Turnbull's NBN French KISS is right, but so wrong

Turnbull's NBN French KISS is right, but so wrong

Summary: Malcolm Turnbull has been caught investing in a telco that's rolling out fibre to the home, despite opposing such a move in Australia.

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The usual intellectual sparring between Malcolm Turnbull and Australia's technology media took on a different tone this week, after the shadow spokesman on communications told The Australian Financial Review that "too many [tech journalists] ... have become zealots" in what he sees as one-sided promotion of the National Broadband Network (NBN).

The confusion that Turnbull and like-minded Liberal pollies have perpetuated around this debate has been truly mind-boggling. So if repeatedly pointing out that the Tony Abbott-led Coalition has so far failed to elucidate a realistic alternative to Labor's fibre-based NBN makes me a zealot, well, slap on those cuffs and take me away.

(Turnbull image by Adam Carr, public domain; Sven Palmqvist image by Familjen Palmvist, public domain; baguettes image by Amarant, CC BY-SA 3.0)

Turnbull also claimed that the technology media should look at "what is going on around the world" with relation to next-generation broadband roll-outs. I know he meant that we are supposed to look at the raging successes of fibre to the node (FttN) in places like the UK — a roll-out that Turnbull conceded cannot be replicated here — but he inadvertently focused our attention on a completely different project after it was revealed (by rival Stephen Conroy, of course) that he had bought personal shares in France Telecom.

This investment — detailed right there in documents lodged with parliament's Register of Members' Interests — effectively meant that Turnbull, a vocal proponent of FttN, had chosen to invest his own money not in an overseas FttN roll-out, but in a dominant French telco that is spending over €2 billion to put itself at the vanguard of fibre-to-the-premises (FttP) roll-outs.

That's right; France Telecom has been rolling out FttP since 2007 in major French cities, and is aiming to have 10 million homes online with 100Mbps fibre by 2015. By 2020 — two years before our own NBN roll-out will be complete — France Telecom expects to have 15 million homes connected. This represents just over 60 per cent of the approximately 23 million homes in France.

When I asked Turnbull about his investment — and whether it signifies that he believes an FttP roll-out promises better commercial returns than FttN — he replied that the France Telecom roll-out is "pretty modest", and that he "thought the shares were good value".

Modest? In the immortal words of Inigo Montoya: "You keep using that word. I do not think it means what you think it means."

Just so I get this straight: France's incumbent telco is investing heavily to push fibre out to 15 million premises by the end of this decade, and Turnbull calls it a "modest roll-out" and "good value". Our own NBN Co is investing heavily to push fibre out to 12.2 million premises in around the same timeframe, and he has variously called it "insulting", "unwise" and loads of other adjectives that don't merit repeating here.

Turnbull has even called the NBN an artefact of Julia Gillard's "socialist paradise", which is laugh-out-loud ridiculous, given France's historical leanings in this regard. Turnbull's position on socialism is now clear: Australian socialism is evil, but French socialism is a great investment.

Saving grace

It's not all bad for Turnbull, however; he does have a point, and it's a good one — if you gloss over some devil-is-in-the-detail showstoppers that make it irrelevant in Australia.

The thing about France Telecom's FttP roll-out is that it's not only based on running fibre all the way to your house or apartment; in many cases, the roll-out will bring fibre to the building and span the last few metres with existing cable infrastructure — long ago installed in a significant percentage of French houses and apartments.

France Telecom is also reselling access to that fibre to partners like French ISPs Free, SFR and Bouygues Telecom, which are free to install their own last-mile fibre technology (such as G-PON) or piggyback on existing cable.

The operating parameters of the French NBN are so far removed from our own that comparisons are meaningless.

From an infrastructure point of view, it's an entirely sane approach, and has been feted by French regulator ARCEP as a way of ensuring competitive access to customers; ARCEP's latest annual report notes that 39 per cent of France Telecom's 1.475 million FttH premises are currently "passed by at least two operators".

Here's another interesting point: to prevent lock-in, ARCEP mandates a three-month waiting period between when fibre is installed to a particular premise and when the operator can actually market that service. This is to ensure that competitors have the opportunity to install their own last-metre infrastructure, so that customers have as many choices as possible when it comes time to switch on the actual service.

This is all good and well, and it supports Turnbull's contention that the France Telecom model is "utterly unlike Conrovian Australia — no universal FTTP, and facilities-based competition encouraged, not banned".

Yet, here is where Turnbull's comparisons with France fall flat on their proverbials. If you dig a bit deeper, you find that France Telecom's contract with Free will only see that operator service around 1300 municipalities, with 5 million homes, by 2020.

