Sans costs, Turnbull's 'policy' is no policy

Sans costs, Turnbull's 'policy' is no policy

Summary: Malcolm Turnbull may not have been announcing Liberal Party policy last week, but he might as well have been. Yet while his statements featured fewer technical fantasies than previous attempts, his unabashed optimism about Telstra and refusal to substantiate his claims with fact prove that the Coalition still lacks the gravitas to formulate workable NBN alternatives.

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I didn't end up with bruises from banging my forehead against the desk, as when I read the Coalition's gut-wrenchingly awful election communications policy last year. However, after reviewing Malcolm Turnbull's recent revelations about the party's current NBN "policy", I was struck by his determination to continue the fine Liberal tradition of promising the world but forgetting to check the price of the tickets.


For someone with such a strong business background, Turnbull remains surprisingly reluctant to talk costs.
(Credit: David Braue/ZDNet Australia)

That Turnbull's comments, made during a Q&A session at a Sydney conference, have been universally assessed as some form of official Liberal Party policy confirms that the industry is desperate for clarity about the potential ramifications of a 2013 Liberal election win.

There were, on balance, some relatively reasonable motherhood statements, such as Turnbull's support for a "pragmatic approach" that included fibre in greenfields roll-outs — a rare area where his amendments managed to gain support, if not legislative weight. There's the expected commitment to a cost-benefit analysis that will stall the NBN roll-out for six months (call it a year) from the date of a Liberal election win. There's the usual lack of firm commitment to rural areas beyond a wishy-washy subsidy scheme that will shift infrastructure risk back onto a jittery private sector that still has no interest in servicing unprofitable rural areas.

And, of course, there is the jaw-dropping optimism with which Turnbull has dismissively addressed the cancellation of the company's contracts with Telstra and Optus — whose hybrid fibre-coaxial (HFC) networks he will preserve in the name of competition but even, as an "ambivalent" Optus head Paul O'Sullivan subsequently made clear, in the face of a lack of a demand by those companies to actually keep those networks.

What Turnbull does not do is commit to opening up those HFC networks to competitors, which are currently unable to access wholesale services that would allow customers to get 100Mbps services from other operators. Without government intervention to force the wholesaling of those networks, he's not so much preserving competition as destroying it — and handing Telstra and Optus a non-competitive duopoly over the provision of 100Mbps services to the 25 per cent of homes that are currently cabled. Since both companies have been proved happy to take money instead of operating those networks, forcing them to keep the networks operational — and rewarding it with elimination of competition — is only likely to increase costs.

Without government intervention to force the wholesaling of those networks, he's not so much preserving competition as destroying it.

Everywhere else, Turnbull will deliver fibre-to-the-node infrastructure in those areas where people live too far away from the local exchange to be able to get decent service over copper. And that, as you and I know all too well, includes both rural areas and suburban areas from one end of our country to the other. For example, I live in a dense suburban area 5km from the local exchange but Turnbull will, apparently, bring fibre to my street corner so I'm within VDSL's ability to get me a 50Mbps service — or would, if he wasn't going to leave me to the ravages of his cosy HFC duopoly.

While Turnbull's technical vision is not as reprehensible as the Liberal Party's wireless-is-best approach from last year, his logistical insight seems to be blurred by the cataracts of party dogma. He casually refers to renegotiating the government's deals with Telstra and Optus — which would be essential before any fibre-to-the-node deployment could proceed — while ignoring the fact that Labor's just-signed deals took years of struggle to negotiate.

He also wants to convince us that the plan would be faster than Labor's — although by the time you add up delay after delay, that assertion is revealed as a joke. Analysts expect if Turnbull's plan is implemented, we could face a four-year delay until everything is sorted out and building can proceed. Maybe I'm missing some semantic detail, but I wouldn't call that faster than the plan currently in place.

Even worse: despite his supposed rationality, Turnbull is continuing the fatal flaw that allows the discounting of so much of the blather that comes out of the Coalition's policy-making machine: it is simply unable to assign real, backable costs to its policies. Throughout the entire process, he makes no assertions as to just how much cheaper this whole plan would be — and when called to do so by Conroy, he fell back on the time-honoured strategy of dodging the question and bagging the government.

