Libs kick NBN policy own-goal, but can Labor convert?

Libs kick NBN policy own-goal, but can Labor convert?

Summary: By announcing its policy, the Coalition has finally framed the NBN discussion in more realistic terms. It has also invalidated six years of its own arguments that Labor was spending too much on its NBN.

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My first thought while reading the Coalition's national broadband network (NBN) election policy channelled that bon mot about pigs and lipstick, but the second was more instructive. That is: By offering a policy that is both better than its last election policy and far more expensive, the party of "no" has conclusively proved that its long-standing push for austerity is incompatible with the design goals of a modern NBN.

Lipstick-On-Pig
The Coalition rolled out the red carpet for its new NBN policy — but is it just lipstick on a pig? (Image: David Braue/ZDNet)

In other words, you get what you pay for, and you have to pay for what you want to get.

The Coalition plan is a concession to the reality of telecommunications that both parties had years ago ignored, but which Labor accepted first when it moved from its $4.7 billion fibre-to-the-node (FttN) posture to its $43 billion (subsequently revised to $37.4 billion) fibre-to-the-premises (FttP) commitment.

Compared to this investment, the Coalition's insistence during the 2010 election that around $5 billion worth of broadband band-aids would solve our problems seemed downright foolish. After all, building a network like this is expensive, complicated stuff. By committing six times as much this time around, the Coalition has finally accepted this — and framed the NBN discussion in more realistic terms.

It has also, I should add, just invalidated six years of its own arguments — that Labor was spending too much on its NBN, and that it could actually be completed for the price of a few packs of Hubba Bubba and some doughnuts to keep the workers motivated.

That's just so much water under the bridge, apparently: To get your vote, the new Coalition is ready to spend up big on a brand spanking old network that will, it solemnly swears, deliver anywhere from one quarter to one half the speed of Labor's NBN possibly two years earlier and for a similar cost.

But wait — there's more! Vote now and the Coalition will also throw in guaranteed obsolescence, substandard performance, some pretty iffy performance projections, teeth-gnashingly awful upload speeds, and an utter lack of vision around what Australia should actually do with this network that — as Malcolm Turnbull repeated several times during interviews after the announcement — they didn't want to build in the first place.

Realising that even your average I'm-no-Bill-Gates punter wouldn't see much difference between $29.5 billion and $37.4 billion, Turnbull once again dug deep into his weasel-maths textbook to conclude that Labor's NBN will actually cost $94b by the time it's done.

If that sounds like a pretty crap election campaign to you, you're not alone. Spending $29.5 billion on an overdue, half-arsed grudge isn't anywhere near as inspiring as proactively committing $43 billion to a project that will modernise the nation and reinvent civilisation as we know it.

Even the Liberals know this, which is why the next part of their election push is to try to make their policy look good by wrapping it in insinuations, untruths, and utter fabrications. Sala-ka-du-la, men-cha-ka-pu-la, bibbidi-bobbidi-boo — put 'em together and what have you got?

What you've got, in this case, is a rather unconvincing attempt at making your porkies look like truths. Realising that even your average I'm-no-Bill-Gates punter wouldn't see much difference between $29.5 billion and $37.4 billion, Turnbull once again dug deep into his weasel-maths textbook and went through what appears to be an intense series of calculations to conclude that, despite all suggestions to the contrary, Labor's NBN will actually cost $94 billion by the time it's done.

I have previously had a few words to say about the Coalition's affinity for weasel maths (and, if I may say so, if you add the $11 billion Telstra contract to the Coalition's $29.5 billion, my estimate of a $40 billion total turned out to be spot on. But I digress).

Sure, a $29.5 billion Coalition FttN NBN sounds cheaper than a $94 billion Labor FttP NBN, and even supports Turnbull's claims that the Coalition option will be one-third of the price of Labor's NBN. Well, not Labor's actual NBN, mind you, but the one that Coalition modelling has creatively decided to concoct to legitimise its own model.

That $94 billion figure sounded as arbitrary to me as it probably did to you, so I had a look through the background document that contains the financial assumptions on which this $94 billion figure is based.

