Election rant 4: roll-out sloth

The Coalition says it can connect the country faster and better than Labor, but 69 per cent of its committed telecoms upgrade funds will only be spent AFTER Abbott is re-elected in 2014.
Written by David Braue, Contributor on

In making its argument to discontinue Labor's NBN and pursue its alternate, slimmed-down policy, the Coalition has gone to great lengths to suggest that its policy (PDF) will be not only cheaper, but deliver outcomes sooner than Labor's.

That suggestion quickly goes up in flames when a candle is held up to it: in reality, the Coalition's plan will take nearly as long as Labor's before it is complete, with a stated 2016 completion date and a pattern of funding that suggests this deadline is hugely optimistic. And, with most of the Coalition's expenditure to be made later rather than sooner, it will be years under a coalition government before most Australians see any change in their broadband services at all.


The Outback may start here, but broadband won't get anywhere near here — or much of anywhere else — for years under the Coalition's current plan. (Yalgoo Shire image by Gnangarra, CC BY-SA 3.0)

Consider the Fixed Broadband Optimisation program, a $750 million commitment that will be split with $200 million in the Coalition's promised alternative 2010/11 budget and $350 million the next year — and then nothing for two years, with a further $100 million allocated in each of 2014/15 and 2015/16. While this funding might address some key blackspots by helping customers on a RIM get ADSL in coming years, most others will struggle along with whatever they have for half a decade. And that's just so they can get DSL services that may struggle to even deliver the 12Mbps baseline speeds the Coalition has promised.

Wireless networks, which form the key equaliser in the Coalition's policy, suffer an equally anaemic funding strategy. Construction of those networks in rural areas will receive just $200 million in 2011/12, $175 million in each of the next two years, and jump to just $200 million in 2014/15 and $250 million in 2015/16.

Even if this were held to be adequate funding to set up wireless broadband across the continent, there is one significant obstacle: Tony Smith has already stated the government's policy is to "quarantine" the digital dividend to get spectrum in which to operate above-mentioned wireless services. The Coalition has recognised this delay by deferring its $1 billion in metro-area wireless spend (which could see a wireless tower on every street) until 2013 to 2016, yet it is still planning to spend $550 million on wireless services in rural areas by 2014, which is the earliest that the digital dividend spectrum may be available.

Smith believes telcos will start investing in wireless services when there is no backhaul available apart from Telstra's? This hasn't happened for years, and I doubt even the most cashed-up operator is going to start spending on actual kit based solely on the cheque's-in-the-mail promise of decent backhaul some time down the line.

The question, then, is: on what will this funding be spent in the meantime? Subsidising private carriers' 3G wireless would seem to be the only option, unless Smith believes telcos will follow the digital TV switch-offs around the country and progressively start building wireless towers in their wake.

Actually, that may be exactly what Smith is counting on; the Coalition has been adamant that it wants the private sector to pull its own weight. Smith made this very clear with a hugely optimistic comment during his now-infamous policy launch speech: "For companies who would engage in wireless, they will have the confidence to start offering services knowing that backhaul is coming".

Based on what we know so far, any telco that did make that jump would be waiting for a long time until the backhoes got there. Smith made derogatory comments at the policy launch about the Nextgen Networks-driven backhaul project being only one-sixth complete and having already eaten up $250 million in funding, but the Coalition's Competitive National Fibre Optic Backhaul (CNFOB) plan isn't any better.

CNFOB will get no funding at all until 2012/2013, when it will get a paltry $50 million, and 2013-2014, when it will get an additional $100 million. In other words, by mid-2014, the Coalition will have spent only around half as much on backhaul as Labor spent in the last 12 months. Much of this will no doubt go to finish paying Nextgen for its work to date, with the Coalition cruising along on the momentum of that project for now. The bulk of CNFOB funding, $2.6 billion of the $2.75 billion total expenditure, won't be spent until 2014 through 2017.

By mid-2014, the Coalition will have spent only around half as much on backhaul as Labor spent in the last 12 months. The bulk of funding, $2.6 billion of the $2.75 billion total expenditure, won't be spent until 2014 through 2017.

That's a pretty lightweight spending plan for a party that has publicly stated the biggest obstacle facing Australian telecommunications today is access to competitive backhaul. To resolve that obstacle, the Coalition would spend just $150 million in its first term of government — only slightly more than it has committed to spend on its cyber-safety package over four years, and about the same as it will invest in putting technology into schools.

Just so we have this clear: private-sector telcos are supposed to start investing in wireless services in rural areas now, but the Coalition won't actually bring them backhaul to connect it to until 2014. At the same time, the Coalition will spend $550 million of its own on wireless that wouldn't seem to have enough spectrum to support it and won't have the backhaul it needs either.

I'm reminded of the hilarious scene in Mr Bean's Holiday where Mr Bean is thumbing a ride by the side of a French road, spies an oncoming biker, and waits for many desperately impatient minutes until the biker arrives, putting along at walking speed. By the time the Coalition's backhaul gets to these areas, proactive telcos' cash-burning rural wireless operations — assuming there is even enough spectrum to enable them — will have collapsed under the weight of customer complaints about cost and performance.

Reliance on wireless to service small and remote areas, and its sloth in actually rolling out that wireless and the backhaul to support it, contradicts the Coalition's stated claims that the plan will get broadband where it's needed faster than Labor's plan.

Under current plans, 69 per cent of the Coalition's telecoms funding — $4.370bn out of $6.345bn total — will only actually end up being spent if a coalition government is elected now — and re-elected in 2014.

In reality, none of these areas will get much of any benefit for years. The Coalition's timetable is not so much a solution for Australia's telecoms woes, as the most insignificant of stopgap measures designed only to while away the time until the next election. Under current plans, 69 per cent of the Coalition's telecoms funding — $4.370 billion out of $6.345 billion total — will only actually end up being spent if a coalition government is elected now — and re-elected in 2014.

Rather than beating Labor to the punch, all this means is that the Coalition's plan would actually give Labor a four-year head start in the race to wire the bush. Based on Labor's stated eight-year timetable, the fibre NBN will be nearly halfway complete by the time any of the Coalition's wireless actually comes online — and that is only by commandeering 4G spectrum that would otherwise be sold off to private-sector carriers to build their own 4G networks.

It's also important to remember that the Coalition has stated that it will not do anything at all, whatsoever, no-siree, until NBN Co has completed an exhaustive business plan for the roll-out. Knowing government bodies, delivery of this business plan — and decisions by a coalition government on how to proceed — is likely to take months, and months more until contracts are awarded.

Meanwhile, Labor has this week started building the NBN on the mainland, and will no doubt ramp up construction dramatically if it's re-elected. This development can lead to only one conclusion: the supposed rapidity of the Coalition's plan is nothing but a smokescreen, designed to appeal to fiscal conservatives rather than the technologically aware. If rural residents want any hope of getting usable broadband before 2015, the Coalition's option is no option at all.

This is part of a series of seven election rants, one for each deadly sin, aired each business day until the big day. Renai LeMay is writing a reply to each of the rants, playing devil's advocate.

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