The stench of rhetoric

Turnbull has from the get-go assumed that his solution is cheaper than the government's NBN — and it very well may be. But if he cannot cost his own policy and — as he predictably did just hours after Stephen Conroy called on him to provide firm numbers — simply hits back in a flurry of empty and evasive rhetoric, how are we supposed to take this policy any more seriously than the Coalition's previous ones?

The costs of the existing NBN plan are well understood and, despite hysterical fearmongering that has planted speculative figures into the public debate, have been made clear to the public since the policy was announced. We know approximately how long Labor's NBN will take to build, approximately how much it will cost, and exactly what it will deliver.

What Turnbull seems to have forgotten is that the country is not, for now, choosing between two alternatives: the NBN is being built right now, and it is the government's current policy. What Turnbull is proposing is a change of plans — and for that proposal to be accepted, it is imperative that he stop hiding behind political deflection and come up with some real numbers by which his alternative can be evaluated.

If he cannot provide those numbers, the Coalition is simply spouting empty rhetoric, as it has done with such aplomb on all manner of topics. It has become so adept at spouting baseless attacks on all manner of topics that commentators are now regularly calling time on Tony Abbott and the vitriolic culture of the party he leads: Business Spectator's Rob Burgess, for one, highlighted how the Liberals love to ignore financial reality and the ABC's Annabel Crabb summed it up beautifully in writing about Abbott's "one-man battle against demonstrable logic".

If Turnbull cannot cost his own policy and simply hits back in a flurry of empty and evasive rhetoric, how are we supposed to take this policy any more seriously than the Coalition's previous ones?

Ever more rational than his master, Turnbull has at least shown a willingness to modify his policy as reality over and over proved his earlier NBN ideologies to be hollow fantasies. However, just as Tony Abbott made it clear he would ignore the results of a pro-carbon tax plebiscite, Turnbull made no commitment to continue the NBN if a cost-benefit analysis found that Labor's plan was indeed the most cost-effective approach.

And surely — given that a cost-benefit analysis conducted in 2013 would have to factor in far broader investment-to-date than one conducted in 2010 — even Turnbull would have to concede that the plan could well turn out to be the most cost-effective way forward. With contracts in place and presumed momentum gained, the incremental cost of finishing the NBN will be far less than going back to square one, or even stepping back to square four as Turnbull is suggesting.

When it comes to infrastructure building, the basic problem with the Liberal philosophy is that it approaches budgeting with the fundamental mindset that any spending is fat ready to be trimmed, and that anything can be made more efficient by reducing its funding. It's like your Grandpa Barry who keeps the house at 16 degrees year-round and, if you're brazen enough to complain, tells you to shut up and go put on a jumper or three.

Mediocrity, Liberals argue, is good for us because spending money is anathema to progress. And this philosophy reverberates throughout everything the Liberals do — whether it be slashing funding from already-struggling schools, promising to knife an ambitious but world-leading electronic healthcare records project, or basing the party platform on delivering a mediocre improvement to broadband services that — the Liberals unabashedly proclaim — will keep Australia right there in the middle when it comes to broadband innovation.

"Good-enough" broadband, the Liberal creed goes, is good enough for Australia. We should not aim too high, or look too far into the future, because it is expensive. Turnbull's policy not only axes Labor's revolutionary vision for world-class broadband, but aims for middle-of-the-road outcomes on the back of an argument that is still both unfounded and speculative. Unless he can come to the OK Corral for an honest fight, armed with real numbers and firm plans, he's just blowing more smoke up the noses of those who need just a whiff to turn anti-NBN posturing into bloodsport.

What do you think? Was Turnbull's "policy" a game-changing breath of fresh air? Or a warning for a change-weary industry that more upheaval is inevitable if the Libs gain power? Should we accept his assumptions that the Coalition's approach is cheaper without demanding numbers? And — days later — are you still buying it?

Topics: Broadband, Government AU, NBN

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

22 comments
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  • How will Turnbull separate Telstra without paying $Billions compensation ?
    What percentage will get FibreTTNode ?
    Avleigh
  • As I mentioned the previous article the coalition are just playing catch-up so they can modify their patchwork solution all they want. Clearly they want some kind of in the middle compromise so they can criticise the current plan while saving face with what they tried to fool everyone with at the last election but it makes no difference fibre is the future so we can do it now while the ball is rolling or stop everything and do it in 50 years when it'll be more costly and everything is in an even bigger mess than it is now.