It's a voluminous tome, which at 36 pages, is twice as long as the Coalition's own policy. But down around page 27, we arrive at the crux of that figure: It's a worst-case scenario in which NBN revenue grows more slowly than forecast (3.5 percent ARPU real growth, rather than the projected 9 percent) and premises costs are 40 percent higher than forecast.

Bibbidi.

It also assumes that 50 percent more households will go wireless-only than forecast.

Bobbidi.

And that it will take 50 percent longer for Labor to finish its rollout — 15 years, rather than the expected 10 — thereby exacerbating the other factors.

Boo.

Put 'em together and what have you got?

A massive, worst-case, perfect-storm scenario confected for the express purpose of making the Coalition's alternative seem cheaper to voters than Labor's existing rollout. But Turnbull, of course, never mentions this when spouting the figure to mainstream media, which loves easily digestible numbers and doesn't care a whit where they came from.

Then there are the flat-out deceptions, which should anger any right-minded fan of either side of the NBN debate.

The Coalition's suggestion, for example, that "within a few years, FTTN should support downloads exceeding 100 megabits per second over short lengths of copper", is a feeble attempt to compare copper-based topographies to fibre. What the Coalition is not saying here is how short — and the reason they are not saying how short is because the answer is just a few metres.

A more honest way of conveying this would be to say that the Coalition's FttN infrastructure will happily deliver 100Mbps if the Coalition installs fibre nodes in front of every home in Australia.

The Coalition policy also speaks of an "equitable re-negotiation" of the government's contracts with Optus and Telstra for access to their HFC networks. Those networks will once again get the ability to carry broadband data services — which they have already indicated they are happy not to do — but will have the added bonus of seeing ARPU slashed as the Coalition purports to impose open-access provisions onto HFC networks that have never, ever had them.

For some reason, the Coalition believes that both carriers will jump at the option to re-assume their HFC maintenance costs and ongoing operating expenses, then give away the keys to the kingdoms that they so carefully created for the express purpose of being sustainable monopolies.

It is not as inherently awful a policy as the 2010 election policy. This time around, the Coalition has outlined a more realistic, deliverable, albeit technologically odious option whose devil is in the many, many details ... kudos this time around for putting enough work into the policy that it at least looks like they're trying.

This is optimistic, to say the least — and deceptive, in the worst, because on page 9, the Coalition states quite clearly that it will overbuild those same HFC networks by 2019. What retail service provider would consider investing in the equipment to become an open-access reseller of, say, Optus HFC services, knowing full well that its investment will be moot within six years?

Another bout of creativity comes from the Coalition's assertion that it will "investigate opportunities to invigorate and enhance competition among retail service providers (where hopes that monopoly infrastructure would enable a dynamic retail market have so far been unfulfilled)".

I know Turnbull has been spending most of his time studying overseas FttN deployments, but anybody who has been watching Australia's NBN market would be well aware that RSPs have been aggressively jockeying for position with their early NBN plans, with prices down as low as $29.95 per month and all sorts of plans far cheaper than the $66 per month cost contained in the Coalition's NBN policy.

Suggestions, therefore, that the "dynamic retail market" remains unfulfilled are less than accurate. The NBN's biggest problem isn't its construct, which the Coalition policy goes to great lengths to impugn; it is the NBN's execution, which has suffered of late, and is looking iffier and iffier as contractors continue to pull up lame well before the race has barely begun.

To be fair, despite the great lengths to which the Coalition has gone to try to make its policy look better than Labor's, it is not as inherently awful a policy as the 2010 election policy. This time around, the Coalition has outlined a more realistic, deliverable, albeit technologically odious option whose devil is in the many, many details.

That doesn't necessarily make it a better option than Labor's — indeed, few would suggest it was inherently better — but the Coalition at least gets kudos this time around for putting enough obvious work into the policy that it at least looks like they're trying. Given that a Coalition election win is a distinct possibility, the next few months should be committed to pointing out the deficiencies in this new policy, and hoping against hope that Turnbull will work to improve them.

