Turnbull doesn't need to pass legislation to change the NBN

Turnbull doesn't need to pass legislation to change the NBN

Summary: One of the commonly held misconceptions around the potential change of government is that the Coalition would need to get legislation through the parliament to make any major changes to the NBN rollout.

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TOPICS: NBN
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As the Australian election campaign draws to a close and it looks increasingly likely that the Coalition will win the election on Saturday, fans of the National Broadband Network (NBN) in its current fibre-to-the-premises design are going through their five stages of grief over the likely changes coming to the project.

At first, it was denial. The Coalition won't win the election, they said; Turnbull's "fraudband" plan will be the end of the party's chances. Clearly, as much as Labor has tried to make this election all about broadband, the NBN will not be the deciding factor for most on Saturday.

Then it was anger. You only really need to read the comments section of any article on the NBN that mentions Turnbull to witness that factor.

Now we're into bargaining. People on Facebook or Twitter over the past couple of weeks have frequently suggested that they have hope that the NBN will remain fibre to the premises because under a Coalition government, the would-be Communications Minister Malcolm Turnbull would need to get legislation passed through parliament, and Labor and the Greens might seek to block it in the Senate.

But the notion that fibre to the premises is some sort of legislated guarantee is more fantasy than reality. While there were a number of pieces of legislation that the government enacted to create the competition and regulatory environment for the NBN and structurally separate Telstra, there is nothing preventing a change in the network design.

The two biggest pieces of legislation that the Labor government worked to get through parliament were amendments around competition law, which required that any network provider building a new broadband network in Australia must be a wholesale provider only, with access terms in line with NBN Co at its wholesale price.

The so-called cherry-picking law was put in place so that fibre providers wouldn't build new networks in places where it is profitable and then be able to undercut NBN Co on the wholesale price, which NBN Co couldn't compete with because there is cross-subsidisation built into the network such that while it is more costly to build the network out to regional areas, people in those areas will still pay the same price as people in metropolitan areas.

The Australian Competition and Consumer Commission (ACCC) last year made a final access determination that the maximum that high-speed broadband wholesale providers like Openetworks could charge for services would be AU$27 per month.

I had originally thought that this would be the only piece of legislation that Turnbull would be required to repeal, if, as he promised, infrastructure-based competition would be allowed to return under a Coalition government. But it seems as though he has all but adopted Labor's approach in this area.

He said yesterday that he is in favour of removing the "barriers to the construction of non-NBN wholesale access networks", but that the competitive networks would need to be available to ISPs on a non-discriminatory term, with wholesale prices equivalent to NBN Co's wholesale cap price.

The other method that Turnbull could use to overrule this legislation is that, like former Communications Minister Stephen Conroy did with TransACT and Telstra, he could, as minister, make exempt certain providers from the legislation.

Allowing new fibre providers to build rival networks presents an interesting conundrum for Turnbull. On the one hand, he has said constantly that he wants to return to allowing infrastructure-based competition, and wants providers like Openetworks to go out and build new networks to compete with the NBN, but they will ultimately target those high-density locations where it is most profitable for them to do so, leaving NBN Co to pick up the slack in the areas that are the least profitable.

If we get to the stage where the NBN has very few customers in the cities and most of its customers in regional locations, it is unclear how the government under the Coalition would begin making its return on investment in the NBN. On the other hand, if an area is deemed to already be adequately serviced, then perhaps NBN Co may skip that area and save on the cost of the upgrade.

Despite the lack of legislation blocking a change in the NBN design, there are two major roadblocks to changing the NBN rollout. Firstly, the existing construction contracts in place with partners like Silcar. But NBN Co rationally only made these contracts run two years at most, with the last current agreement set to expire later in 2014. Turnbull has already indicated that it will take about a year to implement his changes to the NBN. Depending on what method of construction NBN Co under the Coalition would decide to take, these exiting construction partners may be recruited to continue the work with a fibre-to-the-node design, or the company could recruit partners like Telstra to take over large parts of construction.

That brings us to the second big roadblock: The Telstra deal, and the legislation around the structural separation of Telstra. Although the Coalition is currently in favour of keeping the company structurally separated, it's still unclear exactly what Telstra will be gunning for in negotiations with a Coalition government.

