PAUL BUDDE. And so the NBN blame game starts

Oct 25, 2017

It has taken four years for the government and the nbn company to finally admit what many people have been warning for since the very beginning of the change in NBN plans from FttH (fibre to the home) to FttN (fibre to the node).

The Prime Minister claimed that the train wreck was coming all along if that is so, why did he then overrule Tony Abbotts’ argument who said “ kill the NBN”, that would have nipped that train wreck in the bud.

Obviously, he didn’t see his change in policy as a train wreck in the making as he indicated he could build the NBN for $25 billion and it would be finished by 2016. We all know what happened the price tag is now $50 billion to be finished in 2020/2021 and we now saddled with a 2nd rate network.

During my (unpaid) strategic involvement in the initial FttH NBN I made it very clear to then Minister for Broadband Stephan Conroy Minister that there were several serious flaws in that plan, such as the unrealistic high ROI of 6-7%; the way the NBN would be rolled out (not taking the most urgent areas into account); and the plan to replace HFC (what in my opinion could be done  much later as a next phase of the NBN, there certainly was no urgency for that – the same applied to ADSL2+ connections).

Nevertheless, the main blame should go to the current government who changed horses halfway and then putting them in front of 2nd rate solution. Which among other things resulted in a ban on competitors not being allowed to roll out superior FttH broadband services; who would have thought such a policy from a pro-business liberal government. To prop up the NBN, they are even imposing a broadband tax on mobile operators, further damaging telecommunications competition.

It is that 2nd rate solution (FttN) that is causing the main problem. There are no complaints from the 1 million households who were lucky enough to be part of the original FttH roll out.

In other parts of the blame game the original NBN plan was compared with the successful roll out of FttH in New Zealand.

One of the reasons why we have the NBN as it is, is because of the position taken by the than CEO of Telstra Sol Trujillo, who wanted to maintain Telstra’s monopoly at all cost, he  didn’t want to roll out a nationwide high-speed broadband and instead wanted a regulatory holiday to roll out a FttN broadband network to approx.. 50% of the population for which he wanted a regulatory guaranteed subscription charge of $95 per month (later reduced to $85). He sued the government when they wanted to change the Telstra monopoly.

If we want to go even further back to the Howard years, it was under his watch that Telstra was privatised without any conditions attached to regional broadband or to an upgrade of the network from copper to fibre. Sol Trujillo happily used the monopoly handed to Telstra by the then government.

The situation in New Zealand at that time as it was  in most of the other leading broadband countries such as the ones in Scandinavia and Eastern Europe, Singapore, Hong Kong, Korea, Japan, etc was far more cooperative. So these countries didn’t have the trouble that Australia was facing. Yes with hindsight and with the current Telstra management in place a better outcome would have been possible, however in the Trujillo period this was simply not an option.

To a certain extend we still suffer from this as the nbn company must pay around $1000 per house to Telstra for the use of their ducting and cabling.

Also if that train wreck was already in place in 2013 when the government changed the plan,  politicians might not have seen it coming, but one would have expected some push back on this train wreck from the engineering experts (being the nbn company), to the contrary they happily let the train wreck move forwards and keep on talking it up. At the same time rather than promoting high-speed broadband the CEO kept on talking that down now even indicating that 10Mb/s is fine for him.

Now it is suddenly a blame game but only a few days the Communications Minister Mitch Fifield was still taking-up the current NBN telling TV audiences that the NBN soon would be the envy of the world.

Then there is this list of premises that costs tens of thousands of dollars per premise to connect to the NBN. We can very easily make similar calculations for roads, electricity, gas and water connections. What about 4 homes on a 2-km tarred road or electricity connections to rural communities and farmsteads?

So yes, there have been wrong decisions all along but my advice to the PM in 2013 was to keep the original NBN in place and make the changes such as the ones I mentioned above and perhaps take a longer time to complete, spreading the costs over a longer period. Obviously, you would make adjustments as the roll out would continue, the City of San Francisco just proposed a FttH network that will cost US$2000 per home to roll out; the costs of FttH roll outs is coming down day by day, so it doesn’t have to be a train wreck.

On the positive side the current admissions are potentially making it possible to look at solutions. By writing off 50% of the roll out costs, the government could at one stroke of the pen make it instantly possible to deliver more affordable true high-speed broadband. This would then also provide for a better platform for the next step of the NBN be it privatisation of the company or finishing the current roll out by the nbn company with FttH as the end goal, something also the Prime Minister has mentioned in the past as being the preferred end goal.

In the meantime, stop the roll out of the FttN and replace that with FttC (fibre to the curb), more money spend on FttN will only make the NBN less valuable and continuous the waste of taxpayers’ money, if the price for this is a delay of another one or two years so be it, better to do it right in the first place.

Paul Budde is an independent telecommunications analyst.  This article first appeared on his blog on 23 October 2017





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