It's time for Turnbull to swallow his NBN pride
Malcolm Turnbull's first instinct, naturally, was to frame the findings of the NBN Strategic Review (download it here) as being an indictment of the failings of the previous Labor government. But as the dust settles and people realise just how thoroughly the new government is about to shaft them on broadband, one hopes that Turnbull can be a big enough man take time over the Christmas break to seriously and openly consider the implications of the review – and that the Coalition's current policy may not actually be the best way forward.
Turnbull has wasted no time pushing forward the headline figures as some sort of bottom-line red-light-green-light indication of the best way forward. Yet for those with any sort of memory, those figures put him in a most difficult situation.
The bottom line is this: we now face the prospect of spending $41 billion for a piecemeal upgrade that will leave around one-quarter of Australians with future-proof broadband and relegate the rest of us to making do with a best-effort service based on networks with still-unknown access issues and a big question mark around the cost of obtaining that access.
Apart from managing the capital costs of the network, the Coalition will have to author and push through massive legislative change, take the unprecedented step of forcing Optus and Telstra to open their HFC networks to competition, browbeat a sceptical construction industry into reskilling its workers and rushing through the implementation of FttN at breakneck pace, and do everything it can to prevent Telstra from using the policy changeover to re-establish its network monopoly.
There are numerous other obstacles, as highlighted by NBN Co in its confidential report to Turnbull during the caretaker period.
All of this, just to get a network that even the new chairman of NBN Co, Ziggy Switkowski, has said won't need to be replaced for at least five years after it's completed around 2020.
In other words, by 2025 the government of the day will be planning the upgrade of our Frankenstein NBN to be completely based on the same fibre-to-the-premises (FttP) technology that Labor is implementing now.
The average cost difference between the Coalition's retrograde FttN broadband plan and the current future-looking FttP broadband plan – the difference between nation-building and nation-crippling – is just $800 million per year.
As was already revealed in its confidential 'blue book' guidance to Turnbull, NBN Co has been aware of this requirement for months – warning that the FttN model won't generate enough revenues to justify the expense of implementing FttN, and that he should start planning FttP now.
Given that even the chair of NBN Co agrees with this, the public cannot and should not accept a policy based entirely on the findings of the Strategic Review without a companion costing for the eventual fibre-optic upgrade.
That NBN Co itself should be taking this posture raises significant questions about the wisdom of spending $41 billion for a substandard outcome that will offer no clear benefit to Australians and need to be upgraded shortly after it's implemented.
If such a massive project is to be undertaken at all, it needs to be done with consideration for the outcomes we can deliver in 20 years, not just to meet arbitrary and ill-conceived political timelines. And, if we are going to be up for another $30 billion in expenditure for an FttP upgrade from 2025, even the Coalition government needs to concede that it may be better to simply do the network right the first time.
It's not even that hard to justify the extra expense. If you stop a moment to do the maths, you'll realise that the Strategic Review has actually indicated that the average annual costs of the FttN and FttP models aren't as different as Turnbull wants to believe.
Spending $73 billion on a fully-FttP network that will, by the review's own timing, be complete in 2024 – eleven years from now – works out to an average of $6.64 billion per year.
Spending $41 billion on a mixed-technology network that will, by the review's estimates, be complete seven years from now – and reflects an average spend of $5.85 billion per year.
In other words: the average cost difference between the Coalition's retrograde FttN broadband plan and the current future-looking FttP broadband plan – the difference between nation-building and nation-crippling – is just $800 million per year.
That extra expenditure would guarantee Australia is at the forefront of the world in terms of communications outcomes. It would give Australians access to cutting-edge services in healthcare, e-government, and even entertainment – which is often dismissed by naysayers but, objectively, represents a multi billion-dollar, tax revenue-generating business in Australia alone.
Spending that extra money would guarantee a broadband infrastructure that does not, unlike the Coalition's current plan, need to be upgraded as soon as it's complete.
It would help keep Australian researchers on level footing their their broadband-guzzling peers around the world.
It would facilitate improvements in the government's own back-end systems by boosting reliability and service delivery, and allowing fibre-enabled citizens to interact with their governments more robustly than ever before.
The Coalition's policy looks nowhere but into its own navel. It will hamstring Australia's economy and impact our ability to move forward....It will keep Australia dragging its feet in the 20th century rather than giving it the opportunity to be relevant in the 21st.
It would attract new providers of telecommunications services; help convince businesses that they don't have to apologise for Australia's continued status as a communications backwater; lure investment by multinationals who have shown they are all too willing to overlook us for our cluier, more progressive Asian neighbours in places like Singapore – where a fierce commitment to prudential integrity has long been matched by a willingness to invest in technology and to look to the future.
It would allow the Australian government to invest in a network that will have a very real net present value when it's complete – and could potentially be sold off to a private sector that won't touch the Coalition's revenue-crippled network with the proverbial ten-foot pole.
To make this happen, the Coalition needs to fundamentally understand that making the NBN pay is not only about minimising capital costs; even NBN Co said the more important objective is to build long-term revenue streams – and in the world of broadband, that is all but impossible over FttN.
The Coalition's policy looks nowhere but into its own navel. It will hamstring Australia's economy and impact our ability to move forward after the increasingly devastating consequences of the loss of companies like Holden and Toyota, and the inevitable others that will follow in their wakes. It will keep Australia dragging its feet in the 20th century rather than giving it the opportunity to be relevant in the 21st.
Turnbull still has the discretion to do the right thing in postulating his new strategy. All it will take is the insight and willingness to accept that the Strategic Review has presented a damning indictment of the Coalition's alternative policy – and the willingness to put what is morally, technologically and economically right for Australia, over what is politically right for the Coalition.
What do you think? Will Turnbull prove to be big enough to do the right thing? Or is this the beginning of the end for Australian broadband? And, more broadly, what did you think of the Strategic Review?