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Labor criticises NBN rollout as ramping up too quickly without considering consumers

Michelle Rowland has warned that difficult decisions will need to be made after the economics of NBN were compromised.
Written by Chris Duckett, Contributor

After years of disinterest, the government is finally having to deal with the problems faced by the National Broadband Network (NBN) thanks to its switch to a multi-technology mix, Shadow Communications Minister Michelle Rowland has said.

Speaking to the Australian Communications Consumer Action Network (ACCAN) National Conference in Sydney on Wednesday, Rowland said the government failed to protect consumers from NBN's planned ramp-up in 2017 and 2018.

Under Labor's original fibre-to-the-premises (FttP) plan, Rowland said the NBN would have reached 27,000 premises each week and maintained that level until its 2021 completion, while the current NBN plan sees the number of premises connected each week top 70,000.

"That's almost a threefold increase in capacity," the shadow minister said. "Surely if the government received a corporate plan which forecast such an increase in the operating profile, and you were genuinely looking out for the consumer, it would be prudent to ask a few questions.

"What impact would this have on the consumer? What steps can I take today to mitigate these impacts? What are the consequences if we don't act? Will this supply of consumers in a condensed period intensify price-based competition, and, if yes, what does this mean for the variable CVC cost, and in turn the experience of the consumer?

"This government never asked those questions. They should have been asked in 2014 and 2015, not in April 2017."

Rowland defended the contentious NBN pricing model created by Labor that sees retail service providers (RSPs) charged to access the network and then further charged for bandwidth under the connectivity virtual circuit (CVC) charge, saying it was well suited for an FttP network.

"One feature of the [AVC and CVC] pricing design is it provides scope for differentiation whilst creating a framework where competition can cater for affordable, entry-level prices. This approach has merit if the underlying economics are sound, and consumers have good information," she said.

"The underlying economics of the fibre rollout were sound; this is why the ACCC approved the pricing framework for a AU$45 billion network, and left NBN to manage the demand-side risks."

With the current mix of technologies in NBN's network requiring higher costs to maintain and needing upgrades while running at slower speeds, Rowland said the network is now infused with complexity and generates less revenue.

"Critically for the taxpayer, none of these costs or risks are reflected in the AU$49 billion price tag," she said.

"The long-term economics of the NBN have been compromised, and we have a pricing design that is increasingly not matched to the capabilities and economics of the network.

"There are no simple choices here, and difficult choices will have to be made."

RSPs baulking at the level of CVC has led to allegations by NBN CEO Bill Morrow that retailers are cutting corners.

Welcoming the move by the Australian Competition and Consumer Commission (ACCC) to monitor the fixed-line connection speeds of users, the shadow minister accused the government of sitting on the initiative for 14 months.

"We have learned the ACCC presented a proposal for the speed-monitoring program to government in February 2016," Rowland said. "It could have been up and running at the start of this year.

"Consumers are suffering, and we need to get this moving."

On the topic of the long-running blame game between RSPs and NBN that has left consumers confused, the Labor MP is calling for more clarity, and for the Telecommunications Industry Ombudsman (TIO) to be able to force NBN and its retailers to resolve issues.

"Retail providers are accountable to their customers, and in some respects to the TIO ... it is really not clear who NBN Co is accountable to, and this is not sustainable in my view," Rowland said.

"NBN Co should not be insisting on business rules which make it unreasonably difficult for service providers to escalate legitimate problems."

Rowland called for "meaningful" service levels to be put on the company responsible for rolling out the NBN across Australia.

"The public simply does not accept the lack of accountability in getting [NBN installation and service] problems sorted once they have been reported. Promises being made that aren't kept; technicians being booked and people staying home all day for that booking, and then a technician doesn't arrive; blame shifting at every turn," she said.

"We need clear standards so consumers know what to expect. Right now, too much of it remains a mystery.

"No one expects perfection, but I tell you what consumers do expect: Less buzzwords, and more progress."

Earlier on Wednesday, NBN announced the trial of a new tool aimed at remotely finding out whether a premises has copper wiring faults running to and from telecommunications sockets within it.

"Of those studied [in the internal tests], speed performance issues identified in one in two premises on fibre-to-the-node networks were caused by in-home wiring. In many of these cases, poor wiring caused download speeds to degrade by more than 50 percent," NBN acting CTO Carolyn Phiddian said.

Cases of wiring faults -- which could also affect those connected by fibre-to-the-building (FttB) and fibre-to-the-curb (FttC) network technologies -- include degradation from where it is aged or poorly put together, or where unused phone outlets remain connected to the main system.

"Thankfully, there can be a relatively simple fix for homes suffering from speed degradation caused by poor wiring," she said.

"The range of solutions includes moving your modem to the first socket, closing off unused phone outlets, installing a central splitter, or re-cabling poor wiring. In fact, our study found that the above simple fixes resulted in an average speed increase of 55 percent (from 30Mbps to 46Mbps download speeds)."

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