Turnbull has repeatedly said that he doesn't expect to pay any more than the current AU$11 billion agreement, which would need to be altered in order to obtain the copper line from the node to each premises under his proposed plan. Leaving aside the question of whether Telstra will ask for more money, if Telstra does agree to do it without asking for more money, what would be the non-monetary benefits for it?

Would the company be brought in to build part of the network, or would it be allowed to upgrade its network in the profitable areas to compete against the NBN?

Turnbull said on Tuesday that "transparency will be the new watchword of the NBN Co" if the Coalition wins government, so these are the questions that will need to be answered very quickly after the strategic review of NBN Co, the proposed independent audit, and the cost-benefit analysis have been completed after the election.

It's inevitable that NBN fans will no doubt reach depression if the Coalition wins on Saturday, but to truly reach the final stage of acceptance, Turnbull will need to quickly prove that his talk of being able to offer fast broadband to Australia in a quicker and more affordable way has been more than just fast talk.

Topic: NBN

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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Talkback

18 comments
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  • Eh? Wasn't this always assumed that the coalition can change the NBN into whatever they want. I think this is one of the main reasons why there has been so much debate, exactly because everyone knows if they get in they can make a mess of it and turn it into a gimped patchwork plan.

    Those "bargaining" are kidding themselves, the coalition clowns have never taken broadband seriously, they are notorious for this, so there is no reason to expect them to grow up and come to a logical conclusion about how the NBN should be completed as planned. Sortius well may be close to the mark with his predictions: http://www.sortius-is-a-geek.com/nbn-post-election/
    Hubert Cumberdale
  • But who'd trust Labor to run this project

    Would you trust Rudd (who implemented the pink batts and School Hall projects which turned out to be fiscal disasters) to run this project properly?! Its already well over budget and the timeframe has been pushed out to well past 2020. Even if it was implemented S.Conroy (and his Labor mates) would demand filtering and censorship devices be placed on it to ensure any increase in speed would be reduce significantly, just so they can sleep more comfortably knowing the Australian people can't get to any web-site Conroy deems as 'perverted'.

    The Coalition are continuing the project but are going to reduce the huge financial waste, and improve the roll-out time-frames. It may not be the dreamed Ferrari-speed that Rudd has painted for the those who must-have-that-bluray-movie-downloaded-in-ten-seconds-flat or else there'll be consequences. Right now 25Mb is pretty good; not the best of the best but getting there. Things can and will improve will time and new technology. A 1Gb link per house-hold to the Internet isn't going to be much use if the server at the other end is only pumping data out at 25mb per connection.

    At least this way the NBN will not break the economy; people just need to be patient. Doctors, school teachers, firemen, etc still need to be paid; the NBN is 'not' the only issue out there and people need to take this into consideration.
    Spartan-Runner
    • You're a clown!

      You think Liberals plan is in the national interest? It will just create further disparity between those in the city with access to fast services and those in the country, who actually stand to benefit more from some E-health and E-education opportunities.

      The nation stands to benefit from a (93%) uniform population coverage, because it means applications can be developed knowing that consumers will nearly universally have the same access to it. Using a patchwork of different delivery techniques will mean that there will be lower development of online services and hence reduced economic gains.

      Do you think the copper will just always be useful? Or do you think that it's worth installing a network that can meet literally all forseeable usage purposes. It's rotting in the ground, and leaving it there but with a fibre node on the other end is a bandaid solution. It's not on the upgrade path. That's the real economic burden. So vote Labor or Luddites this Saturday.
      NBNFTW
      • "The nation stands to benefit from a (93%) uniform population coverage, because it means applications can be developed knowing that consumers will nearly universally have the same access to it."

        Exactly. Of course wasting $30+ billion of taxpayer money on a substandard solution like FttN has it's own benefits. One being placating the uneducated for a while. Can't think of anymore really. They like the bandaid solutions best because it gives them warm fuzzy feelings inside. The future? Too confusing and scary. Let Future Abbott give you another bandaid solution in 2016...
        Hubert Cumberdale
    • Crystal ball?

      "The Coalition are continuing the project but are going to reduce the huge financial waste, and improve the roll-out time-frames. "

      unless you have a crystal ball, that's just pure speculation. Kudos to Malcolm on promising transparency, though it may be something he will regret saying.
      Tinman_au
  • What are you? A parrot?

    I don't think there's a single statement in Spartan-Runner's little diatribe based on anything but innuendo, propaganda, and outright lies.

