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Federal

Jan 13, 2016

Who you should blame for the NBN (hint: not just Turnbull)

A cabinet discussion paper proposed cheaper, faster cable -- fibre to the premises, one might call it. And that cabinet was the Hawke cabinet, in 1991.

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When talking about what he faced as the minister responsible for NBN, Prime Minister Malcolm Turnbull was fond of recalling a joke about asking for directions from a pub in Ireland and being told “I wouldn’t start from here”. It is a jab at what he believed to be the deficiencies of the former Labor government’s broadband policy, but telecommunications policy has been a problem for governments dating back even to the Hawke era.

One of the most popular theories around why the Coalition was opposed to fibre-to-the-premises (aka fibre-to-the-home, or FTTH) for the National Broadband Network is that it would render the Foxtel pay TV network obsolete. While it is probably a bit much to blame only Foxtel for the change in NBN policy after the last election, pay television’s link to Australia’s broadband woes goes back a long way.

The Hawke cabinet papers of 1990 and 1991 reveal how telecommunications policy in Australia started to go all wrong.

In 1990 and 1991, while Foxtel was just a glint in Rupert Murdoch’s eye, the Hawke government was finalising the introduction of a second telecommunications carrier via the privatisation of Aussat (now known as Optus) and the introduction of pay TV services in Australia. Ultimately pay TV in Australia would be delivered two ways: through hybrid fibre-coaxial cables installed by Telstra and Optus, and through satellite services to areas outside Sydney, Brisbane, and Melbourne.

In a cabinet discussion paper prepared by the Department of Transport and Communications on the delivery of pay TV services in 1991, the department argued against the very HFC cable NBN is now buying, suggesting fibre-to-the-home (i.e. Labor’s model of the NBN) would be vastly superior, even in the early 1990s.

“FTTH is the technology for next century. Recent advice from Telecom [the government-owned company that would eventually become Telstra] is that they do not expect the economics to be right to commence installation to homes until 1997 [The Prime Minister argues the economics are still not right for it in 2016].”

The cost for a fibre rollout is, even with adjusting for inflation, significantly lower than the current estimates for either the full fibre-to-the-premises NBN or Prime Minister Malcolm Turnbull’s “multi-technology mix”. According to the discussion paper, the rollout for “homes in urban areas” would be $5.3 billion, and could be rolled out to between 3% and 10% of homes every year. HFC could be rolled out faster, but the paper states that it would “still be expensive and be made obsolete by FTTH”.

The internet, not being what it is today back in 1991, was not a major factor in the reasons for rolling out FTTH. The discussion paper suggests if FTTH were to be built, then there would need to be other applications like “home shopping, banking, and security” to make it worthwhile.

The report was fairly scathing on the HFC networks that Optus and Telstra eventually would go on to build, and NBN would ultimately buy from them:

“A hybrid network could be started now but it would be obsolete before the end of the century and could be a one-way system that would not significantly add to the development of Australia’s telecommunications infrastructure.”

A parliamentary committee at the time suggested that Telecom (Telstra) could be the company to build the network, and that if it did, then it would not be able to be a pay TV operator, but would instead offer other companies to sell pay TV over the cable. This is how NBN operates today in not selling broadband services directly to consumers.

It should be noted that no one decision in this period can be blamed for the mess that telecommunications policy has been in Australia for the past 30 years. This discussion paper was well before a series of poor policy decisions (privatising Telstra as a single company that is both a wholesale network operator and a retail service provider was probably the worst) throughout the ’90s and into the current century from both Labor and Liberal governments that ultimately led to the Rudd Labor government deciding to pursue a government-owned and built fibre-to-the-premises network from 2009.

The Coalition argued before the last election that advances in technology for new uses of legacy copper networks, from the ADSL broadband connections we use today to the VDSL connections over fibre-to-the-node, have meant that the economics to upgrade the existing networks rather than rolling out brand new fibre networks make more sense, and could be done faster. In government, however, switching to a fibre-to-the-node and HFC network has been slow progress with most of the NBN still consisting of fibre-to-the-premises connections, and an estimated $8 billion added to the cost of the network just to switch from Labor’s policy.

NBN has also rejected a recent analysis suggesting fibre-to-the-premises would be ultimately better value for the company than fibre-to-the-node.

The 1991 report predicted that in 2010 Australian homes would have access to broadband providing “high-capacity communications services” including HDTV, video telephone, home shopping, and energy management”. Most of us are still waiting for that.

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34 comments

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34 thoughts on “Who you should blame for the NBN (hint: not just Turnbull)

  1. Coaltopia

    Sorry, but the buck stops with Turnbull: he kyboshed FTTH. Adding just one HFC network could’ve made sense, but his switching to node is a short-sighted, ultimately more expensive boondoggle.