In other words, the "facilities-based competition" that Turnbull so heartily applauds is actually allowing competitive operators to cherry pick the most profitable areas of France's broadband population, and ignore the rest — presumably because the areas are too expensive to service.

Indeed, figures from ARCEP's very interesting annual report (PDF) confirm that 88.2 per cent of FttP in 2011 and 2010 covered French municipalities "located in very high-density areas". If you look at a heat map of France's current FttP roll-out, it includes one dense spot in Paris, a large area around second city Lyon and a few spots around the countryside.

For the rest of France's population, broadband appears to be the same as it ever was — whatever it ever was. ARCEP figures suggest that only 11.8 per cent of FttH and 29 per cent of cable services reach homes outside of France's most heavily populated areas. Everyone else, presumably, gets ADSL. Or dial-up. Or sits watching flames licking in the fireplace.

Sound familiar?

This is why Turnbull's statements about France are both right and wrong. They are right because France's FttP strategy will bring facilities competition to residents in the country's most heavily populated areas, which are already well serviced with cable infrastructure.

If Turnbull wants to be taken seriously by our media "zealots", he must stop arguing speeds and feeds, and kick off a new wave of competition in an industry that has no interest in it.

But they are wrong, because the operating parameters of the French NBN are so far removed from our own that comparisons are meaningless. Australia experimented with facilities-based competition in the 1990s, and it got us two now-stranded HFC networks running down the same street, with no compulsion for Telstra or Optus to allow any other operator to share their services.

Were a company like iiNet allowed to lease Optus HFC to a customer's premises at competitive rates, and then install its own head-end connection, this sort of facilities-based competition might work here. But the Howard government's complete failure to mandate any kind of access provisions on HFC operators preserved them as outdated monuments to 1990s-era competition optimism.

Fixing that disaster is a major, and often glossed-over, goal of Labor's NBN. If Turnbull wants to be taken seriously by our media "zealots", he must stop arguing speeds and feeds, and explain how he will implement regulatory change to force the opening of closed HFC networks, open access to Telstra copper and fibre, effect swift and effective separation of Telstra and combat private-sector malaise to kick off a new wave of competitive infrastructure investment in an industry that has almost no interest in it.

In the absence of such substantive policy declarations, Turnbull's rhetoric about speeds, feeds, foreign roll-outs and promises of cheaper broadband are utterly and totally irrelevant to the current discussion.

Another distinctive feature of France's roll-out is, by my reading, what appears to be a complete lack of retail competition. I am happy to be corrected here if my research has missed some fundamental point, but I don't see any mention of pure retail competition in France.

Little wonder why; the market is extraordinarily top heavy. If Wikipedia figures are to be believed, France Telecom, Free and SFR account for 90 per cent of internet subscribers. Those are the same operators that are deploying infrastructure that all but eliminates the possibility of French customers accessing internet plans from small, niche, specialist or other providers.

Turnbull has called the NBN an artefact of Julia Gillard's "socialist paradise", which is laugh-out-loud ridiculous, given France's historical leanings.

Australia's NBN model is totally different, because NBN Co has taken lessons from the past failure of facilities-based competition and shifted competition to the retail sector. Mandating a consistent price for all serviced premises not only ensures that robust retail competition is available to sparsely populated areas where Telstra copper is woeful and HFC unavailable, but it also fuels cross-subsidies that ensure the NBN can reach all Australians, rather than only those whose location makes them commercially attractive to French operators that return profits to Turnbull's pockets.

Labor's NBN may indeed be a socialist paradise — but it's the only rational, actionable model for next-generation broadband that's available to us without massive fundamental market restructuring that Turnbull has so far yet to outline. And as long as he refuses to detail how he would whip Australia's infrastructure into an open, workable shape, Turnbull's French dalliance is just another inconsistency in a policy platform riddled with them.

What do you think? Is France doing FttP better than Australia? Have I missed any important facets of France's telecoms market? Is Turnbull right to crow about the merits of overseas models, or do they simply not apply here? And what would Turnbull have to do to get his policy taken more seriously?

Topics: NBN, Broadband, Government, Government AU, Telcos, Australia

About

Australia’s first-world economy relies on first-rate IT and telecommunications innovation. David Braue, an award-winning IT journalist and former Macworld editor, covers its challenges, successes and lessons learned as it uses ICT to assert its leadership in the developing Asia-Pacific region – and strengthen its reputation on the world stage.

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Talkback

12 comments
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  • Is France doing it better?

    Possibly, but there are going to be several million French premises that are going to be left behind by the commercial imperatives of the companies involved in the roll out. That can't be good. I wonder if the French government will look at Australia and when Europe begins to recover then decide to connect those left behind in the Dim ages if not the dark ones.

    Another point that you might consider is; the cost.

