Base coalition NBN would cost AU$15B

Base coalition NBN would cost AU$15B

Summary: Shadow Communications Minister Malcolm Turnbull has said that his NBN policy would cost AU$15 billion, if NBN Co didn't already have contracts in place.

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If the Coalition wasn't stuck with existing National Broadband Network (NBN) contracts, its network would only cost AU$15 billion, according to Shadow Communications Minister Malcolm Turnbull.

base-coalition-nbn-would-cost-au15b
Stephen Conroy and Malcolm Turnbull
(Screenshot by Josh Taylor/ZDNet)

Turnbull made the comments during a debate with his government counterpart, Communications Minister Stephen Conroy, on ABC1's Lateline last night.

The government's peak capital investment for the NBN is set to be AU$37.4 billion, which will be paid off over the life of the project, with a 7.1 percent return rate. As the 2013 election draws closer, pressure is mounting on Turnbull to reveal the full details of his policy. Turnbull last night said that if NBN Co had not already locked in construction contracts and other deals, his plan would only cost AU$15 billion.

"If you were starting from scratch without any of their existing contracts, we know it would cost about AU$15 billion to do the whole job. So a third or less of what the NBN Co is saying it will cost," he said.

"What we don't know — is because the NBN Co has not been transparent about it — is how many contracts they've entered into which have locked in, wasteful commitments, over investment which we may well be stuck with."

Turnbull has previously said that a coalition government would honour the existing contracts if it wins office in 2013, but would likely scale back the network in many places from a fibre-to-the-premises (FttP) network to a fibre-to-the-node (FttN) network. The last government estimate put the cost of cancelling NBN contracts at AU$2.3 billion.

The AU$15 billion estimate is closer to the figure that Citi released last year, pricing the Coalition's NBN at AU$16.7 billion. Turnbull rejected this costing, saying that Citi had not consulted with his office prior to the publication of the report.

Conroy rejected the AU$15 billion figure, stating that it did not account for the cost of securing the use of Telstra's copper network between the node and the premises.

"The big unknown is that Malcolm [Turnbull] quotes this third figure from an Alcatel-Lucent study, which said if you were the incumbent, it would be the third of the cost," he said.

Turnbull said his own policy could not be fully costed, because he does not have full access to the details of the contracts with NBN Co.

"We're not in a position to present a corporate plan along the lines you have, because we don't have access to your data. You give us full access to the NBN Co's financials and we will deliver that," he told Conroy.

"But the NBN Co has a sort of financial transparency regime modelled on the Kremlin. It's a defensive organisation, it puts out bodgie numbers like that 758,000 thing to conceal the fact that this is a failure."

Turnbull again argued that NBN Co using the term "construction commenced or premises passed" for marking milestones for the progress of the rollout is misleading, and that it is more accurate to state the number of active services on the NBN.

Earlier this week, Conroy said that there are 7,000 active fibre services on the NBN. He last night revised this figure to 8,500. Including the fixed-wireless and satellite customers, NBN Co has a total of 30,000 active services on its network.

Topics: NBN, Government, Government AU, Australia

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

22 comments
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  • The deciding factor for me.

    I am normally a Liberal voter. However ... the Coalitions stance on the NBN is short sighted and this subject seems to be the only difference between the two parties that I actually care about.

    FTTH will come whether Turnbull likes it or not. Under Turnbulls plan the real question is ... how much extra is it going to cost us down the track when the NBN needs to be upgraded from FTTN to FTTH. In the great scheme of things isn't it better to get it out of the way now while work already needs to be done? It's nice to see the Labor government using a bit of foresight. That's usually unheard of in politics.

    Turnbull needs to provide us with both current and future costs if he wants to compare dollar figures.
    colonel.mattyman
  • $15B

    Is that WOULD cost $15B or SHOULD cost $15B? Quite a difference.

    Apparently that means he has a costed plan again. Perhaps he should release it?
    mwyres@...
    • It's like the old Irish joke

      Turnbull's comments remind me of the old Irish joke - the one with the tourists who are lost in the Irish countryside and spot a local. They stop and ask him how to get to their destination. "Oh well," the local lilts, "I was going that way I wouldn't start from here at all."