    Also the coalitions assumption that their FTTN patchwork plan will be cheaper is flawed. In the end we will be paying the same for an inferior product years later.
    Hubert Cumberdale
  • Turnbull's policy is a pure placeholder, and he knows it. Like everything else under a future Prime Minister Tony Abbott, what they actually do in Government will be anyone's guess. It certainly won't have anything to do with whatever they should say while they are in Opposition - on any topic.

    Yes, they are that cynical. Turnbull by choice; Abbott by very nature.
    Gwyntaglaw
  • I agree David. And I'm amazed that Liberal followers will spin any number of arguments to valliantly defend their 'uncosted' polocies??? Yet if the Labor party were to do it, well need I say more... There is no question that it's hard when you are in opposition, but the Coalition have been drawn into a campaign of opposition for the sake of it, and if you speak with any politician with years of experience, they will tell you that a party with no substance can only get so far before the voting public tune in and realise. It must be ackowledged that Turnbull is atleast attempting to bring some substance to this debate, as oposed to Abbott who has no intention whatsoever. My major concern though, is that Turnbull is hiding behind a cost benifit analysis and will not produce detail on the guidelines of this document (like will average data speeds be predicted for the next 30 years, from past increases?), or will they attempt to predict future IT technologies? Brave men don't need to take this approach and that says to me that their policy is rubbish. It is pure politics and Turnbull knows he can lose with his current policy. But my opinion is that no matter who wins the next election, the NBN will proceed as currently planned.
    omega-b9c3d
    • Yes, I think the most likely outcome is that there will be some tweaking of the policy; some manufactured "efficiencies" found somewhere, some change to the mix of fibre vs wireless and satellite. But it's highly likely that the Productivity Commission will come out broadly in favour of FTTP anyway; giving Turnbull political cover to "do it right".

      They might even flag some sort of early part-privatisation; something to appease the corporate paymasters.

      If they were ideologues and "true believers", then they might really trash the Telstra/Optus deals and stop the rollout cold. But they don't actually believe in anything except power, which means that it's very easy for them to alter their policies to fit the circumstances.

      And remember: the "NBN" that Turnbull is so blithe about dismissing is a kind of rhetorical ghost; a figment, a dream - because in most people's minds, that's all it is right now. In two years' time, it will be a much more substantial fact, a going concern, a very much living and breathing project.

      Which is why we can comfortably dismiss anything Turnbull says right now on the subject.
      Gwyntaglaw
      • no matter who wins the next election, the NBN will proceed as currently planned.

        No - Rupert is scared of it, Tony won't upset News Limited
        KenShabby
        • Rupert? News Limited? Oh thats right, they used to be powerful players...
          btone-c5d11
      • Whatever Malcolm plans to do or not do, can only be better, the less we let Labor touch it the better, I'd rather come out of this with the same as what we have now, than a 43Bn unfinishable white elephant ...
        asdfasfsafsadf
  • NBN - somethimng we didn't want nor can we afford. Retail price is beyond 70% of the customers it was to serve.
    Labour just didnt get it right, look at the master of fools - Conroy the builder - no idea , no time for Labour and its minions like David Braue.
    Hideous62
    • Wow, what a compelling argument, how do the anti-NBN crusaders manage to stay so fresh after opposing the NBN for so long?

      Seriously I'd try to explain why your post is substandard but I'm afraid I'd be wasting my time, your lack of knowledge regarding the NBN and Australian politics in general is embarrassing... perhaps you would have better luck posting something like this over at The Australian they love this sort of thing but just a hint don’t forget to mention "white elephants" it's the only way they'll publish it.
      Hubert Cumberdale
  • The liberals need to explain why everyone (country people in particular) are not entitled to an equal quality of service. Turnbull & Abbott also need to explain why we need to spend more money on a non standardized telecommunication services which will require many different types of network specialists implement.
    While these politicans argue for policial gain we can see that the populist penny pinching now will only lead to a substandard system for which we will pay more later to replace.
    fibretech
    • People, we need to get what is actually happening out so it can be discussed without the "stars" in our eyes. The NBN is 121 separate networks, it has very little backhaul built in, and every area outside of the urban fringe is going to get wireless. I would love to drop this wirless point but David you seem determined to continue implying that rural areas are going ot get fibre. That is simply not correct - unless they dig deep and pay for it themselves - at the very costly NBN Co price as noone else is allowed to operate one of these networks now.

