NBN deadlines missed, can Turnbull make industry play nice?
Having already missed the first significant deadline of his ministry and by all accounts set to blow way past a more significant one, Malcolm Turnbull's NBN turnaround effort is already looking iffy. He's prevailing upon the telecoms industry for "patience" and "collaboration", but will they listen?
Malcolm Turnbull's communications ministry quietly missed its first major, self-imposed deadline on Sunday, which marked 60 days of the Abbott government and therefore the latest date on which the current NBN review should have been delivered.
That deadline was never going to be met – nor was Turnbull's earlier commitment to November 11. Neither, for that matter, will Tony Abbott be able to honour the promise he made, on the launch of the Coalition's official NBN election policy, that he would deliver a revised NBN Corporate Plan by his 100th day in office (around Christmastime); now, Turnbull says that is due in mid-2014.
Those aren't the only deadlines being missed: as Turnbull made clear in his CommsDay Rebooting the NBN speech, neither will his promise – part of official Coalition policy and repeated over and over again during an election campaign built on discrediting the previous government's NBN project – to give every Australian premise “a download data rate of between 25 and 100 megabits per second by late 2016.”
Sorry, folks. It's just not going to happen. So much for "sooner".
Obviously, we now learn, the Coalition was just kidding with all those straight-faced election promises. Its NBN review, apparently due in early December, has blown out its timeframe by nearly 40 percent and the revision of its NBN Corporate Plan is already six months behind schedule.
This, from a government that made a hobby of bludgeoning Labor whenever it managed to delay the NBN by weeks or months.
Stepping aside from pedantry, however, one thing is clear: now that Turnbull is in the captain's chair and becoming aware of the true challenge of actually building the NBN – rather than just hobbling it with one acid-filled speech after another – things are very, very different from what was promised in the election.
Now the growing consensus is that the FttN rollout won't begin until 2015 and will probably run until 2021 – the date when Labor had initially planned to have its fibre-to-the-premise (FttP) network in service. For those keeping score, that's a six-year rollout – three times longer than Turnbull promised before the election.
I hate to say I told you so but... oh, wait, who am I kidding? I love to say it. Scratch that.
Consider, though: given that so much of that plan still remains up in the air, even 2021 could be an optimistic half-guess. Any progress depends, for example, on the Coalition government's renegotiations with Telstra – for which Turnbull amusingly called for quick conclusion “in a spirit of collaboration and partnership”.
Because, you know, Telstra is just dying to gift-wrap its copper network for Turnbull. Perhaps David Thodey will wrap up the network with a nice figgy pudding and deliver it to Turnbull's doorstep for Christmas?
I'm sorry, but being sued during major contract negotiations doesn't exactly suggest that Telstra is feeling that spirit too. Indeed, there is still a very large question mark around whether an economically deterministic Coalition can offer enough money to get a disaffected industry to even complete its obligations around the current rollout. The way things are looking, anybody wanting to put a bit of extra cash in their pockets for Christmas might consider starting an NBN-contractor dead pool.
As we hunker down to wait for yet another broadband plan to come to fruition, it's worth remembering that many of the obstacles Labor encountered came not only from its own over-ambitious agenda, but from the uncertainty that Turnbull himself sowed and reaped over three years in virulent opposition.
Turnbull has begged “patience” from the industry as he seeks to sort out the remnants of Labor's rollout, and he continues to blame the disarray on Labor's own mistakes. This is hardly surprising.
And yet, as we hunker down to wait for yet another broadband plan to come to fruition, it's worth remembering that many of the obstacles Labor encountered came not only from its own over-ambitious agenda, but from the uncertainty that Turnbull himself sowed and reaped over three years in virulent opposition.
Had he supported Labor's FttP ambition but pushed instead for tighter oversight of the processes by which it was being rolled out – instead of simply arguing for a totally different policy – would the industry have fallen in line faster, knowing that FttP was inevitable?
It's not a question we can answer for sure, but it's certainly one to consider as Turnbull swaddles himself in the blindly optimistic capitalism that marked the Howard government's poorly-executed privatisation of Telstra.
Even now, Turnbull speaks in misty-eyed terms about a private sector given government subsidies “to support deployment in less economic, typically rural and remote, areas for the project and business execution risk to be carried by those best able to manage it.”
This is a worry, because – as we have seen – for better or worse, the private sector in Australia is simply not interested in managing that risk, or taking it on at all. Construction firms were, we must remember, contracted to deliver specific outcomes around the NBN based on their own estimations of the cost of the work – and, by all accounts, struggled to deliver outcomes that meet their own expectations.
Whether or not those expectations were driven by unrealistic government demands, as Turnbull will allege, or by fierce competition for what was perceived as A-grade project work, as Stephen Conroy will likely contend, the fact remains that Turnbull now faces a serious problem in mustering the manpower to deliver on his own vision.
And yet I seriously doubt TPG, or any other company building its own infrastructure, is going to freely allow access to that infrastructure. Turnbull's NBN Co could deliver such an outcome were it to buy the infrastructure when it's built – but that's not really the plan, now, is it?
Turnbull still has not outlined how he will deliver the open-access wholesale network that everybody agrees is necessary – while getting the private sector to build enough infrastructure that the government can shed the risk that he believes it should never have taken on in the first place.
Despite assimilating TransACT's fibre network and all his rhetoric about capitalising on existing HFC networks, Turnbull still has not outlined how he will deliver the open-access wholesale network that everybody agrees is necessary – while getting the private sector to build enough infrastructure that the government can shed the risk that he believes it should never have taken on in the first place.
But who will carry that risk? Modern business cases simply don't allow you to fund infrastructure that will facilitate the creation of new competitors that will eat your lunch. Foxtel hasn't allowed competitors onto its HFC network, Optus didn't do it either. Optus has reined in its mobile virtual network operator (MVNO) business in an attempt to stop price erosion in the crucial mobile market.
Everywhere you turn, Australia's private sector is showing exactly why Turnbull's business idealism is completely misplaced – and why residents in rural areas of Australia, who everyone agrees need broadband sooner than anybody else, have been left holding the bag once again.
Turnbull has appealed to the telecommunications sector for “commitment and flexibility, patience and hard work” as the industry's new captain works to turn the ocean liner that is Labor's NBN plan towards the Port of Broadband Mediocrity. But as Turnbull's nascent ministry misses deadline after deadline, and staggers from one broken promise to another, it's worth wondering not only when but if this boat will ever reach shore.
What do you think? Is Turnbull just doing the best he can given the situation? Or is he reaping the effects of the dissent he sowed in Opposition? Will the private sector be as nice to Turnbull as he wants to be to it? And: is this thing ever going to be built?