Coalition broadband safer than NBN: analysts

In wake of the Opposition's broadband policy announcement today, some analysts said that Liberal's plan could potentially be safer, more flexible and "give more bang for your buck" than the National Broadband Network (NBN).
Written by Colin Ho, Contributor on

In wake of the Opposition's broadband policy announcement today, some analysts said that Liberal's plan could potentially be safer, more flexible and "give more bang for your buck" than the National Broadband Network (NBN).

While industry analysts Paul Budde and IDC's David Cannon argued that the Opposition's policy built on "old technology" lacked vision, IBRS's Guy Cranswick and Ovum's David Kennedy said that a lack of market demand, uncertainty and complexity in the telecommunications market meant that the Liberal's policy could come out trumps.

Kennedy believed that the parties' differing approaches are indicative of two different philosophies in addressing broadband. He called the government's policy a "big, snowy mountains style" infrastructure scheme. He believed that the plan could easily provide all the bandwidth Australia will ever conceivably need.

He said that it "was hard to tell" which one would be best for the long term and that both policies had advantages and disadvantages. Both hang on what "is going to happen in the future" particularly in terms of demand for high-speed broadband.

The Opposition's policy

"The Coalition views the NBN as too big a risk," said Kennedy, explaining that it had put forward a more "incremental strategy" than the government and was "prepared to let the market work where the market is working well". The main strength of the Opposition's policy was that it was "much cheaper" with its projections of "$6 billion" as opposed to "$43 billion", according to Kennedy.

However, Cannon believed that the Opposition's plan of "leaving it up to the market to decide what the last mile will be means leaving it up to Telstra which simply is not going to happen".

Budde also slammed the Opposition's policy claiming that competition on infrastructure didn't make sense. Instead what mattered "for competition are services delivered over that infrastructure". He argued that the Opposition could not achieve this by "referring back to the failed policies of the past".

Cranswick claimed that giving the market more power would not necessarily be detrimental, as long as the government had a role to play in regulating and guiding the market for broadband where necessary.

According to Kennedy, the Opposition will need to focus on intervening in "backhaul monopolies" and "rural and outer metropolitan markets" as outlined in its policy.

The Opposition's policy did not surprise Cranswick, who believed that it was consistent with the Liberal's beliefs in reducing waste and maximising efficiency. The policy, with its lower cost, may be a sensible option and ties into larger debates about best approaches to broadband, he said. But he said that it is a complicated argument without a clear answer.

Cranswick believed that the modularity and flexibility of the Opposition's policy may also mean that it will be the safer option in the short term. However, he expressed concerns that a new (and costly) bureaucracy may emerge to replace NBN Co.

The case for the NBN

In terms of technology, the Opposition's policy is largely trumped in terms of performance and reliability by the NBN, according to Budde and Cannon. Fibre networks are also easily upgradeable, Kennedy said.

More importantly, for Cannon and Budde, the NBN is already being rolled out.

For Budde it was clear cut that the government's policy is better. He said it will provide a solid framework for the future.

"The fibre backhaul plan is certainly a good policy," he said, adding that while current, "old" technologies can be used "as a bridge to the future ... everybody else in the world acknowledges that the future is [fibre technologies]".

Budde believed that the Opposition's plan will stifle investment, saying that old technologies cannot be used as a plan on their own.

"The current plan will not deliver the security investors need to put their money on the table," he said.

This idea was supported by Cannon, who slammed the Opposition's policy.

"The Coalition are really clutching at straws with this policy. It only seeks to resolve some of the nation's market access woes with a piecemeal technology approach and the key backhaul portion of it to be delivered in the long term," he said.

Cannon claimed that the Opposition wrongly believed the existing structure of the "telecommunications market is sound and that the current exchange based DSLAM technology via copper is sufficient going forward".

"The government's NBN vision is quickly becoming a reality at a much lower cost that initially quoted. This is a 50-year vision for Australia's communications future where comparatively the Coalition simply has no vision," he said, adding that it was necessary infrastructure for e-education and e-health.

Yet Cranswick believed that economic volatility, uncertainty and a lack of demand for 100Mbps internet may mean that the Labor Government's plan will deliver very little (or no) return on investment. Cranswick advocated that while a few sites, like health, media and education relied on super-fast broadband, this may not be the case for all Australian businesses.

As far as Cranswick is concerned, considering the current demand for broadband, the government's network is a lot of investment for "little, if no, return". In his view, questions relating to efficiency and waste need to be addressed when considering the NBN.

Kennedy also stated that currently there isn't a lot of demand for 100Mbps internet, citing low take-up of Telstra's cable service in Melbourne. However, Kennedy believed that this could change in the future, adding that it was early days yet.

The Liberal and Labor approaches may be quite different, but Kennedy said that both had a mutual desire to tighten up the competition regime.

While the Opposition doesn't support the functional separation of Telstra, it supports all the other measures being put forward in the Senate, which Kennedy believed is "bad news" for the telco.

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