      You talk aboutcutting costs for schools, hospitals - that is just what will happen under this NBN Co plan - it is so unnecesarily ruiniously expensive. Lets face it government should not be in the busienss of building access networks. At best they should be in the business of building backhaul. Build the backhaul, repeal the latest round of throw back legislation and let private sector build the networks (including Greenfields as they were doing until government put them out of busienss) - the private sector will stampede to do so. Take a look at those areas that are now getting serviced by the backspot fibre. Then you can use the wireless so beloved by the NBN Co to fill in the blank spots.

      Just remember - the internet is developing around multiple different networks - it drives the different local networks to improve and copy the best of breed networks.
      Rossyduck
      • If I may respond to some of your points, my dear Rossyduck:

        "...every area outside of the urban fringe is going to get wireless. I would love to drop this wirless point but David you seem determined to continue implying that rural areas are going ot get fibre. That is simply not correct - unless they dig deep and pay for it themselves - at the very costly NBN Co price as noone else is allowed to operate one of these networks now."

        I wonder about the definition of the term "urban fringe", which implies that fibre will only extend to the big cities. This is demonstrably incorrect. The general rule of thumb is that towns with at least 1000 residents will be eligible for fibre as part of the main rollout. I can't see how the term "urban fringe" could possibly be stretched to refer to towns like Glenn Innes and Blayney (just to take NSW examples), both of which will get fibre. The numbers are 93% fibre, 4% wireless and 3% satellite - of the total population. Yes, of course it means that properties well outside a country town may not get fibre. But when we talk about providing services, "rural areas" are the areas in the country where people live, not just the wide brown paddocks - and those who live in towns like the ones I mentioned WILL get fibre.

        "Build the backhaul, repeal the latest round of throw back legislation and let private sector build the networks (including Greenfields as they were doing until government put them out of busienss) - the private sector will stampede to do so."

        Well, that's quite a laugh, really. Thanks, I needed a smile!
        Gwyntaglaw
      • Either that or we (rather you) need to stop the politically orientated FUD...
        Rizz-cd230
  • www.youtube.com/watch?v=4WQvtq6Hn6g

    I'm with that guy.
    myne-819b4
  • http://www.youtube.com/watch?v=fi-q0ALVzPg&feature=share

    Basically Tony Abbot in a nutshell.
    anonymous
    • Man, that's gold....and it sums up Tony and the Libs perfectly...
      Tinman_au
  • "Why? Because the monthly port cost of the lowest speed fibre service and the ‘backhaul/CVC’ cost is higher than even Telstra Wholesale charge for an ADSL2 service … and is almost double the cost of an Optus ADSL2 service … and that the fibre cost is going to get much higher once the ‘trial phases’ end and the [points of interconnect] move to their planned 121 locations instead of, as they now are, in CBD major data centres.”

    From
    http://delimiter.com.au/2011/07/25/undercutting-internode-exetel-reveals-nbn-prices/

    and

    "However, the Internode chief said, the price rose dramatically as the number of customers fell – so that for a national ISP with only 10,000 customers spread out across Australia, the cost of connecting to the NBN would be as high as $106 per month per customer. “I just gave you insane,” he said. “At 10,000 customers, it’s insane to connect to this network, as a national provider. A 10,000 customer provider is insane to connect to this network."

    from
    http://delimiter.com.au/2011/03/29/insane-nbn-pricing-will-kill-small-isps-hackett/

    Means that the people you criticize are probably more "correct" then you will ever be, Mr David Braue
    deteego
  • Blah, blah, blah... Lib puppet...We have heard it all before!

    Simon is, of course, simply trying to get the best deal he can, just like Telstra did with their migration deal and Optus etc. This is private enterprise, doing what they do best, trying to look after #1, themselves... exactly as you promote...!

    And AGAIN... NBNCo have said they will review and alter CVC costs if they have the mix wrong... DO YOU UNDERSTAND?

    Stop the FUD and campaigning, the election is years away...!
    Rizz-cd230