Senate Committee finds FttN NBN 'inadequate', recommends FttP

The Senate Select Committee on the NBN has found the government's fibre-to-the-node (FttN) model is "inadequate", criticised the government's NBN Strategic Review for fudging its numbers to support the FttN model, and recommended that NBN Co be "unshackled" to continue the FttP rollout free from political interference.
Written by David Braue, Contributor

Former communications minister and member of the Senate Select Committee on the National Broadband Network (NBN) Senator Stephen Conroy delivered a scathing assessment of the Coalition government's alternative fibre to the node (FttN) policy as the committee tabled its 182-page interim report in Parliament.

Saying that the Coalition's $41 billion alternative policy would “build a broadband network that is inadequate for Australia's needs”, Conroy said the committee had concluded, on the basis of evidence given and 89 public submissions to the inquiry, that the government's NBN Strategic Review is “a totally inadequate basis for making any decisions about broadband.”

The committee – which began operating on 14 November with a remit to inquire into the government's reviews of the NBN and the governance of NBN Co – called out seven key deficiencies that it had identified with the Coalition policy and the Strategic Review it delivered in December. These include the findings that the Strategic Review:

  • Estimated a revised deployment schedule that is at odds with NBN Co's current run rate – allowing the Review to “strip out” $11.6 billion in revenues from the Labor model and adding $13 billion to the Strategic Review's calculation of peak funding;

  • Ignores $4 billion in architectural savings that had already been signed off by previous NBN Co management;

  • Increased estimates of the capital expenditure of the fibre build by $14.4 billion despite evidence from NBN Co and the Department of Finance;

  • Uses “overly pessimistic revenue assumptions” for the FttP NBN that “do not reflect existing strong demand for NBN services” and ignore “important elements of broadband quality”;

  • Assumes “without direct explanation” that Labor will fly a third satellite in 2021, increasing the estimated cost of the satellite deployment without including revenues from that service in its projections';

  • Includes costs and revenues for the Multi Technology Mix through its assumed completion, but excludes $15 billion worth of revenues that would be obtained from the fibre build after 2021;

  • Acknowledges that the government's multi-technology model will need to be upgraded within five years but ignores the costs of these upgrades in calculating the total cost of the model.

“These deficiencies in the Strategic Review all help [Malcolm Turnbull] justify his rhetoric,” Conroy said. “The Strategic Review relies upon nothing more than international benchmarks and estimates for the cost of the Multi-Technology Mix.”

“Where the committee has been able to test these assumptions they have been found to underestimate the costs of copper remediation, of maintenance and of essential IT systems.”

The Senate Select Committee's interim report found that the government's NBN Strategic Review had underestimated the real pace of the FttP rollout. Source: Interim Report.

Turnbull has repeatedly downplayed those costs, arguing during last year's election campaign that Telstra will give the government access to its network for no additional cost above the $11b Definitive Agreement it signed with the previous Labor government.

The committee had also concluded that the government's model will create a disparity in services between wealthy and less-wealthy suburbs, highlighting the so-called 'digital divide' that has long been a sticking point for discussions about Australia's broadband infrastructure.

“The Coalition and the Minister are carrying out their pledge to destroy the NBN,” Conroy said. “I cannot be clearer than that. If their plan is implemented, the NBN will be destroyed. It will not be national and it is certainly not the broadband that Australia needs.”

“People with more money will access the best broadband in the world, while people with less money will have to make do with inferior broadband. This inequality is a betrayal of all Australians who believe that access to high-quality broadband is essential in the 21st century.”

The Committee's report recommends that NBN Co management “be unshackled to continue rolling out fibre to the premises, free from political interference”, Conroy said.

Liberal members of the committee – including ACT senator Zed Seselja, SA senator Anne Ruston, and WA senator Dean Smith – lodged a 28-page dissenting opinion that, among other things, accused Conroy of "contempt" during the hearings, "hectoring" witnesses, ignoring requests by the goverment to call certain witnesses, and "crudely self-serving conduct deeply at odds with Westminster-derived governance....Senator Conroy's true legacy [is] $38 billion of costs for ANY version of the NBN".

The full linterim report can be downloaded here.

The committee's final report is due by 10 June.

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