  2. AR

    He broke it, he owns it and he’s now in the hot seat.
    Meanwhile Fraudband alreadys costs more for far, far less of lower quality than SpaceCadet Conroy’s back of a tram ticket proposal.
    And it can only become worse, slower and even more obsolete.

  3. drsmithy

    Who do I blame for the NBN ?

    John Howard, who allowed Telstra to be sold off without first divesting it of the physical infrastructure that should have remained in public hands.

  4. drsmithy

    The 1991 report predicted that in 2010 Australian homes would have access to broadband providing “high-capacity communications services” including HDTV, video telephone, home shopping, and energy management”. Most of us are still waiting for that.

    How do you figure that ? “Most” people would have access to the few Mb/s of ADSL (or better) necessary for those things. It’s not a particularly high bar.

  5. Hunt Ian

    Well, yes but Murdoch is to blame for much else besides the failure to build a progressive FTTP network, including the crazy belief in low tax and spend policies and privatisation, which threatens to rob Australians of the communications benefits they would otherwise enjoy. These policies were what inspired Turnbull to come up with his silly hybrid. We only need to ask a more precise question: which politician is to blame for our NBN mess to get the clear unequivocal answer: Turnbull.

  6. Jaybuoy

    It’s Mr Broadband wot dunnit..

  7. Bo Gainsbourg

    Bottom line is that if you adopt the rhetoric of running the country on ‘business principles’ you will be bereft of the intellectual heft to deliver proper infrastructure like an NBN to the home. Turnbull isnt the great intellectual he’s made out to be, he’s just got a smoother way of articulating dopey policy positions. Running a country is different from running a business. Doesnt matter how many times you run around saying innovation if you can’t deliver a proper public policy outcome.

  8. zut alors

    Quite right, not just Turnbull but also the thickheaded Abbott bears blame.

    However Turnbull is the person who understood the implications of undermining Rudd’s original NBN & turning it into a concept slightly short of two-cans-&-a-string by comparison. Abbott was never bright enough to grasp the potential of a first class (albeit expensive) NBN, Turnbull realised the value of it but became his willing stooge.

  9. klewso

    Turnbull is the “Lance Boil” in this Mal-administration.

  10. billie

    The writer should do some research before writing
    A good place to start is Delimiter or Paul Budde

  11. billie

    What has Haeke to do with NBN? He was PM 30 years and 6 PMs ago
    The Coalition ought to take responsibility for its decisions

  12. David Hand

    I wouldn’t get too excited about the failure of FTTH being Rupert’s plotting and politicians being bought by evil corporations.

    The FTTH debacle began when Conroy, as communications minister in the Rudd government, had a spat with Sol. Sol tried to play the “Telstra is too big to be pushed around by the government” card and found that it wasn’t strictly true.

    But the NBN that emerged from Conroy’s thought bubble was quickly bastardised by political interference. Witness the roll out starting in rural marginal Tasmanian seats as well as Tony Windsor’s seat for example.

    It is still not convincing to me that homes in the first half of this century need FTTH and if they do, a compelling economic case for building it must be possible.

    Up to this point, I have yet to see any economic justification for a FTTH NBN from anyone.

  13. Carnivean

    The previous government made a plan to fix the mess that was left by their predecessors, and it would have set Australia up for the future. Turnbull took a steaming dump on that and left us in no better position that when Howard took the previous steaming dump.

    While it is clear that previous actors caused problems for telecoms and the internet, like when Telstra forced Optus to duplicate the HFC network, the blame for the NBN rests entirely on 2 men. Howard for failing to keep Telstra Wholesale separate from the retail arm and Turnbull for destroying the potential of the current NBN.

    If this is the best journalism that Crikey can afford, then I feel no problem with letting my subscription lapse.

  14. David Irving (no relation)

    Billie, I think Budde now accepts that FTTP was the way to go. I certainly remember discussions about a full-fibre network from the early 90s as well.

  15. zut alors

    And who was the senator who voted for the sell-off of Telstra despite campaigning on not doing so? Barnaby Joyce gave Howard the casting vote….

    http://www.abc.net.au/7.30/content/2005/s1460495.htm

  16. graybul

    Being ‘agile’ whilst hobbled, is exceedingly difficult! As an example, if you were both Communication Minister in one Govt and, Prime Minister in the next . . . how could you explain away a copper wire linkage between the two?

  17. 2bobsworth

    “While it is probably a bit much to blame only Foxtel for the change in NBN policy after the last election”…
    Being Liberal means never having to say sorry.
    What a weak kneed way to bury a steaming pile of “mea culpa” for Turnbull, the sorceror’s apprentice Abbott, and Murdoch, the Voldermort of print.
    It was always about Foxtells stranded asset cables!
    Mission accomplished !