    School halls and pink batt, NOT a disaster. Complaints and wastage remarkably low despite the rapid rollout.

    Filtering and censorship are off the ticket, and have been for a while. 1. It can't be done. 2. People don't want it.

    Coalition are CLAIMING to continue with 'their NBN', or 'NBN-lite'. Otherwise known as 'Fraudband'. Which costs nearly as much [and probably more] short term, cost double long term. Can't possibly be completed in a shorter time frame. So, not cheaper, not faster, and definitely MUCH crappier. Not to mention that if Libs win, it'll get dumped so fast [along with any other policy they agreed to keep] that people won't know what hit them.

    The NBN right now isn't going to break the economy. It's $47B over ten years, much of which isn't coming from government funds. We spend $120B each YEAR on health. and similar large amounts on education, defense, etc.

    $47B is peanuts in an economy the size of Australia's. Literally peanuts.

    The big question is... Why can't people understand we are getting a bargain?

    Unless they have a purely political axe to grind of course.
    Kam-80d87
    • Sorry, I couldn't hear you ...

      ... with your head so far up Kevin's back-side. So you're happy for Australians to spend billions of dollar needlessly just so 'you' can have faster broadband?! That'll be cold comfort to the pensioners who are already struggling to pay their bills due to the huge carbon tax that was lumped on everyone. And it ain't $47 billion over ten years; its double that.

      The thing is Kam, this country isn't just here to service 'your' needs, its here for all of us.

      And whether you like it or not, the NBN is going to change come Saturday.
      Spartan-Runner
      • Meanwhile, in reality....

        "this country isn't just here to service 'your' needs"
        Well it's a good thing the NBN isn't being built exclusively for Kam.

        High speed internet is an essential service. We need to build infrastructure for the future. You don't wait until we're 50 years behind the world to start playing catch up. Do you really want our country stuck in some bygone era? Keep your horse and cart, buddy, nobody wants it.

        "struggling to pay their bills due to the huge carbon tax that was lumped on everyone"
        Oh, now I see, you're stuck on the parrot setting. I'm so sorry.
        Herman Wheatley
      • How big is your TV?

        Struggling to pay the bills whilst the 60" TV is left on with no one watching because everyone is on their phone/tablet/laptop in a different room.

        Oh, and let's not forget the air con, pool pumps, and two late model cars in the driveway financed by the bank that are driven twice a day with 1 passenger in the car.

        I'm surprised you can hear your own voice with your head up Tony's backside.
        sunsoar77
      • Irony

        Spartan, the Liberal party is spending billions to also give us faster internet (though they are only spending $900m less, for a quarter the speed - Value for money? Not in my opinion).
        Tinman_au
    • "Unless they have a purely political axe to grind of course."

      Nailed it.
      Hubert Cumberdale
  • Senate was their second last hope

    Good article Josh. Thanks.

    If elected MT's plan's first test end Jan; Audit, CBA and NBNCo redirection. Nodes for MDU should be defined by then (told NBNCo already prepared a plan for Conroy to reject). We'll need to see Telstra discussions concluding by end of Mar-Apr, HFC and FTTN starting around Jul for best chance to deliver on their very aggressive timetable. We will be watching.

    You missed the fanboy positing of their last hope; vadalisation of copper cables, acid into pits, thief of batteries and other damage to node cabinets, etc. At delimiter a call for a "tame hitman", presumably because they could negioatate with an untamed one;-).

    They're a nice bunch of citizens; a sense of entitlement unbelievable only a generation ago. Competent govt will be tough for them.

    Regardless of election result the real work continues; moving Australians to a smaller govt position, returning individual's lost freedoms (Labor's attacks on free speech unimaginable, the few voices opposed frightening; good work IPA), pushing back against the anti-free market voices dominant in our schools & universities, public sector and public broadcaster.

    NBNCo and its massive waste, legislated removal of competition, vile behaviour of its Minister, its failure to deliver and subsequent abuse of KPIs (like premises commencemed and including premises unable to connect as passed) will make a classic case study.
    Richard Flude
    • "moving Australians to a smaller govt position"

      Just read through Joe Hockeys economic plans for our future and the savings total $6B over four years or a fraction of a percent.

      The LNP is not a party for small government, they believe in the redistribution game just like stinking Labor.