      He's a slippery eel, very weasly with his comments. Every commitment or assertion has its own built-in escape clause. It's all debaters' tricks, all the time.
      Gwyntaglaw
      • That joke

        You'd be surprised but Turnbull uses that joke at EVERY press conference I've been to recently when someone asks him what his policy is.
        Josh Taylor
  • The bit that wasn't mentioned

    To refer to the Lateline article.
    http://www.abc.net.au/lateline/content/2012/s3642410.htm

    "The Opposition spokesman on Communications, Malcolm Turnbull, says that in government the coalition will continue the NBN in a reduced, privatised form rather than destroying it as previously promised."

    Using that wonderful HFC and pristine copper which belongs to Telstra, let us not forget that $11Bill to Telstra includes lease of Facilities, Backhaul and Transit Links and use of ducts and pits as well as customer migration. Now add on the copper.

    Further quotes
    "MALCOLM TURNBULL: For the bulk of the brown field built-up residential areas of Australia, what we will do is take the fibre further into the field, but not to the customer's premises.

    MATT PEACOCK: For those last metres to the home, the Coalition will negotiate to use Telstra's existing copper wire - unless you're rich enough to pay for more.

    MALCOLM TURNBULL: You can have a fibre service area of a couple of hundred households getting the fibre node connected to the copper, but there might be one person - perhaps it's a business - that needs to have very, very high speed connectivity, and you can selectively run fibre optic cable to that premise. Of course they'd have to pay more for it.'

    From being a National essential utility that is ubiquitous business capable from 93% of premises readily upgradeable designed to serve as our communications platform for many decades, degraded to a commodity that provides a inferior product that will depend on the location lottery and the problems of copper and HFC, with of course the Nobility, affluent and worthy ably to pay many thousands for a FTTH service.

    Not only is his costing questionable in the extreme, but instituting a Digital Divide and instituting Class differentiation in essential infrastructure.

    Then a cut down Mickey Mouse version (basis of costing) is to be private sector. Exactly what the NBN is trying to overcome. Inferior profit driven infrastructure skimping on unnecessary expenses such as maintenance and upgrades
    Abel Adamski
    • Don't forget

      Did I mention Subsidies and the screwing over of the rural sector. How many $Billions in Direct(transparent) subsidies and incentivisation plus the $Billions in hidden indirect subsidies all from the taxpayers pocket with no return to the taxpayer.

      FTTH will be a Status Symbol for the worthwhile citizens, the rest are peasant scum
      Abel Adamski
  • Wow...

    So 15 billion for a substandard network vs the NBN option which is a far more capable future proof network out of the box and much better value for money. The choice is clear... except to those that like to waste time & money, which I suspect the coaltion of clowns enjoy doing with tax payer funds.
    Hubert Cumberdale
    • Basis for comparison

      OK, so now we have a figure - $15b. Lets put our own little spin on that.

      5 years ago, Labor started with a FttN plan that cost just $4.7b. So in just 5 years, the cost has apparently tripled.

      Extrapolate on that if you will with a FttH build some time in the future.
      Gav70
  • Move on, or stagnate

    It seems we have two options. The current option pushes us into the 21st century, the other locks us into the 20th century for many years to come. Work it out. And I'm stuck the difference between fttp and fttn. What is a node? Is a premises a node?
    tonye56
    • FttN is a lot like the current POTS

      You have fibre from an "exchange" out to "pillars" all over the place (thats the cabinet or "node", for the coverage MT wants they'll need around 70,000-100,000 of them). The node converts the fibre line to the normal copper line that runs up the street to your house. At a very basic level, it's the equivalent to ADSL at your place (but faster if your near a node).

      FttH/FttP runs the fibre all the way to your house.
      Tinman_au
    • FttP vs FttN

      The difference is fairly simple. Fibre to the Node builds the line about 90% of the way to your house, then relies on copper to deliver the signal. Fibre to the Home/Premises delivers fibre all the way to your house/fenceline.

