NBN committee demands strategic review redo

NBN committee demands strategic review redo

Summary: The Labor-Greens majority Senate Select Committee for the NBN has demanded that NBN submit a new, more reliable, strategic review that transparently costs the different network rollout proposals.

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The Senate Select Committee investigating the National Broadband Network has questioned the financial assumptions made in NBN Co's strategic review that resulted in an unreliable costing model for the fibre to the premises rollout.

The Labor-Greens majority NBN committee's interim report, released last night, said there were "significant concerns" with the accuracy of NBN Co's strategic review released late last year. The committee is chaired by Labor senator Kate Lundy, and includes three Labor senators — including former Communications Minister Stephen Conroy, three Coalition senators, and Greens senator Scott Ludlam.

The reassessment of the existing rollout of fibre to 93 percent of Australian premises failed to include AU$4 billion in business as usual incremental savings outlined by former CEO Mike Quigley shortly after his departure, but were included in what NBN Co called a "radically redesigned FttP", the report said.

The assumption that there would be a delay in the completion of the network defied the current rollout run rate, the report said, meaning that AU$11.6 billion in revenues are removed, and AU$13 billion in peak funding is added to the FttP model.

The committee said that the current run rate, and the June 2014 target of 357,000 brownfields premises passed was "lowballed" to give NBN Co a target it could not fail to meet, and to provide support to the extra three years added to the FttP model.

The model in the strategic review also includes the assumption costs for a third satellite which was not planned for, but does not include the associated revenue with this satellite.

The committee said that the "radically redesigned" FttP rollout detailed in the review comes closer to estimating the cost of the existing NBN rollout. 

The committee also said the cost of the multi-technology model that includes hybrid fibre-coaxial networks and fibre to the node has underestimated the operating expenditure that will be required to maintain the existing copper network, as well as the IT costs for integrating the HFC networks.

The lack of high end products on the FttN network would also reduce revenues for the NBN, the committee said.

Overall, the committee said that the strategic review was less reliable than NBN Co's own corporate plans, and said that the review "does not comprise a sufficient information base for the NBN Co board or the minister to adopt an alternative deployment path for the NBN".

The committee recommended a revised strategic review looking only at the FttP and multi-technology mix models, and in the meantime, NBN Co should continue the FttP rollout.

The report stated that the multi-technology model would see fibre deployed in places which high revenue potential, while FttN or HFC would be used in areas with lower revenue, and this was not appropriate for a rollout by a taxpayer-owned company that should be correcting market imbalances.

The report also called for NBN Co's governance to be investigated to determine how the strategic review was signed off in its current state, and NBN Co should begin to provide information to the public on where construction had begun for the rollout on its website.

Report 'grossly misleading'

The three Coalition senators on the committee labelled the majority report as "grossly misleading" and accused Labor of creating a falsified version of the report for the Coalition, and only provided the full 140-page report to the Coalition one hour before it was published.

This version was "replete with misrepresentations" and "self-serving recommendations".

The minority report said that the committee had become "highly politicised" and "at times farcical face-saving exercise where Senator Conroy has sought to distort the history of the NBN and deny or disguise his direct personal culpability for massive economic damage to a crucial input industry."

The Coalition senators were not allowed equal time to question witnesses, and Labor and Greens MPs had subject witnesses to "frequent bullying and hectoring", according to the Coalition, in such a way that was unparliamentary. Other witnesses requested by Coalition members to appear were not contacted, according to the minority report.

"This is crudely self-serving conduct deeply at odds with Westminster-derived governance, and more akin to the parodies of democracy common in the Eastern Bloc prior to the fall of the Soviet Union," the report stated.

The Coalition senators said they hoped to "lift the standards" of the committee in the future.

"There are important questions for the Committee to examine – including those around how fast broadband can be delivered to Australians sooner, at lesser cost to government and at prices which are affordable for consumers, and a separate set of questions about why the NBN project under Labor's oversight failed so disastrously."

The committee's next hearing is scheduled for Friday.

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

10 comments
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  • Heres a question...

    Here's a question the Coalition senators may be able to find an answer to (once they get past their marketing "faster, cheaper" BS), why has the NBN turned from being under budget and over time into a train wreck with no discernibile direction or leadership?
    Tinman_au
    • Reviews

      Turnbull has had to wait for his reviews, upon reviews, upon reviews to complete and then work out how to juggle the numbers to justify his model and rubbish Labor's FTTP model. By the time all of his fraudband reviews are completed so could have the FTTP NBN.
      Lastofthegoodguys
    • Are you serious?

