Just because NBN Co serve you doesn't mean they like you

Just because NBN Co serve you doesn't mean they like you

Summary: Just so we get this straight: when Labor proposes spending $43 billion on an FTTP network it's "reckless spending". When the Coalition spends $41 billion on a hodgepodge it's "money well spent". This, from the government that's putting the 'con' back in 'condescension'.

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Ziggy Switkowski isn't a career politician, but his latest interview suggests he's learning quickly. With just a few words to a recent business lunch, he confirmed that revisionism is alive and well in the Coalition-led NBN Co – and reminded us why, when it comes to the NBN, the government continues to put the 'con' back in 'condescension'.

The words in question: Switkowski's claim that spending $41 billion on the government's NBN would be “money well spent”.

This statement is patently ridiculous for two reasons.

Clerks-Hockey
The Hockey sticks are out as we brace for the Budget we had to have. Screen shot: David Braue/ZDNet Australia

The first is that “well spent” implies a process of assessment has taken place, but there still has been no completed cost-benefit analysis (CBA) to evaluate the expected benefits of the government's multi-technology mix (MTM) model for the NBN.

Until mid-year, when the Vertigan Review will hopefully give us a realistic and balanced assessment of the benefits that the MTM NBN will bring – and how they compare to the benefits expected from Labor's fibre-to-the-premise (FTTP) model – it is absolutely meaningless to make authoritative statements about the value of any investment.

Any honest CBA will have to also consider the benefits that would flow from the other five options highlighted in the NBN Strategic Review – two of which, we must recall, still involve the construction of an all-FTTP network. These must be assessed alongside the favoured MTM before Switkowski or anybody else can make conclusive statements about the value of the MTM.

Were the CEO of a public company to make a statement about such a massive investment without clear and irrefutable analysis to support it, he would be ridden out on a rail: statements about business value must be based on fact, not political convenience or sheer willpower.

The second reason we should recoil at statements like Switkowski's is because it highlights the almost eye-stinging hypocrisy that continues to surround the NBN in its current incarnation.

I know it was more than a week ago and therefore has fallen out of the current news cycle, but didn't we just all suffer four years of being told, as Malcolm Turnbull put it, that building Labor's “$43 billion National Broadband Network thought bubble” was an utter waste of money?

Weren't we told that the NBN represented “reckless spending” and that “billions of dollars were being spent unwisely with no real benefit to the community”?

Didn't we just all suffer four years of being told, as Malcolm Turnbull put it, that building Labor's “$43 billion National Broadband Network thought bubble” was an utter waste of money and represented “reckless spending” .... Now, we're told that $41 billion to buy a multi-technology mix (MTM) model – which, by the way, is still unbuildable and completely, entirely speculative – is “money well spent”.

That “the NBN is now a $43 billion project over 8 years with an unknown cost to the Australian public because the government is proceeding without analysis of the cost or customer take-up”?

Yes, we were told all of that – and much more. Of course, during the same press conference Turnbull also said that he would “certainly” be prime minister if the Coalition were elected. And we know how that worked out.

Now, years later and with a government fixated on stripping every last cent out of the project no matter the functional compromises, we're told that $41 billion to buy a multi-technology mix (MTM) model – which, by the way, is still unbuildable and completely, entirely speculative – is “money well spent”.

This, from someone who was once reportedly on the short list to chair the construction of Labor's $43 billion version of the network – and was a staunch advocate for that model and price tag.

Clearly, Switkowski isn't afraid of believing whatever he is told to believe. After all, he's the one who previously and publicly told Business Spectator (watch it here) that the fibre NBN was “a very important project” and that “the government strategy of investing in a high speed, fibre optic based broadband network is a good one.”

Of Labor's $43 billion plan, remember, he said “I think it's a project that deserves our support...I think an all-fibre network is a desirable endpoint and along the way it will render obsolescent the copper network.”

That, of course, was in 2009 and is therefore far in the past for Switkowski, who is now arguing that spending basically the same amount on an MTM NBN is “money well spent” even though its implementation depends on acquiring the very same copper network he said would become “obsolescent” back then.

Switkowski's flip-flopping on network architectures has been well documented by a media that increasingly has no idea which of his statements – like those of his boss Malcolm Turnbull – are actually meant to be taken as meaningful or enforceable in any way.

It's worth mentioning that, in the same discussion last week, Switkowski reportedly said that projecting NBN speeds of 100Mbps by 2020 “would be about right”.

Not even the NBN Strategic Review has predicted this outcome, nor did it suggest that NBN Co will even deliver 100Mbps by the MTM NBN's projected completion date in 2021. Apparently, we've just witnesses yet another change in scope for the project.

