's current local loop, but Turnbull is, of course, arguing that his plan to run fibre backhaul to nodes on every fifth street corner in Australia would overcome these issues.

The thing is, distance isn't the only enemy of bandwidth. Line configuration and quality are also essential — witness those people still on RIMs, who remain unable to get broadband at all, despite brand-new copper. Telstra may be slowly improving its lot with its "top hat" project, but that's just putting chewing gum on top of duct tape in terms of the permanence of its repairs.

Also, witness people such as yours truly, who are (or were, in my case) shoving their broadband through a Telstra copper line so decrepit that they struggle to get 2Mbps downloads on a good day. Uploads are a go-make-yourself-a-cuppa-then-have-a-nap kind of exercise.

I was lucky enough to bail to cable (which, itself, is becoming a spotty nightmare of unreliability), and my copper line is now sitting there fallow, unterminated wires in my roof space. The problem in my case was that the line had simply fallen apart — degraded so much that over time, even repeated visits by Telstra technicians couldn't do more than get me a voice service that was only 20 percent static, rather than 90 percent.

I assume that I am not alone.

The point here is that Turnbull's new habit of claiming that new last-mile technology will magically boost everyone to 25Mbps is politically optimistic, and technologically naïve. There may be some places where Turnbull's speed claims are correct — the VDSL experience of TransACT shows that it's possible, albeit, over correctly qualified lines installed expressly for that purpose — but, in the main, I'd say that he's simply throwing numbers to see what sticks.

He is continuing to make a fundamental error in his FttN argument: assuming that, just because FttN may deliver certain performance to some people, it will deliver equal performance to all people. Across Australia's copper network, this is just not true.

For all his speed claims, he still isn't providing numbers in the one place where it really counts; his repeated refusal to provide even an approximate price for the Coalition's alternative NBN. Asked whether his claim, that it could save three-quarters of the cost of the NBN and equate to a cost of AU$10 to AU$12 billion, Turnbull has still refused to be drawn to commit to anything other than his empty rhetoric.

He is continuing to make a fundamental error in his FttN argument: assuming that, just because FttN may deliver certain performance to some people on some copper networks, it will deliver equal performance to all people. Across Australia's copper network, this is just not true.

The reason for the Coalition's information vacuum, he has said, is because NBN Co won't provide more detail on its contracts.

In other words, it appears that Turnbull has absolutely no idea how much it actually costs to build things in today's market. He has continually slammed NBN Co as being inefficient, over-priced, and wasteful — and this week, went a step further by launching an unprecedented and groundless personal attack on Mike Quigley — but he is now looking to NBN Co's financial modelling to provide guidance for his own policy.

The NBN may have struggled to gain the kind of momentum it needs — and if it never gets that speed, it will fail on its own accord . But for the opposition to repeatedly attack NBN Co's work and the people that run it, and then base its own policy on the supposedly shoddy work of those same people, reeks of hypocrisy.

Surely, Turnbull could draw on the financial modelling done by British Telecom, on which he has repeatedly based his technological design, to get some guidance as to the cost of his policy.

With the NBN far and away his banner policy, Turnbull could expend the energy to get a provisional, high-level design drawn up on which to back his claims of superiority.

There are plenty of independent organisations that would be happy to work through the details, to give him a real number to hang his hat on. The last organisation to do so, Citigroup Global Markets, came up with a figure just south of AU$20 billion ; but he has repeatedly refused to confirm or deny that.

The reality is, of course, that there is no way in the world that Turnbull's FttN policy could come in at AU$10 to AU$12 billion. Just buying Telstra's copper network , which it would need to do to make its policy work as described, would cost a Coalition government more than that much — and that's before you even start factoring in the costs of labour, equipment, fibre backhaul, opportunity cost, and interest.

Yes, interest. Because while Labor has intentionally structured NBN Co to deliver a moderate return in the long run, the Coalition's NBN plan is being designed as a subsidy-based handout. Turnbull can hardly be budgeting for a return on an FttN NBN investment; how could he when he has made it clear that there is no viable business case around the NBN?

Turnbull may have taken optimism to new heights with his projections of FttN performance, but his financial creativity continues to degrade his own arguments. The only reason he hasn't been hammered on his financial modelling is because he continues to avoid offering it.

Is he now claiming that an FttN network would generate commercial levels of return? In which case, how much of a return? And for whom will they be generated — Telstra? If the Coalition's policy is really all about pouring money into Telstra's copper network, it could be better summed up with three words: Wash. Rinse. Repeat.

What do you think? Do Turnbull's NBN numbers actually add up? Should he put his money where his mouth is and fund some proper policy modelling? Could an FttN network turn a profit where FttP can't? And if so, why isn't Turnbull promoting its financial value?

Topics: NBN

About

As large as the US mainland but with a smaller population than Texas, Australia relies on ICT innovation to maintain its position as a first-world democracy and a role model for the developing Asia-Pacific region. Award-winning journalist David Braue has covered Australia’s IT and telecoms sectors since 1995 – and he’s as quick to draw le... Full Bio

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