Election rant reply 4: NBN mess

Election rant reply 4: NBN mess

Summary: The question that Tony Abbott wants the nation to ask itself this election is: does the Australian Labor Party deserve a second chance at governing when its first term was marred by a series of debacles (think insulation, the mining tax and Kevin Rudd's abrupt exit from the PM's chair) that have left its credibility in shreds?

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commentary The question that Tony Abbott wants the nation to ask itself this election is: does the Australian Labor Party deserve a second chance at governing when its first term was marred by a series of debacles (think insulation, the mining tax and Kevin Rudd's abrupt exit from the PM's chair) that have left its credibility in shreds?

When it comes to broadband, the answer is squarely up for debate. Depending on how you count, Labor has already squandered no less than three chances of substantial reform in the telecommunications sector that could lead to a better broadband future for all Australians.

"Three?" I hear you ask. "But I thought there has only been one National Broadband Network policy?"

The truth is, there has been at least two national broadband policies — one for the last election in 2007 and one for this election — as well as a third piece of legislation that aimed to restructure the telecommunications sector through the break-up of Telstra. And none of these three Labor initiatives have yet delivered on their promises.

David Braue is right when he says in the fourth of his epic series of seven rants on election technology policies that the Coalition's broadband policy would take years to deliver any real outcomes to Australians.

I agree with his statement that the Coalition's stated 2016 completion date for its own projects is "hugely optimistic". We've seen no evidence that the Coalition even truly understands the technical nature of what its policy will involve. The Coalition is merely attempting to address problems in the telecommunications sector from a top-level perspective without looking at the details.

Much of the Coalition's policy is simply a bad joke that deserves to be laughed at.

However, just because the Coalition's policy stinks to high heaven, it doesn't mean that Labor is capable of delivering on its own, much grander, vision. In fact, recent history would suggest that Prime Minister Julia Gillard's team will have just as many problems delivering on its own ambitious vision as the Coalition will have.

Recent Labor broadband policy has been based on Conroy's ambitious plan, unveiled in March 2007, to build a nationwide fibre-to-the-node network costing $4.7 billion. As I chronicled at the time, Conroy's plan was designed to break the then-gridlock between rival NBN plans put up by first Telstra (under then-CEO Sol Trujillo) and a coalition of its rivals known as the G9, including Optus, Macquarie Telecom, iiNet and so on.

In March 2007, Conroy had some pretty harsh words to say about the Howard Government's own broadband initiatives, led by his predecessor Helen Coonan. "The minister has had two years to resolve this debacle and it has comprehensively failed," he said. "These failures will have negative economic and social consequences for Australia unless we take action now."

The only problem is that like many Labor policies (hello, emissions trading scheme), Labor never enacted Conroy's policy after being elected just six months later.

Instead, after a torturous year-long public tender process that led to a number of organisations wasting millions of dollars on applications and the farcical exit of Telstra, which experts involved later admitted was the only applicant that could have delivered on the government's requirements, the scheme was completely canned in April 2009.

After wasting a year and a half of time and millions of dollars from the public purse, Conroy convinced Prime Minister Kevin Rudd to go for an even bigger scheme, a $43 billion fibre-to-the-home package.

The heart of the problem was that Labor planned poorly when putting together the policy in the first place; none of the private sector organisations who responded to its vision were capable of delivering on it.

"Despite whatever spin the government may put on its vision for a fibre future, the collapse of the initial $4.7 billion tender for a national fibre-to-the-node (FTTN) network represents a big policy failure, one that raises questions about the grasp Conroy has of his portfolio and the competency of his advisers," wrote telecommunications analyst Kevin Morgan at the time.

Now there is no doubt that the fledgling NBN Company, which has formed from the rubble of Labor's first botched broadband effort, is a good one. It has a capable leader, in the form of Mike Quigley, and has attracted the cream of the telecommunications industry to its ranks. NBN Co does, it must be said, have the potential to deliver on Labor's NBN vision.

But we must judge governments on what we have seen from them on the actual ground, and what we have seen from Labor with respect to its new NBN policy so far is not great.

A tiny, tiny amount of fibre has actually been rolled out around Australia in the past two and a half years since Labor won government, and a mere 70 households and a handful of businesses in Tasmania have been connected to the NBN — despite Labor's glitzy launch of the infrastructure last week.

Construction has only just begun in other locations around the nation.

All of this is despite the fact that NBN Co now employs hundreds of staff, has already spent millions and millions of dollars in contracts, and has almost the entire telecommunications industry agreeing with its vision.

Realistically, it has to be said that a better outcome, at least in the short term, would have come about after the Labor Government's election if Rudd & Co had simply and immediately enforced the structural separation of Telstra into at least two companies: wholesale and retail. This would have had immediate consequences for the industry.

Firstly, it would have removed the vertical integration inherent to Telstra that almost every telco in Australia has long complained about, avoiding situations such as iiNet and Internode's current appeal to the ACCC to intervene over recent BigPond pricing changes.

Secondly, it would have given Telstra's wholesale arm an immediate incentive to invest in its decaying copper network and start to plunge its billions of dollars in free cash flow into fibre infrastructure.

Thirdly, it would have avoided the need for the Federal Government to create an entirely new telco giant from the ground up, spending billions of dollars in the process.

However, Labor failed at even this. Its legislation to restructure Telstra and introduce additional consumer safeguards never made it into law, courtesy of its pigheaded attempt to withhold the NBN implementation study from the public and its misguided deal with Telstra, which will actually see the government pay Telstra billions of dollars to sign onto its NBN initiative — just a few scant years after the company was privatised.

Three chances. Three delays. Three failures.

The Coalition might not have an entirely workable broadband policy of its own. But Tony Abbott's camp is right to state that Labor's NBN is a "dog's breakfast" and that the government's performance in this area is not to be trusted.

Renai LeMay is writing responses to David Braue's series of election rants, one for each of the deadly sins and each of the seven days that are remaining until the election. This piece responds to Braue's roll-out sloth rant.

Topics: Broadband, Government AU, NBN

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  • Abbot can talk. He was part of a govt that lead Australia towards the GFC, and it was Labor who spent the money to head off it. Yes now we have a debt but its better than the alternative. I'm undecided on either Indpendant / Greens / Labor but definately not LNP. Worse part was the shameless 15min or so stint the the LNP advert on ABC and SBS the other night during prime time. Shameless spending on tax payers money
    archtiect
  • That's not really fair. The Liberals actually left the economy and public balance sheet in good shape, which allowed Labour to pump money into the economy and avoid a recession. Also the GFC was due to external factors over which Australia had no control.

    That being said the Liberal's excuse of a telecommunications policy is pathetic and I'm finding their catchcry of "Private sector! Private sector! Private sector!" for everything doesn't stand up to scrutiny. I think there are probably phases when sectors of an economy need regulation, stimulation or leadership by non profit-obsessed agencies, i.e. governments, and phases where the govt should be hands off and allow the private sector to move in and expand according to market forces. In telecommunications I think we're in one of the former phases. I genuinely hope that Labour gets re-elected.
    redrover-fac06
  • Hey "archtiect" I think your powers of deduction are as muddled as your spelling. How could the Howard Government have caused to GFC???? I do think that the Conroy NBN plan is far more credible that the Smith dogs breakfast but it is prudent to prepare for the possibility an Abbott win Saturday.
    sydneyla