That's a pretty big contradiction for someone who has famously downgraded NBN Co's ambitions to the point where Switkowski will not even guarantee the download speeds his NBN will provide.

It's also rather difficult for someone who believes telecoms guarantees “have lost their currency” – and that the entire telecommunications industry is rapidly turning against NBN Co “for completely understandable reasons” – to expect that Australians will ignore the obvious hypocrisy of his assessment and accept that the $41b project is indeed “money well spent”.

The biggest problem in this revisionist and condescending NBN culture, however, isn't the blind optimism and the political-speak with which the government has promoted its purported economic credentials. It's not the way that we as a country are being so blatantly groomed for self-sacrifice in tomorrow's Budget.

Not even the NBN Strategic Review suggested NBN Co will deliver 100Mbps by the MTM NBN's projected completion date in 2021. Apparently, we've just witnesses yet another change in scope for the project.... That's rather difficult coming from someone who believes telecoms guarantees “have lost their currency”.

It's that, in repeatedly telling us that black is white, the new captains of the NBN – like those now running this country – are simply ignoring the legitimate concerns of the population. They have no real interest in meaningfully engaging with industry or potential users about the network, but are railroading their preferred model through based on nothing more than blind optimism and a callous disregard for even constructive criticism.

I'm reminded of the slacker convenience-store clerks in Kevin Smith's hilarious breakout film Clerks, which was marketed with the tagline “Just because they serve you, doesn't mean they like you”.

The premise of the movie is that the employees hate their jobs and mock their customers at any opportunity, while flouting propriety and laying waste to the very premises they've been entrusted to manage and protect.

Could a more apt tagline be attached to the way NBN Co and the Coalition government are treating voters on the eve of what they're selling as the Budget we had to have?

Sure, we don't have romantic angst and necrophilia (although some might argue to the contrary given the state of Telstra's copper network). We don't have incognito salesmen, broken roller blinds, stoners loitering out front, or hockey games played on the roof.

But we do have Hockey and Cormann smoking cigars in fat-cat style, plenty of voter angst and an overriding, despairing feeling that the current management and political structure is quite happy if the NBN is broken, just as long as they can convince themselves they're right.

In the process, they are setting themselves up for a huge fall if the CBA – miraculously and unlikely as it might be given the framing of this particular CBA – concludes that it is indeed not money well spent to drop $41 billion on a MTM network that's mostly rehashed from existing infrastructure and would create a management and technological nightmare.

When it comes to the NBN the government is so desperate to sell its purported economic credentials that it is writing massive cheques that it can't cash – and Switkowski has become its bookkeeper. If the many limitations of the MTM model prevent him from balancing the benefits column with the “well spent” $41 billion in the cost column, voters' tolerance for the government's condescension may well run out.

What do you think? Can a $41 billion MTM be “money well spent” even as a $43b FTTP network was “reckless spending”? And: will voters punish a government that takes them for granted for too long? 

Topics: NBN, Fiber, 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

18 comments
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  • Not surprising.

    Public Sector employees aren't allowed to disagree with the Prime Minister.
    colonel.mattyman
  • What can you say

    Sexy fingers is raving on again.
    Considering we will have a very strong El Nino this year and for several more those tin boxes are a brilliant move befitting our genius Comms minister and his Lackeys.

    The venal and ideologically obsessed in the MSM, business and Cabinet will reap what they sow

    Crisis Times?
    Scrub the Carbon Tax yet leave the Billions in compensation untouched, instead sink the boot into the average Australians for a far lesser saving, in fact greatly increased long term costs both economically and Socially.

    http://www.businessspectator.com.au/article/2014/5/12/technology/fat-lazy-executives-are-holding-australia-back
    Abel Adamski
  • to answer the questions...

    I would answer as follows -

    To the first - I think they are both a waste of money honestly, but if we have to have government build Telstra MkII then the comparison is 41B for coalitions plan vs god knows what for Labors. Anyone believing Labor would have delivered for anywhere close to their 43B should come see me - I have a bridge to sell you.

    To the second question - it took 2 rounds of labor for people to boot them, so the coalition is prob safe for about the same length of time. Governments are like IT vendors - the majority of them ignore you until its time to renew the contract (election time) then its all dinners and drinks (new spending/tax relief) until the new contract (election) is signed, then its back to ignoring you till the next time around.
    aesonaus
    • Not very good answers

      If do think the MTM is going to come in at $41b if you remember before the election they had a "fully costed plan for $29b". Turnbull expecting the be given the copper and HFC for free as it had no price under labor's as it was getting replaced. Then there's the remedation and maintence of both networks which could cost any where between $1b to $5b a year. On top of that Turnbull is expecting 90% to get 50mbps not one company in the world grantees any speed on FTTN where you know you would beable to get 100mbps on FTTP.