      @Tinman_au what numbers are you believing? The NBN has consistently been behind schedule and over budget. Running a cable down a major highway does not equate to completion of delivery of the service. This whole project has always been a pie in the sky pork barrelling exercise by a party with a history or throwing away the hard earned dollars of the few of us left that pay tax.

      The days of govts having masses of tax payers able to fund bloated and ill-conceived projects, are well and truly over. Maybe if the former government, you remember them, the ones we threw out on their ear, if they had any kind of well thought out an properly costed plan, we wouldn't be in this mess. The mess that us, the tax payer, continually has to put our hand in our pockets to fund.

      I for one question whether this country has a future when fewer and fewer of us are expected to pay more and more tax, while the incompetent fools in Canberra waste our money as if it just doesn't matter.
      GovtWatcher
      • Really

        An you don't think Turnbull love child of a dogs breakfast is ill-conceived, $41b to get 1Mbps better than adsl2. Plus Turnbull's "minimum 25Mbps" cant be done on HFC and FTTN its only an upto service.

        According to the SR Labor NBN has only spent $7b with nothing wrong with the books.

        Also missing figures with MTM is the cost of buying/renting the HFC and copper as well as the cost to fix and upgrade both networks eg. if 900,000 people on the HFC atm are not getting the speed they should be getting atm and they want to increase that to 3mil people.
        JasonKent
      • Don't let facts get in the way

        Even the SR disagrees with you there. A lot of emotive worlds with no supporting facts does not an argument make.
        "while the incompetent fools in Canberra waste our money as if it just doesn't matter"
        I think that is what many are trying to stop. FTTH would have been late and the cost blown out to some degree, all projects do. But in the end we would have a great communications system with fibre all the way to the houses and businesses that could be upgraded quickly and cheaply and would do us for 30-50 years, possibly much longer. Even if never full paid back it will set us up in a good position for the future. The MTM has a use by date, when it no longer can supply increasing demands, 5-10 years for now, that's it, money gone, start running fibre, pull out 60K nodes worth billions and scrap them. There is not costed upgrade path from FTTN, HFC, as costing that in the review would show just what a money pit the MTM is. The MTM is not about communications, it's about Malcolm Turnbull's NPD.
        Pilfer-52cec
      • You believe the lies?

        Don't believe a word that comes from any LNP 'minister'.

        The NBN was NOT over budget, if it was they'd have needed to raid the contingency fund which they did NOT do:

        http://www.theregister.co.uk/2013/04/19/nbn_can_stay_on_budget_says_quigley/

        It was over time, but that was due to external factors (Telstra and contractors) and Malcolm will have the exact same problems with those...
        Tinman_au
  • it's just par for the course

    Why is this all so surprising? When did any govt department either state or federal ever really honestly achieve an serious and honest quality outcome?

    Govt in Australia consistently subscribes to the concept that if you set the bar low enough, it's possible to achieve anything. Even if that anything is basically nothing.

    If we harken back to the ongoing woes of RailCorp in NSWN where trains consistently ran late, causing the organisation and the govt pain and embarrassment. The solution? Redifine the meaning of "on time" so that all the trains that were once considered to be late, would now be considered either on time or in some case "ahead of schedule". What an achievement!
    GovtWatcher
  • No surprises

    The entire anti-Fttp argument was attacking a straw man to begin with. It's not surprising to see that any criticism of the misleading anti-Fttp argument results in attacking the critics. Meanwhile Australia gambles that the gigabit Internet isn't going to be be a global industry revolution in the next ten to twenty years. Currently few businesses need to transfer data at those volumes, speeds, and latencies. We won't know for a while if the Liberals are right not to streamline a transition that sees gigabit on the near horizon, and they surely won't accept any blame. But I'd expect to see some radical changes occur, just like Kbps to Mbps changed our perceptions, so can low latency and faster upload/download speeds in the 15 ms and Gbps range.
    TomAnderson-3ecad
  • What a circus

    This government has produced the greatest show on earth. What a show it is with puppeteers(Morrison with the puppet general), mime (they all repeat the same phrases like miming a broken record), jugglers ( Hockey, Turnbull, Hunt, Brandis and Abbott can dazzle us all how they juggle the numbers effortlessly to suite their own agenda), acrobatics (Pyne and Abbott perform the best double backflip ever) and magic (Abbott, Brandis, Joyce, Bishop and Randall, all rorted the entitlements without, like Slipper any charges being laid.) What a spectacle, especially with Ringmaster Bronwyn Bishop introducing all the acts and cracking the whip. What a show.
    Lastofthegoodguys
  • It's ridiculous

    Take the politics, the vested interests, and especially News Corp out of the picture and just build our NBN using FTTP. Otherwise Australia will be left with an expensive white elephant that nobody uses - just what Rupert wants.
    Postulator