    A report in February, (http://www.telecomengine.com/article/france-telecom-step-spending-fiber-networks) claims the France's telecoms regulator estimated the cost of covering France with a FTTP roll out as being around $33billion, US I presume.

    One has to wonder at Turnbull's temerity in arguing against our FTTH rollout in view of the almost closed market being created in France as opposed to the, what I envisage will eventually turn out to be, open slather retail market that will serve to bring prices down in the mid to long term.

    On second thoughts; no, France is NOT doing it better. (I never thought so).
    Rubens Camejo
    • Huh? You never thought so?

      French FTTH policy has just been decided.

      What you thought in the past is irrelevant I'm afraid.

      Competition has failed to give us lower prices on telecommunication.

      The reason that competition has failed in Australia is that the copper network provides a virtual monopoly. THis monoploy has limited the service and kept a bundled-in line rental charge on all connections.

      At least right now we have competing DSLAMs at the telstra exchanges, so for instance iiNet would connect me to an iiNet DSLAM, rather than paying Telstra for the use of their DSLAM and therefore being able to offer a lower service for the same charge.

      The Coalition FTTN proposal moves the DSLAMs from the limited number of large exchanges to 60,000 small cabinets. To maintain copetitiveness you would have to allow 5 or 6 DSLAM operators in each cabinet. (like the french last mile situation - but far harder to do)

      The other issue is that right now Foxtel maintains a monopoly on Sport programming by having control of enough of the Cable infrastructure through a monopolistic agreement with Telstra.

      The NBNco infrastructure is designed to provide an open market TV distribution medium across 90% of premises - maybe extending to 100%. To do this properly and be compatible with the newer sets hitting the market you need FTTH or you seriously cut into the VDSL bandwidth.

      So the danger of the NBNco architecture and FTTH is not that it limits competition or that it costs more.

      The danger is that FTTH provides a way for the AFL to sell it's matches directly to the consumer and cover every household. And yes they have considered this and for now they are holding off till the coverage is there.

      FTTN is the most anti-competitive thing there is.
      richardw66
  • The Hidden Cost to Turnbulls plan

    This Turnbull's position is a complete political con - Heres my understanding:

    You have to remember that FTTN relies on the "last mile" copper lines to people's premises rather than direct fibre connections..

    The truth is that the reason Telstra belatedly agreed to sell its copper assets because they know that over the next few years and decades the mounting maintenance costs to repair and replace aging copper lines (many of which are decades old) will cause a massive financial blowout that is both hidden and potentially of unforeseen proportions.

    Telstras obligation for these copper lines placed on it a hidden future cost that will need in order to ensure that the "last mile" copper lines remain usable and reliable. There are enormous problems faced by Telstra from dated network design decisions, deteriorating copper lines and mistakes in laying the original copper. Such problems range from incomplete network maps all the way to shoddy work being done in laying the cables (such as not sealing ducts properly against water ingress and even the laying of bare copper in contact with the earth - causing numerous grounding issues).

    So the truth of the matter is that Telstra in the long run knew it would be better off in the long term for the NBN to buy the ducts and replace the copper with fiber rather than keeping a hidden and potentially unknown maintenance bill that could end up being more enormous than ever envisaged.

    Now with FTTN, the the liberals would have the government buy up the copper from Telstra and also be left holding onto a potentially egregious maintenance bill.

    What the Labor government knows is that the benefit of laying fibre pays for itself when taking into account these maintenance issues as well as the direct economic benefits from an actual FTTP network. You have to remember that the original plan was for a more limited NBN scheme but when the government looked at the wider issues, including issues of structural separation, industry regulation, the economic future and importantly the benefit for the end user all indications pointed to building a full and direct FTTP network as the only sensible and cost effective option.

    So - now you know.. I only wish more of the media would ask Turnbull who if the public will be lumped with a hidden maintenance bill and if it makes sense buying a dying and broken asset to only then pay for its repair when designing and building your own network would be not only more sensible but leave Australia economically and financially better off.
    davidX81
  • The question is not really is it better

    The question is, what is its' relevance to Australia? Mr Turnbull posted on his own blog:

    "Note France Telecom state they are investing $2 billion euro (AU$2.37 billion) to pass 10 million French households by 2015"

    Once again he tries to utterly mislead the public by suggesting that equates to just $237 a household, compared to Australia's almost $2800 per household, from $37.4 Billion over 12.2 Million households. What Mr Turnbull DOESN'T allude to is that, as you have found David, the VAST majority of those house are in Pairs, Lyon and Marseilles, the densest parts of France. I'm certain that, if Sydney were as dense as Paris (Paris having some 21000 people per SqKm and Sydney having some 2000 per SqKm) NBNCo. would have no problem whatsoever rolling out FTTH to the majority of households for a similar figure (I believe the average urban FTTH rollout cose per household is approx. $800 in fact), but still slightly more owing to France's almost ubiquitous urban cable/HFC install, something only some 27% of Australian households have.