      If you think it's a waste of money the country has an average of 6mbps or 44th in the world. Telstra has neglected the copper network and only upgradeing there mobile network.
      JasonKent
    • Limited News for All

      Forget about flogging the bridge, Murdoch & Jones have sold the gullible among us a $41B Foxtel subscription instead & saved Tony from selling his posterior this time around.
      Now instead of a modern communication network & working from home we'll get more highways we can't afford to use unless on bycycles due to the ever increasing cost of fuel.
      grump-a1eeb
  • Ziggy & the NBN

    Ziggy was a looser at Telstra CEO & he will be a looser at NBN Chairman
    mgmaher
  • a great idea proposed by the wrong parties

    Look can't we face it no matter how much we all dream of 1gbps fibre connections that the ALP would have delivered a farce. I know for a fact that the NBN was stacked with heaps of mini-Obeid types. Who didn't know telco and who were there to pick up their $250k plus salaries, who didn't know diddly about telco and who's job was to jump on bad news and push good news at the right times,

    The NBN was a great idea proposed by the wrong party.

    The reality of the project was it was all about which group of inidivudals would profit immensely from the billions.

    Think about people, this is billions of dollars up for grabs. The conman are out in force.

    With the ALP disposed the Liberals are flooding the decks with their corporate stooges.

    Hell if the Snowy Hydro con scheme fails I'm sure we'll see Paul Broad come on board for no reason at all but to pick up an immense amount of money and do the occasional press conference.

    New government, different herd of pigs, same trough of money.
    chugs@...
    • it's all smoke and mirrors

      Anyone who believes that any Aussie government department or instrumentality is capable of delivering any IT project on any reasonable budget or time frame, clearly has no experience working in government.

      These projects are all about public servants and global consultancies extracting as much money as they can for as long as they can from the minority of Aussies that still pay their fair of tax.

      Whoever is in govt, it will cost 10 times more than it should and be as rudimentary as is possible.

      The problem is that incompetence and corruption is rife in the governmental system in this country. We sit in judgement of other countries for corruption, but Australian govt in my experience is right up there.
      GovtWatcher
  • We do need an NBN

    I understand why people think we don't need an NBN, but when you look at the facts and ignore cost its hard to argue against it. Governments will talk about competing with Asia but seem unwilling to spend money on needed infrastructure to do so. we are not going to compete in manufacturing like we used to, and technology is a field we have had some success in.
    Now I understand cost has to play a part in this, but Labor at least had a plan. The coalition seems to live in the present, with no real plan available, no indication if and how much to upgrade to fibre. There are lots of assumptions though.

    If the coalitions NBN included everything they criticised Labor for, like a CBA then I'd have no problem, but like many things, they used the NBN to try and win votes. I'm not sure it was actually a reason people voted for the coalition though, especially when polls suggested half the coalition voters supported the labor NBN.

    Many have no immediate issue with a mixed technology NBN. However we'd like to see an upgrade plan or contingency plan. What happens if cable can't meet demand. what happens when copper goes. I think FTTB is worthwhile to hit large numbers fast and bring in revenue, but that is not really stated in a plan anywhere. If i was drafting a design for a client along the lines of the coalitions plan I'd be out of a job.

    The arguments politicians have used have been flimsy at best. On one hand its good to spend money on a parental leave scheme for productivity reasons, yet spending it on the NBN for productivity reasons is not a good idea? A NBN would allow mothers to start working sooner from home, without having issues uploading files to servers, or connection problems because its raining, or blurry video conferencing.

    On another topic its alright ideologically to get rid of the carbon tax but hike up fuel levy (if that occurs tonight). Government seem to only care about facts if they suit them and my concerns are the current government seems to have complete disregard of anything a scientist or economist tells them. Experts who are definitely less biased than a political party member or politician.

    One day it would be good if the two major parties actually thought about the people, rather than how they will get re-elected in 3 years time.
    Justin Watson
    • ignore the cost?

      Justin ignoring the cost of things is what turned Britain into a welfare state and is rapidly doing the same to Australia.

      When the tax system provides an "opt out" option that allows individual tax payers to decide not to have their taxes used for specific purposes, then go your hardest and ignore the cost.

      Do you run your household budget this way?
      GovtWatcher
      • Profit > cost

        Yes, we shouldn't ignore the cost, and Labor didn't.
        Even the Coalition's own Review said Labor's NBN would make a profit.
        Btw,
        Do you have any evidence supporting your contention that Australia is rapidly emulating the British welfare state?
        And household budgeting is absolutely irrelevant when discussing national budgets.
        MaudeLynne
  • Small correction

    Switkowski reportedly said that projecting NBN speeds of 100Mbps by 2020 “would be about right”.