      I'm frankly disgusted with them after 3 years of hoo-hah about economic crises and mismanagement they come up with 0.375% savings and no plan about achieving structural balance in the long term. They trot out some spurious example about a study into chairs costing $180k and something to do with fertility in Egpyt costing $60k. They won't find billions going down that route. In any government you will find ridiculous expenditures like this, the Howard government was no different to any other. Instead on the big ticket items we have Tony promising roads, roads and roads and don't touch our middle class perks such as FBT on our BMWs and Mercs or PPL. Didn't anybody tell them the productivity payoff of roads is diminishing? Worked in the 60's, now there are more efficient ways to invest in infrastructure. Funny enough the NBN would be one of those if done properly and given the LNP form to date I have no faith that Malcolm will do any better, any faster or any cheaper. Just another useless politician with a big mouth.

      As any skeptic knows and I should have known better, the difference in economic policy as evidenced by the last 3 decades between LNP and Labour is next to nothing.

      I'll have to go to the Liberal Democratic Party to get my economic conservatism fix. They're itching to legalise dope too so at least I can get stoned when I have no minimum wage. The only problem is they will get maybe 500 votes across the country.
      RHUL_SP
      • I share your pain

        Again much work to do. Abbott way to big govt, but a level if competent govts would be the right first step.
        Richard Flude
        • Competence

          Is merely a point of view.

          I did have this great and wise explanation to let people know exactly where and why you too arrogant clowns sit. But I of wasting valuable time and precious words on you decided to sum it up simply.

          You sit further up the market food chain. Governments that help the majority don't help you. THat is bad, you are too important and deserve more than the working class. So everything must be there to help you and everything that costs money and doesn't must be opposed. End of story. Gonna have to save this one and reblog everywhere you show up to ensure poeple know why you are a waste of their time.
          Darren.Bennett
          • No competence is measurable

            A govt that borrows $300b at the peak of the economic cycle is incompetent, as is promising obvious surpluses but failing in everyone of their 6 years.

            A govt program that so ill considered it destroys hundreds on homes, electrifies many more, leads to the death of 4 young Australians and costs billions more to fix is incompetent.

            Losing control of our borders, despite Federal police warning of the inevitable outcome, by changing successful legislation leading to hundreds of thousands of illegal entries and a few thousand bodies (including children) floating in the ocean is incompetent.

            Building our priced school halls and tuck shops, which will have no education benefit, many well after any threat the GFC was going to impact Australians had passed in incompetence.

            Dumping two leaders in two terms; incompetence. As is passing thousands of pages of unnessecary legislation, supporting corrupt ex-union officials.

            Attacks on free speech and proposed Internet filter and media legislation beyond incompetence; an abuse of important freedoms.

            The working class haven't been helped; lower participation rate and higher unemployment (less job security) the signals. True more have become dependent on unaffordable govt programs, but as in the US and Europe eventually you'll be required to pay back your borrowings. Living beyond one's means is no more possible for govt than individuals; a fantasy created by the left.

            An NBN paying management bonuses despite missing every target by massive margins, delivering less than 15% of fibre promised, is incompetence.

            Sadly we missed your wisdom on the subject; perhaps another time;-)
            Richard Flude
    • Thanks for that!

      "moving Australians to a smaller govt position" I got a good laugh out of that one, Tony is the opposite of what your thinking there, he's even creating an entirely new wing of government and the armed services to "Stop the boats".
      Tinman_au
  • And Telstra shareholders?

    Telstra is required by company law to maximise benefit to shareholders.

    99.25% of Telstra shareholders adopted the NBNCo contract, which was predicated on modest value up front for the copper, in exchange for permanently higher retail revenues from services Telstra can sell on high badnwidth fibre. If the high revenues from the top 25% of fibre users cease to be available to Telstra, then it must renegotiate a much higher handover price for the copper.

    By far the biggest hurdle Turnbull has is that he has painted himself into a corner. Either he ploughs on building FTTN and pays whatever Telstra can get for shareholders up front ($30 billion?), or he admits that Rudd's foray into FTTN in 2008 proved that Telstra's ownership of the copper makes FTTN unviable in Australia, and the cheapaest solution happens also to be the best one, building FTTP to all urban premises.

    Whether this takes Turnbull one year or three will be interesting to watch.
    umbria