LAURIE PATTON. NBN latest: Oh dear, what can the matter be?

I’ve argued before, the only viable solution is to start replacing all the dud technology and that requires that we take the politics out and develop a bipartisan solution.

You know the tune, so let’s all sing along: Oh dear, what can the matter be? Or, if you prefer AC/DC, “Dirty deeds, done dirt cheap”.

As we approach the NBN’s nominal completion date of June this year the decision to dump 21st Century fibre and cobble something together using old copper wires and run-down Pay TV cables has left too many Australians humming a very sad tune. The release this week of the latest financial report from NBN Co underscores what a debacle we have on our hands.

Perhaps the worst revelation is that they have only managed a two dollar increase in average revenue per customer to $45. On their own numbers they need $52 to just break even.

Bizarrely describing it as an outstanding result, NBN Co boss Stephen Rue confessed to a massive EBIT loss of more than $2 billion over the last six months.

NBN Co reported total revenue of $1.8 billion, up 39 percent on the same period last year. But that’s off what they call a very low base! It saw a net loss after tax of $2.8 billion in addition to other multi-billion dollar losses in previous years. This is the network’s tenth year of operations. You do the maths!

Subscriber costs for the half year were $1.43 billion, up from $690 million in the previous period.

Total activations are now at 6.4 million out of slightly more than 10 million premises declared ‘ready to connect’. This figure is the other shocker. There’s a reason why 40 percent of those who could sign up to the NBN haven’t bothered. It’s just not good enough.

The problem is that with a third of the fixed-line network using FTTN (copper wires) they simply can’t deliver high speed Internet to enough customers. Without the higher speed higher yield customers they are falling short on the necessary revenues to create a profitable business.

The numbers are just not heading in the right direction, or certainly not at a rate that can float this sinking ship off the reef.

As they say in the movie business, “once more, with feeling”. So, herewith some salient facts.

1. There are still huge numbers of customer complaints to the TIO / ACCC, etc. Most of these now relate to technology deficiencies or poor connections.

2. A third of the fixed line network using old copper wires will need to be replaced in order to deliver decent speeds to all Australian. $10-20 billion dollars in unbudgeted expenditure will be required.

3. NBN Co is currently borrowing $21 billion from the government with no prospect of repaying it.

The obvious move is to fast track fibre to the curb (FTTC). FTTC wasn’t around in 2009 when Labor launched the NBN nor in 2013 when Tony Abbott told Malcolm Turnbull to destroy the NBN. So both sides can argue that opportunities exist that weren’t around when they made their respective decisions.

As this article shows (and it is pretty recent so not likely to be out of date), Australia is the fourth most expensive country in the world for a standard 100Mbs service.

Even the ACCC appears to have had enough, although it continues to express its concerns very diplomatically. Its chairman, Rod Sims, had this to say recently.

“This Measuring Broadband Australia data clearly shows that too many consumers with FTTN connections are not receiving the speeds they are paying for… The results show that about a quarter of those consumers on FTTN connections, who are paying for high-speed 50 Mbps and 100 Mbps plans, still did not receive anywhere near their full plan speeds, at any time”.

So as we all sing along we don’t need to wonder what the matter is – it’s pretty bloody obvious.

As I’ve argued before, the only viable solution is to start replacing all the dud technology and that requires that we take the politics out and develop a bipartisan solution.

(Laurie Patton is a former journalist and media executive, former CEO / Executive Director of Internet Australia, and currently Vice President of the Telecommunications Society (TelSoc). Some of the views expressed here are those of the writer and are not necessarily shared by TelSoc or its members. This article first appeared in The Lucky General.)

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Laurie Patton is vice president of TelSoc and a prominent advocate for #BetterBroadband to maximise the benefits to our society from a digitally-enabled world.

He is a former political advisor, journalist and media executive – managing Channel Seven Sydney, regional network Seven Queensland, Pay-TV channel World Movies and community station TVS (Television Sydney).

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6 Responses to LAURIE PATTON. NBN latest: Oh dear, what can the matter be?

  1. Bevan Leigh Ramsden says:

    As a retired Telecommunications Engineer and ex teacher of optical fibre technology I fully concur with Laurie Patton. Fibre to the home was the correct solution with its built in expandable capacity to meet any future bandwidth expansion demands. A national communications project such as the NBN should have had bipartisan support not be treated as a political football. With fibre to the node then connection to homes by existing outdated and severely bandwidth limited copper cables we have a “Multilane freeway connected to the home by a goat track”. Eventually those copper cables will have to be replaced and at a significant additional cost to the current NBN. We are cursed with a number of self-seeking politicians of short vision responsible now for a second rate NBN. And that short sightedness goes back to the decision to privatise Telecom when it was already geared up to install fibre to the home and could have given us a truly broadband fibre network to the home more than a decade ago. And furthermore it would have already been paid for from the revenue generated.

  2. Alison Broinowski Alison Broinowski says:

    After more than two years of wrestling with NBN and buying various bits of extra equipment that didn’t work, we asked Telstra if they used NBN in their shop. They said no, took us off NBN, and we now use our mobile phones as modems for much less cost, and it works.

  3. James O'Neill says:

    There are a host of reasons for this fiasco. One of the major ones is that the political parties responsible have paid no political price for their abysmal failures over more than a decade. I understand that Australia now ranks in the 60s in the list of countries with modern broadband and continuing to slide down the rankings. That is a disgrace, but until these technological Neanderthals pay a political price this country will continue its inexorable slide into technological mediocrity.

    • Don Macrae says:

      James, why do you say ‘the political parties’ responsible? Laurie’s view is that Turnbull destroyed Labor’s NBN project under instructions from Abbott. I don’t know how you could come to a different conclusion. He certainly destroyed the original project team, most of which, from CEO down, where scattered to the four winds.

  4. Brian Coyne says:

    Meanwhile, the man ultimately responsible for this technological and financial nightmare visited on the Australian people, Tony (I’m no tech-head) Abbott, rides off into the sunset on what kind of pension for life? We live at a fascinating moment in human history.

  5. Tim Shaw says:

    Very perceptive look forward at what needs to be done.
    But “Dirty deeds, done dirt cheap” was AC/DC, not Barnsie or Cold Chisel

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