  18. CML

    No Josh…this article is NOT acceptable!
    Suddenly it is ‘all Labor’s fault’…even going back to the Hawke days.
    I would have thought this is a superb example of the LNP (read Turdball) favouring the business community (read Mudrake) and his ilk, over the needs of the people of this country…and wrecking the good Labor communication’s strategy in the process.
    But still the MSM (and maybe Crikey?) must worship at the Talcum Malcum altar to have him win the next election, so we can have more bad government.
    The mind boggles!!

  19. Chris Barrie

    Very interesting story about how big business screwed the opportunity with the connivance of various people in government. This is not the only such case.
    I live in two major cities in Australia, close to the CBD. In neither location do I have the luxury of looking forward to the NBN rollout over the next 3 years according to the most updated information from my ISP and NBN Co! It seems if you want NBN you have to sell up and move to new premises…
    At present the delivered speeds are appalling in both sites. It is also true that in Greece on a recent island holiday the OTE lines (all fibre even on the islands) delivered 5 times the speed of my best experience in Sydney or Canberra… This story is an example of how third world we have become, with there being not much chance of a recovery as the rest of the world moves on! Interesting to look at our connectivity performance on against serious competitor countries such as Singapore and South Korea.

  20. zut alors

    And who was the senator who voted for the sell-off of Telstra despite campaigning on not doing so? Barnaby Joyce gave Howard the casting vote….

    Australian Broadcasting Corporation
    TV PROGRAM TRANSCRIPT
    LOCATION: http://www.abc.net.au/7.30/content/2005/s1460495.htm
    Broadcast: 14/09/2005
    Joyce stands by Telstra vote
    Reporter: Kerry O’Brien

    KERRY O’BRIEN: As of early tonight, the Federal Government has been given the Senate green light to sell it’s remaining 51 per cent ownership of Telstra. And helping the Government get its way was the new National Party senator from Queensland, Barnaby Joyce. Barnaby Joyce was the man the Coalition didn’t expect to win a senate seat at last year’s election. He had campaigned on a platform opposing the sell-off of the Government’s majority share of Telstra. Without his vote, the Government would not have controlled the Senate. He gained massive publicity in the lead-up to this vote, publicly agonising about his position, threatening to oppose the sale, then deciding to support it on the basis of what he said was a generous Government package to guarantee future funding for telecommunications services to the bush. Then he got wobbly feet again just this week. Under intense pressure, he even took himself off to a Canberra hospital last night, apparently with chest pains. But he was back on the job today, announcing at the last minute – yes, he would definitely vote for the sale. I spoke with Senator Joyce from our Canberra studio just minutes after the senate vote. Barnaby Joyce, you said earlier today when you were telling us that you were going to vote “yes” for Telstra, “I hope I have done the right and just thing”. That doesn’t exactly sound like a vote resonating with confidence, does it?

  21. Duncan Gilbey

    The LNP campaigned in 2013 to change the existing roll-out of FTTP to FTTN, and Malcolm Turnbull was its champion.

    The buck stops there.

  22. Lee Tinson

    Of course it is Turnbull! He crafted and implemented this disastrous change of policy, regardless of whose butt he had to kiss. He lied to the whole of Australia, he knew he was lying and he knew that we all knew he was lying. And he did it with that big “cat-with-the-cream” smirk on his face the whole time. His excuse was “… oh, a new technology will come along …”. That’s the only thing he might not have known was a lie, but he also didn’t care. Oh, the offensive arrogance of the man.

    Then, of course, his plan ended up costing way more than even the original estimates for the real NBN (yes, I do recognise that that estimate would probably also have been exceeded) and will eventually provide a service which is NO BETTER than the current service.

    So ALL the money this clown spent on the NBN has been wasted, and it’s HIS FAULT.

    So yes, we can and we should hold Turnbull responsible for this, the biggest failure in Australia’s communications policy ever. Don’t let anybody tell you otherwise.

  23. ken svay

    I think Josh should read the Whirlpool forums where tech experts debate the NBN and its shortcomings endlessly. They virtually all agree that its buggered and the LNP and Turnbull are responsible

  24. 2bobsworth

    Don’t mention Murdoch or your comment disappears.
    This article is a very weak excuse to hide the truth in plain sight. Telstra had to offload its cables to Abbotts NBN. Now that is mission accomplished we are left with Turnbulls copper strings and cans model. But hey, there is still value in scrap copper to look forward to.

  25. Coaltopia

    Interesting point Zut @14.

    We shouldn’t be too harsh on the author – Josh does great work and and it is a good history lesson plus the headline is “not just Turnbull”. But as I say, final responsibility on this matter rests squarely with the current PM.

    I’m not sure how kindly we look upon those that were shystered into putting narrow gauge rail into Queensland but their legacy of a bad decision lingers on far longer than we should have to endure.