    What France's FTTH rollout tells us is that, just like NZ, where FTTN was cancelled because of the languishing average speeds and just like several Scandinavian countries and even Eastern European countries (not to mention our broadband obsessed Asian neighbours) is that PRUDENCE requires any strong economy (and while Europe is weakened, France is comparatively an economic powerhouse) to realise broadband speeds are VTIAL. And France's answer to that is FTTH which, no doubt, the government will begin to subsidise more once the European crisis is over, to ensure the other ~30% continue to have FTTH rolled out to them. This is DESPITE the fact that much of France ALREADY has access to reasonable broadband via cable internet (Triple Play services in France are well competed for). And yet they still believe FTTH is necessary to keep up with demand now and in the next 20-30 years.

    France Telecom's FTTH rollout is not "better" than Australia's. It is simply different, primarily because it is being done by a commercial company that is, essentially, cherrypicking the dense areas of France, much like Telstra and Optus did with their HFC....which failed miserably. The difference in France, allowing France Telecom's rollout to work where the Cable Wars here failed, is the regulation. And I cannot see how Mr Turnbull can upend regulation in an industry that has ALREADY been through several years of hard negotiating just to do exactly that for something as wide reaching and industry changing as the NBN and NOT spend more time and more money for an inferior network.
    seven_tech
  • Excellent article David

    And +1 for The Princess Bride quote :)

    I'm pretty over the total lack of ethics in the current Liberal party, they literally will say anything and cover all positions (sometimes even at opposite extremes) to get into power. If they want to job they need to start showing they can do the job and whats best for Australians instead of playing all these "clever" political games.
    Tinman_au
    • Excellent article David

      @Tinman_au... No they don't, Tinman, no they don't.
      BillWell-1f682
      • lying libs

        BillWell - yes they do lie. They lie in their bloody sleep and misrepresent all day long.
        susanaii
  • The Liberals will say and do anything to get into power - simple as that.

    I plainly recall studying Shakespeare's MacBeth in Year 11 and learning how the Witches/Apparitions gave MacBeth "half-truths" such as "No man of woman born shall harm Macbeth".

    What I see coming from Malcolm Turnbull is the same kinds of half-truths. Things like:

    - We can roll it out faster, without knowing how long it will take to renegotiate with Telstra, when in fact the Telstra negotiations with NBN Co are part of its delayed rollout in the first place.

    - NBN co will acquire Telstra's copper, but will Telstra even want to give up its copper to NBN Co if Telstra will no longer get access to Fibre-to-the-Home infrastructure?

    - It will be cheaper, without giving any consideration to the increased maintenance requirements of the existing copper that offsets the cheaper "headline" price. Or to what the newly negotiated price with Telstra might be for their "copper".

    - It will be basically just as fast, without noting that FTTH can be upgraded to 1Gbps connections to the home relatively easily, right now.

    But the biggest problem IMO with the liberals proposal is they think they can define "up-front" what areas might need or get fibre and then hand out FTTN to everyone else.

    FTTH is much more versatile in the sense that a consumer can use it at relatively low speeds whilst a business can use it at very high speeds. It inherently supports that flexibility of speed. There is no real need to demarcate different areas into different technology requirements.

    And with eHealth being one of the potential beneficiaries of the NBN, it leaves me wondering how doctors and dentists practices, most usually located in suburbia amongst their client-base, will get access to the business-speed fast broadband they need to advance to the next level? After all, these practices in suburbia will be limited by the same FTTN infrastructure because "consumers" don't need fibre...

    At least BT is now offering customers an option to upgrade to a dedicated fibre circuit into their home from the FTTC cabinet. I have not seen any mention of this for the Liberal's proposed rollout.
    Kevmeister
  • And Jooliar

    Will say and do anything to stay in power.
    Sultanabran
    • You're kind of right.

      Fortunately, Juia has realized that the most effective way to "stay in power" is to offer some sort of decent government and policies to the masses, like the NBN and the NDIS. You may not think a lot of her policies are fine, but she does. You get the idea.

      I wish the Liberals would learn to do the same.
      peterkmurphy
  • and dont forget Spain

    It seems the honorable member has invested in a Spanish telco that is also rolling out fibre to the home.
    And British Telecom has announced it will go with FTTH in place of FTTN
    vangastoye@...
  • French Turnbull caption

    That picture of Turnbull with the beret is just begging the caption "If they have no NBN, let them eat cake!"
    Drew Parsons