      It doesnt sound like much, but that simple difference in distance is very important when it comes to speed. With FttN, the copper at the end has unfortunate side effects, being signal degredation along its length. If you're close to the node, you get little degradation, if you're further away, you get more. Just like ADSL 2 now.

      There are other potential issues (like how its not necessarily easy to upgrade from the Node plan to Premises), but thats it in a nutshell. A big line of fibre to a box the size of a fridge somewhere in your area, then copper, versus fibre lines all the way.
      Gav70
  • Ok, correct me if I'm wrong here...

    ...but Malcolms saying his NBN will actually cost us at least $15 Billion dollars, while the NBNCo one will actually make us money?? He has no cost recovery built in like the current plan has, and once he privatises NBNCo, there's no other way to recoup costs.

    I'm really disappointed in Malcolm and though he was smarter than that, when he said it would be cheaper, I didn't realise he meant we'd actually pay a $15b premium to get it faster...
    Tinman_au
    • Cost

      This is one of those areas where The Turnbull is being very crafty. If you look at the pure build cost of FttN vs FttH, then he's right, it IS cheaper - $15b vs $40b. If you look at the cost to the taxpayer, then he's wrong, it ISNT cheaper - $15b (being nice here) + future upgrade costs vs $0.

      Very few media outlets question him on that point though.
      Gav70
      • Another issue with his figure...

        If renting the ducts that the copper runs through cost $11 Billion, how much will Telstra want for the actual "nuts and bolts" part of the system? I'd suggest a lot more than just the thing it runs through, but lets say they'll be nice and they'll only charge the same for the actual copper ($11B), that puts his FttN at a lot closer to the NBNCo one than he's trying to make us think it is...
        Tinman_au
        • Telstra costs...

          That was the "being nice" part. Even if you ignore that cost, its STILL $15b commited that you dont get back. Toss in the Telstra costs, and it could be as much as $20b more that you dont get back. Or it could be $1, we just dont know.

          Doesnt change that $15b is gone no matter what.
          Gav70
  • 15 Billion Freeway to nowhere.

    So he wastes 15 billion to run fiber to all those nodes. Then a similar amount to buy back all that copper they sold in the first place to achieve a super highway ending in a neglected, weather prone , one lane dirt track such as the one incapable of anything faster than a single subscriber restricted ADSL 1 service in our area.
    grump3
    • Umm

      Yes, that pretty well sums it up grump3...

      And all of the faithful who have bagged us and the NBN will welcome such wasteful, mediocrity, all in the name of some warped ideology.

      Sad isn't... or rather, aren't they :(
      RS-ef540
      • There is a purpose.

        They are obviously affluent enough to pay the very substantial cost of running fibre to their own premises. Bugger everyone else, they have their status symbol and the peasants get the crumbs, the economy misses a once only opportunity which will NEVER be repeated and the Nation is handicapped - not noticeably short term, but increasingly as the years roll on.
        Our people are our greatest assett and the majority will be increasing excluded over the coming years
        Abel Adamski
  • Cost/benefit?

    It would be great if journalists asked Mr Turnbull to address the end-consumer cost/benefit questions in detail:

    - If Coalition's alternative broadband network is going to cost "a third or less" of the current NBN, will that mean that retail plans are also going to be priced at "a third or less" of the current NBN plans?

    E.g.: current 'naked' NBN plans start from $29.95 per month. Can Mr Turnbull guarantee that this will be $9.95 or less under his plan?

    Mid-range plans with FttN-like speeds of 50/20 (being generous here, since FttN as proposed by Mr Turnbull will have 40/20 maximum -- with many people getting less than that) start from $49.95. Will Coalition's alternative on full-speed FttN hence be $16.65 per month or less?
    Zok76
  • Some where in the middle

    The main concern about the original project was cost. "Generally" speaking conservative governments over recent times have been fart better in the area of budgeting. The Labour governments unfortunately have had a less then stellar budgeting record. It is difficult to argue against. So the true answer probably is somewhere in between. The NBN is good for Oz however what should be focused on is efficiency and cost. Turnbull is on solid ground if he keeps the government accountable for the way in which public monies are utilised for the project so that the maximum benefit is gained.
    ttremeth