NBN will change regardless of government: Analysts

NBN will change regardless of government: Analysts

Summary: The firm that last month projected what a Coalition government could do with Australia's NBN has said that the project will likely change under either government after September.

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TOPICS: NBN
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Michael Reede, partner with Allen & Overy, and Justin Jameson, CEO for Venture Consulting, have told the parliamentary committee investigating the National Broadband Network (NBN) rollout that they believe that regardless of whether Labor or the Coalition win the September federal election, the NBN project is likely to change.

"Regardless of the outcome of the 2013 federal election, the form of the NBN would ultimately be driven to change as a result of inevitable economic pressures," they said in their submission to the joint parliamentary committee.

"We believe that broadband policy will need to be reset, because we remain sceptical of the projections contained in the current NBN business plan."

Similar to Shadow Communications Minister Malcolm Turnbull's criticism of the NBN, outlined in the Coalition policy released last week, Reede and Jameson questioned whether people will be willing to pay more for services on the NBN than they do over ADSL today.

"Global benchmarking suggests that this is unlikely," they said.

High costs for high-end services would also serve to constrain demand, they said. Affordability would be a better driver for uptake of services on the NBN. But this is also limited by what applications the higher-end services would be useful for.

"No one has yet been able to articulate the high-bandwidth applications that will drive demand for mass market FttP [fibre to the premises] capacity, particularly applications that promote productivity and social utility," they said. "Super high-definition television should not be rationale for an investment of this scale."

The pair clarified that 10 years ago, it would have been difficult for people to articulate what 25-megabits-per-second (Mbps) download speeds would have been useful for, let alone 100Mbps or 1 gigabit per second (Gbps), as will be available on the current NBN.

"If you ask experts today to articulate the applications that will be demanded by the mass market that require 100Mbps or 1Gbps rather than 25Mbps or 50Mbps, they generally struggle and rely on the premise that we cannot imagine what we may need the capacity for," they said.

IT consultants, architects, and people in the audio-visual industry account for such a small percent of the population that it would make more sense to have a separate solution for them, rather than a ubiquitous fibre network, the pair said.

The analysts rejected the metaphor that the NBN is like building a six-lane highway, or like buying a Ferrari for a crowded road.

"We think that the correct debate is whether the federal government should be subsidising Ferraris if consumers only need less-expensive vehicles, thereby releasing funds to spend on alternative projects that have greater value to the community."

The submission reiterates the potential options for NBN Co post-election, including splitting the company into metro and regional companies, with a new company made up of NBN Co and Telstra's fixed-line network. The third option would be for a "renewed" NBN Co, which would instead go for the most "technology-efficient outcome" that is determined after a cost-benefit analysis.

The pair is due to give evidence to the committee in a hearing in Sydney on Friday. Also appearing at the hearing will be NBN Co; the Department of Broadband, Communications and the Digital Economy; the Department of Finance and Deregulation; Vodafone Hutchison Australia (VHA); the Australian Communications Consumer Action Network (ACCAN); and the Competitive Carriers Coalition.

In a press release issued on Friday, committee chair Rob Oakeshott said that the review will look at the different policies proposed by both the Coalition and Labor.

"With the shareholders minister's letter and the Corporate Plan now fundamentally in dispute by both major parties, all witnesses will be given the opportunity to provide evidence, in detail, on the various rollout options, and the implications of different approaches," Oakeshott said.

In his last report, Oakeshott warned that because of the looming election in September, disagreements between members of the committee are increasing, and it is looking unlikely that a fifth report would be able to be produced by the committee prior to polling day.

Topic: NBN

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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71 comments
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  • two-way strawman win!

    "If you ask experts today to articulate the applications that will be demanded by the mass market that require 100Mbps or 1Gbps rather than 25Mbps or 50Mbps, they generally struggle and rely on the premise that we cannot imagine what we may need the capacity for,"
    First strawman: just because some people don't know what the capacity can be used for, doesn't mean the uses don't exist. One rock solid use that we know is coming is 4k video and higher.
    Second strawman: speed is not the only benefit of a full fibre network.
    karl_w_w
    • Actually if they existed they would be known

      Conversation isn't about speed but cost; allocation of scarce resources. It always has been to the non-dreamers and economically literate.

      "...we remain sceptical of the projections contained in the current NBN business plan."

      Best and most obvious line yet.

      I see Labor has moved on; a AUD114b high speed rail project possibly by 2060. What a bunch of clowns.

      Crashing share market due to China slowdown (obvious troubles hidden for some time to anyone actually familiar with that market). Coalition might what to start thinking of where all the required money is to come from for their lite version, or get out of the market.
      Richard Flude
      • quite right

        "Conversation isn't about speed but cost"
        Yep!
        Doing nothing: $1bn/year and rising.
        Labor plan: $40bn.
        Liberal plan: $30bn + cost to buy copper network + $1bn/year and rising.
        karl_w_w
        • "Liberal plan: $30bn + cost to buy copper network + $1bn/year and rising."