    No, actually, he said last week that in 2020, 100 Mbps would be the AVERAGE speed.
    umbria
    • Urgh, that's even worse

      As I unfortunately wasn't there physically, I had to go by published accounts. Which are apparently even less flattering to Switkowski's understanding of the project!
      braue
  • It's all about the process

    The fact that we are 5 years into an 8 year project and we still have 8 years to go should give any any rational person pause for thought. Neither major political party is thinking though. The Coalition is making decisions ahead of the CBA. Labor refused to do a CBA at all. Incompetent, politically driven shysters the lot of them.

    Let's have an honest CBA. Let's determine where we need to get to and when we need to get there. Let's have an honest assessment of the options for getting there. It could be that the MTM is money well spent. It could be that Labor's plan is the most cost-effective. All the time we're being driven by political (and technological) ideology rather than following proper process we're not going to know.
    brynmeek@...
    • But will the CBA be honest?

      An honest CBA would be good, but the Vertigan one will be a disappointment.
      Read the transcript from the Senate Select Committee into the NBN on 5 May 2014. Rampant cronyism, appointing similarly -thinking individuals for a start. They also intend to ignore the evidence of what is actually happening in the parts of the NBN already rolled out, in favour of models they will be creating and analysing.
      The 'strawman' method works a treat when you can't shoot down the real thing.
      Conroy tore them apart, but who reads Hansard anyway?
      MaudeLynne
  • A CBA for Who's Benefit?

    Consider this:
    With a national high speed fibre+wireless network nearly all existing media & entertainment delivery models would likely have to drastically change.
    No more Telstra monopoly, newspapers, radio & TV on- broadcasting required.
    Everything delivered to your phone, tablet or home in an instant with worldwide competition for services & pricing.
    Education, entertainment, work, vote, shop, pay bills, medical consultations, security monitoring etc etc all from home when & how you choose.
    No wonder Rupert went from supporting Rudd with his original original FTTN to "Kick This Mob Out" once it changed to FTTH.
    Now, since having gone all out to get Tony elected & "Demolish the NBN" or at least cripple it using Turnbull's dog's breakfast of incompatible technologies He also gets his existing cable services upgraded & extended for free.
    Noticed all those Foxtel ads lately?
    grump-a1eeb
  • cost benefit is awesome. My version.

    1. WIN. Benefit: most businesses can now sack most of their IT staff and offshore the servers/backup/software/support to Google/Amazon/Microsoft etc.. big savings wins to business, big sales wins to google/amazon/microsoft, IT in Australia will be left with some custom programming and desktop support.

    2. LOSS: Loads and loads of Australian IT folk become unemployed and lots of Australian IT services companies that can't compete on price with google/amazon/microsoft go bust or beg for government protection. If the government does protect local businesses by taxing the foreign companies operating in Australia, it will whittled down to nothing almost immediately by trade agreements as Australia likes to bury itself in trade agreements for short term benefits.

    3. WIN: All the unemployed IT folk will be able to steam multiple pirated copies of Game of thrones or movies etc assuming they can afford a plan that provides outrages prices we pay in Australia for broadband. so they will be unemployed, but not bored. :-)

    4. LOSS: The NBN will cost anywhere between 40 and 80 billion dollars and be eventually sold to Telstra for probably a tenth of what it cost taxpayers. It will have racked up billions in operating losses before then as TPG and others will roll out competing networks to all the high profit areas and be able to undercut NBN prices as they won't be subsidizing the cost of rural rollout.

    5. In ten years LTE 5 will be offering faster or equivalent speeds in most big areas and probably cheaper as again they don't have to subsidize rural areas like the NBN does.
    frankieh
    • lol.?

      Part 5.
      If you think LTE 5 is the answer keep your head in the sand. Do you really think any telco is going to offer 250GB plan on LTE5 for $60 a month? No way.

      TPG is a concern as those fools that sign up to their Basement plan will be stuck on a TPG network for ever. As these FTTB TPG is building will not be connected to the NBN.
      The whole idea of the NBN was to allow competition for ISP's as they set their price no mater where you are.
      I doubt you have ever lived in a country town. I lived 20 km's out of the nearest town (this town is only 5 1/2 hours north west of Sydney) we had no mobile service, internet is dial up, no electricity as we had to generate our own. The cost to place a single power pole on the farm was $5000 & you paid for the pole and installation.

      As Telecommunications is a Federal Gov't responsibility I think its fair that the city folk subsidize the cost of setting up the NBN as it gives farmers and people in remote areas the things city folks take for granted. Oh wait what about a 3 hour drive in a car or 2 hours in an Ambulance to go to hospital in case of an emergency. Lets save some money by closing 3 hospitals in Sydney and moving them to country NSW to service the county folk.
      Mudrat70