Although I've previously suggested that the most appropriate time to weigh a change of boats would be 2016 rather than 2013, things are as they are. The Coalition has now played its hand, and Labor's biggest challenge before the election is to find some contractors that can actually deliver what it has promised — and fast — before the fate of our broadband races out of its hands like a greased pig out of the sty.

What do you think? Has the Coalition outlined a viable policy? Does it have merit? And can it actually be delivered as quickly and cheaply as Turnbull wants us to believe?

Topics: NBN, Government AU, 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

16 comments
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  • Not there yet...

    I am happy at the detail of, if not the math-voodoo of the policy, but the omissions in the documents are glaring when it comes to what will be significant maintenance costs of copper and renegotiating with Telstra to ask for much more.

    Question:
    Can anyone tell me (I've read through the background documents) with roughly 60,000 roadside cabinet nodes which are analogous to micro telephone exchanges, for wholesale use, would each cabinet require retailer equipment in order to compete on that node?

    Rhetorical:
    Is it sensible spending 30 billion dollars on a system just barely better than ADSL2? When that system has all the same quality of service issues we experience now and possibly minimal commercial value when completed. Compared to spending slightly more for an all fibre system which is suitable for today and the next 50 years and actually has intrinsic commercial value. I wish this were a technical and practical debate rather than a political one.
    daniel.strickland
    • heh

      "renegotiating with Telstra to ask for much more."
      Turnbull believes Telstra will hand over the copper network for free. Cuckoo!
      karl_w_w
  • Wha?

    Are you seriously saying the the Telstra as it stands today, privatized, hell bent on making profit for shareholders, refusing to invest in copper/HFC/Fibre - instead dropping in pair gain and RIM systems which severely limit broadband speed and only looking after high profit areas, while maintaining ownership of the copper and hence being allowed unrealistic wholesale prices to competition, and forcing us to pay for voice services I do not want or need, is BETTER than the Telecom we had in the early eighties, when Australia's communication was ranked 9th in the world?

    Tell me how a government owned and controlled backbone giving fair access to everyone no matter where you live and across the board wholesale pricing is worse than the incredibly stupid mess we have right now?

    Whatever you're smoking, dude you'd better stop.
    Ramrunner-5dd3e
  • Do the math

    Tony Abbott on radio today said there would be 10,000 to 20,000 nodes across the coalitions broadband Australia. Which would cover 90% of the population and 80% of that figure would use their fttn network.

    By my maths that would be 800 to 1600 users per node connection to the fibre on average. Instead of 3 users to the fibre on labors ftth. This just ain't gonna work for more than a few years. and when they have to sell off ten to 20,000 nodes on ebay because they are not needed anymore. Oh and the copper wire that just bought from Telstra. Wow this could be the worst 20 billion dollar technology announcement ever seen. Good one tony.
    hallob
    • Environmental Vandalism

      Turnbull's 10-20,000 nodes all need electricity to run. That's a hell of a lot of electricity and amounts to environmental vandalism when an efficient FTTP solution is available that uses far less power.
      ITenquirer
    • A lot more nodes than that

      For the speeds they are promising, you have to be around 500 Mts from the node, so one node every 1km of populated Australia.

      I've read they'll need 50-70k of them...
      Tinman_au
      • 60k

        Turnbull himself said 60,000 nodes
        karl_w_w
  • Backup Power

    Also the nodes will require backup power. This was apparently a huge problem with the governments design yet at least with the governments plan the exchanges already have backup power. This leaves the problem isolated in the home where a user can purchase a small UPS if required (and laptops/devices have batteries). But Turnbull's design will require backup devices in each node. If there are hundreds of people using each node, I'd imagine that's a big UPS. Whether this be batteries or fuel cells, they will need to be heavy duty and will need to be replaced regularly (5 years approx.) I wonder if this was included in there estimates?
    omega-b9c3d
    • C'mon, the proposed model is delivering broadband today

      Govt should be out of broadband but his discussion is becoming farcical.

      Many examples of FTTN and HFC used to deliver broadband.