          Indeed karl. Right now the Abbott network is not looking so good in comparison. I'm sure over the many months until the election there will be many defending this massive waste of taxpayers money. After the election with a coalition win scenario which is likely it'll be much harder. I'm sure the apologists will find some way to rationalise it but we are looking at a massive $30+ billion for a network not much better than the one we have now, with blowouts and the inevitable missed deadlines, I'd much rather this money be spent on hospitals, schools and roads where it will actually make difference to ordinary struggling Australians.
          Hubert Cumberdale
      • They canned that already

        "I see Labor has moved on; a AUD114b high speed rail project possibly by 2060. What a bunch of clowns."

        They said they wouldn't do it at the same presser they released the report at....

        As to the applications that use a lot of bandwidth, I can think of two off the top of my head that could benefit from 100Mbit tomorrow, HD VC and Cloud
        Tinman_au
    • Zero credibility

      Hiding behind the term "strawman" shows desperation of your argument. If that’s the only thing you bring to your argument then you’re wasting everyone’s time.

      You are dreaming. There is no business case for giving 93% of the population the best internet connection in the world. Labor just wants to buy gen Y votes who want to dream.

      Labor who has a history of mismanaged projects (badly planned school halls, roof insulation deaths and scamming, a stimulus which provided Harvey Norman with record sales, promising a NDIS with no way to fund it) is giving a startup (NBN Co which has never built anything) 40 billion to make a world class fiber network. It’s doomed from the start. How could the government be so naïve? This is a huge IT project.

      There is nothing rock solid of what the NBN will bring or how it will stimulate the economy for 93% of Australians.

      With so much competition in the market and developing technologies – why the government had to enter it with a 10 year project, behind in deliverables, over budget, with no experience and pathetic history is beyond me.
      sparky_l
      • LOL...

        Is that you Tony?
        RS-ef540
        • Really?

          You really think Tony Abbott is ad bad as sparky_l? I think that's being a bit nasty toward ol' Tones.
          Cowboy1600
          • Admit defeat

            If that's the best reply you can muster then ill take that as win

            Thanks guys!
            sparky_l
          • Such...

            Rank stupidity does not deserve serious response... sorry
            RS-ef540
          • Dam school holiday!

            I cant wait till school resumes and you trolls go back and learn something.
            sparky_l
          • Refer

            Previous...
            RS-ef540
          • Indeed

            I stand corrected Cowboy1600
            RS-ef540
      • "is beyond me."

        Given your comment is nothing but political crap and ill-formed nonsense void of anything relevant or having any substance I cant say I'm surprised.
        Hubert Cumberdale
        • It’s a pity you didn’t have anything practical to say….

          do you guy actually live in the real world?
          sparky_l
          • Speaking

            of trolls
            RS-ef540
          • "It’s a pity you didn’t have anything practical to say…"

            I think this is what I was implying about your comment. It's a pity you didn't understand it.
            Hubert Cumberdale
          • Who are you?

            This is suspect. From your coordinated quick responses, avoiding questions and condescending replies you must be being paid by Gillard.
            sparky_l
          • "This is suspect."

            Yes, of course. I can see how you would consider posting comments on a tech site and calling out those that would much rather score political points and have nothing substantial to add to the debate suspect. Bit paranoid don't you think? Perhaps one of the many websites devoted to conspiracy theories would be more enjoyable for you, clearly you are out of your depth talking about the technologies involved here and coalition supporters are notorious for their extreme paranoia after all.
            Hubert Cumberdale
      • What have you been smoking?

        "Hiding behind the term "strawman" shows desperation of your argument. If that’s the only thing you bring to your argument then you’re wasting everyone’s time."
        Your criticism itself here is a strawman, ironically. Your criticism relies on the idea that my comment represents my entire argument (my argument about what you have not said) when in fact my comment's only purpose was to point out the obvious strawmanning, in which it was successful.

        "There is no business case for giving 93% of the population the best internet connection in the world"
        Right here big boy:
        http://www.nbnco.com.au/about-us/corporate-plan.html

        "a stimulus which provided Harvey Norman with record sales"
        This stimulus? http://www.abc.net.au/news/2010-08-06/stimulus-served-australia-well-despite-waste/935002 Go on, argue with a dude who has a nobel prize on the subject.

        "NBN Co which has never built anything"
        And they still aren't building anything, the contractors build it. Who, by the way, do you think should be building such a project? You think somebody like Telstra has built a network before? The simple fact is there is no entity in Australia which has built a nationwide network in living memory.

        "There is nothing rock solid of what the NBN will bring or how it will stimulate the economy for 93% of Australians."
        Having to pay less for what is quickly becoming considered an essential will stimulate the economy.

        "With so much competition in the market"
        What competition? All the ISPs are just selling access to Telstra's cables.

        "and developing technologies"
        You mean like... fibre?

        "behind in deliverables"
        3 months behind on a 9 year build is a long way from doom and gloom.

        "over budget"
        It is under budget. Initial estimate was up to $43bn, current projection is $40bn.

        "pathetic history"
        It's a brand new company building a brand new network. You have used that as the basis for criticism already. How do you now turn around and complain that it has pathetic history? Your argument isn't even logical let alone factual.
        karl_w_w