  26. Zarathrusta

    I will not forgive Turnbull for wrecking the NBN.

    Finally we had a system being built that not only provided a modern and very upgradeable infrastructure (because basically you just upgrade the modems at both ends) and was capable of fast uploads and thus EXPORT, but also AT LAST got Telstra out of its position of being able to stymie any digital competition.

    Turnbull did not fight the people in cabinet who wanted to destroy the NBN and did their bidding as communications minister. His former business interests prove he knew better than what he chose to do.

  27. David Hand

    It would be nice if someone, anyone, could produce a business case for the FTTH NBN. I’m not saying we shouldn’t build it but how about someone making the economic case for it?.

    Building FTTN with a future roll out to homes makes a lot of sense to me. Hospitals, schools and businesses are already fibre or can pay for it when it comes.

    Expecting FTTH funded by the largesse of the downtrodden taxpayer is a juvenile world view. My kids never got everything they wanted either.

  28. Jimbo

    We know Turnbull and the Liberals screwed the NBN but still the media is full of Liberals boasting of what they have done, making people believe that the Fraudband is a wonderful creation. The media including the ABC is quiet on this

  29. Dogs breakfast

    Dear Mr Hand,

    The Sydney Harbour Bridge would never have passed a ‘business case’. Business cases are short term, profit-calculated, near-sighted documents that usually don’t have much bearing on what happens in the business world. This is government infrasturcture.

    the main ‘business case’ for FTTP is that we will eventually need it, pretty much before the FTTN is actually completed, and the cost will be somewhere higher than 25% more because we fudged it the first time.

    It’s a no-brainer, a social investment with business credentials. Only the most short sighted would suggest that FTTP wouldn’t pay back the investment many times over.

    We already need it, and are being held back by our lack of it. What needs to be argued?

  30. David Hand

    Who needs it Doctor?
    That is the sort of information that a business case would cover. It would be nice if someone had a guess at the bandwidth the average home will need this decade in download speed. Once fibre is run to the node, it is fairly simple to extend it to the home as demand grows. If someone would actually say that the bandwidth is needed now, it would contribute significantly to an NBN business case.

    The other thing a business case would do is increase the likelihood that the rollout would occur in the right localities. As far as no brainers go, the most egregious failure to use a brain is illustrated by Chris Barrie (19) who has two premises close to the CBD in two major cities and will not see the NBN for at least 3 years. No, it is voters in marginal Tasmanian electorates and Windsor and Oakshott’s old seats that the NBN was rolled out to first, followed by Fitzroy – Adam Bandt’s seat in Melbourne.

    If the NBN was built with any regard for a decent business case, we would see it first in the high tech suburbs in our major cities, not Armidale. Government infrastructure? If the first railways were built by governments and not entrepreneurs, they would have been built in the wrong place too.

  31. David Hand

    Sorry Mr Breakfast, I misnamed you.

  32. drsmithy

    That is the sort of information that a business case would cover. It would be nice if someone had a guess at the bandwidth the average home will need this decade in download speed.

    Why would you limit yourself to a decade ? This is the sort of infrastructure that lasts 30-50 years.

    Growth in bandwidth requirements are constant. Nobody with even a passing familiarity with technology would argue otherwise.

    http://www.abc.net.au/technology/articles/2012/06/14/3524848.htm

    Once fibre is run to the node, it is fairly simple to extend it to the home as demand grows.

    No it is not. That’s the point. That’s why FTTN is a flawed design. That’s why places that have previously implemented FTTN are starting to replacing it with FTTP. They are very different physical technologies.

    If someone would actually say that the bandwidth is needed now, it would contribute significantly to an NBN business case.

    Why would you build infrastructure destined to live for decades to meet only the requirements today ?

    The other thing a business case would do is increase the likelihood that the rollout would occur in the right localities. As far as no brainers go, the most egregious failure to use a brain is illustrated by Chris Barrie (19) who has two premises close to the CBD in two major cities and will not see the NBN for at least 3 years. No, it is voters in marginal Tasmanian electorates and Windsor and Oakshott’s old seats that the NBN was rolled out to first, followed by Fitzroy – Adam Bandt’s seat in Melbourne.

    Highly dense locations are _generally_ already served well by existing infrastructure. More remote locations are not, and the disparity will continue to grow if they are ignored, as once the populous and politically powerful high-density areas are satisfied, they will attempt to prevent further expansion and expense.

    One might even entertain the hope that starting in more remote areas might drive some decentralisation of our far, far too centralised country.

  33. David Hand

    Doctor,
    By stating that urbanised densely populated suburbs are “already served well by existing infrastructure”, you have spectacularly made my point for me and contradicted the rest of your own post.

  34. drsmithy

    Then apparently you think one of us is making a very different point than they seem to be.

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