      Analysis continues to ignore he failure that NBN Co is. A much huge story is ZDNet would stop the cheer leading.

      AUD40b for NBN Co doesn't even cover the govt equity required (and assuming private equity can be raised - laughable give their performance). AUB4b already down, even revised several times targets all missed except for their imaginary work commenced metric.

      Labor will deservedly get aniliated later this year. Finally wipe out their pathetic brand and joke representation. Get the pigs out of the trough and design a competitive market for all participants.
      Richard Flude
      • Nice to hear from you again Richard!

        But I would still need to hear where your figures come from. Please SHOW us how at this point in time, you can guarantee more than 38b will be spent. You're as bad as Mal at the moment, pull $90b out of your butt and convince it as truth, only to make your pathetic version of NBN look better at $29b.

        Just so you can prove FttN can be built for a third of the price as he's been spruiking since day one.

        He's a muppet, but obviously you like the muppets, that's cool.

        Not to mention wanting to keep the $800m-1b a year maintenance copper network, while he has investments in FttP with companies in other countries.

        He's burying himself, and for some weird reason I still don't understand you're happy to jump in there with him.

        I'm not saying Liberal will NOT win the election, I believe they will because Labor's other policies and leader are not in favour understandably, but on the basis of their NBN policy alone, they would NEVER be voted in. I think in fact it has hurt their reputation.
        Ramrunner-5dd3e
      • Well...

        "Labor will deservedly get aniliated later this year. Finally wipe out their pathetic brand and joke representation."

        Thank you for admitting to ZD's worst kept secret Fluddy.

        Did you ever fid that fictitious page number?
        RS-ef540
      • "Get the pigs out of the trough and design a competitive market for all participants."

        Speaking of pigs in troughs did you manage to find that page number in the NBNco corporate plan when you were reading it?
        Hubert Cumberdale
  • Lipstick without a pig!

    Regarding the caption: "The Coalition rolled out the red carpet for its new NBN policy — but is it just lipstick on a pig?"

    No. It is just lipstick (on Turnbull) and there is no pig, the LNP certainly can't bring home the bacon with a real NBN! They had 12 years under Howard and left us with dial-up!
    HotWaterService
    • 12 years under Howard

      Plus 5 under Rudd/Gillard, hmmmm let's see that would be 17 years ago.

      You were how old then? You had may as well ask why Hawk and Keating wasted the decade that went before.

      You see the time comes, and I reckon 5 years and two terms is long enough for a government and its followers to leave the " it was the last government" argument out of it.

      In 1996 there were no iPads, no smart phones, facebook was still a decade away, most kids still played outside and spoke to each other.

      Why would a government of that day be thinking of a bb band policy?
      Sultanabran
  • Not cool

    Not sure how you not agreeing with Conroy makes him the right hand man to what will very soon likely turn into a mass murderer is appropriate.

    Please keep the discussion focussed.
    Ramrunner-5dd3e
  • There are some reasons to be optimistic

    If you read the actual policy document, to me there are so many parts that allow the coalition to change track to FTTP.

    "While there is no clear economic case or mainstream consumer demand for FTTP in most areas today, this will not necessarily remain the case. Today’s applications will change and evolve, particularly with the rise of cloud services. The Coalition’s policy anticipates this possibility and ensures it is planned for. "

    In addition their
    - commitment to allow capability to upgrade to FTTP in all deployments
    - putting forward 50% of the costs to upgrade to FTTP from FTTN should another party wish to pay for the remaining 50%
    - installation of FTTP where the copper is inadequate (ie cannot delivery 25mbps)

    "There will also be established areas where high maintenance costs or the condition of the copper renders FTTN unattractive and the best alternative is FTTP."

    My prediction, Turnbull would have liked to keep Labor's policy but just couldn't without loss of face. The alternative, propose FTTN but change later on to FTTP when the maths doesn't add up, pointing out that their plan allowed for this all along.

    This may end up just like the myki project in Victoria, where after criticising everything about it, almost the entire policy was kept with some minor tweaks around the edges.
    Nimos-92373