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Mar 7, 2016

Disruptive, yes, innovative, no: NBN leaks bruise Turnbull

The NBN has not exactly been a roaring success for the Coalition, with new leaked documents showing NBN is still costing fibre-to-the-premises.

It’s clear there will be an ongoing leaking campaign from within NBN in the lead-up to the election, with someone inside the company determined to expose issues with the project PM Malcolm Turnbull commanded for two out of the last three years.

Leaks benefited Turnbull in opposition. As he mounted his attack on NBN for being delayed, expensive and beset with problems, leak after leak showed the company struggling with construction contractors to get premises passed in the time and at the cost required for the project.

Now the tables have turned.

A series of strategic leaks to newspapers — that also conveniently end up being republished in Labor press releases — over the past few months have been aimed at showing how poorly the NBN technology choices favoured by Turnbull in his 2013 election policy are actually working out for the company. Firstly there was a leak showing NBN was concerned that the Optus cable network was not up to scratch; then there was a leak claiming the cost for copper network remediation was about 10 times what was forecast ($66 million v $641 million); and, most recently, there was news that fibre-to-the-node (the Coalition’s model) was suffering delays in the design process, and the cost of fibre-to-the-premises (Labor’s model) is coming down.

They are all presentation documents with no context from the authors, but they are incredibly damaging to the government. They are showing that the government’s reliance on the quick “strategic review” NBN undertook shortly after the 2013 election to justify the change in policy was completely erroneous, full of incorrect assumptions and estimations. That document, from which NBN and the government now disassociate themselves, led to NBN spending much of the first two years of the Abbott-Turnbull government switching from the fibre-to-the-premises rollout to the multi-technology mix, at high cost.

In 2013, Turnbull promised everyone would have at least 25 megabits-per-second speeds by the end of 2016 for $29.5 billion. It turns out fewer premises will be connected to the NBN, and it has ended up costing up to $56 billion (although the government is only investing $29.5 billion). Despite promising, before the election, that he had undertaken significant research into the project in the development of the Coalition’s alternative policy, when he got into government, Turnbull discovered it was not that simple. Telstra and its army of lawyers were not that easy to negotiate with over changing the original $11 billion deal (the Coalition wanted to buy Telstra’s copper network instead of shutting it down, per Labor’s plan), as well as buying the cable network out to build into the NBN.

Rolling out fibre-to-the-node is not as simple as buying the copper network and a whole bunch more network gear. Just as Labor struggled to get the construction component right, the Coalition is now learning that construction, when you have to factor in legacy technology, and include difficult negotiations with power companies, is just not that simple.

The most recent leak shows that NBN is continuing to test options for rolling out fibre-to-the-premises.

It is hardly surprising NBN is still looking at fibre-to-the-premises. Not only is it something NBN will continue to roll out — although much, much less than under Labor — it is often forgotten that NBN is not locked into rolling out fibre-to-the-node and cable. As per instructions from Turnbull and Finance Minister Mathias Cormann, if fibre-to-the-premises is more cost-efficient, NBN has the option to use that.

So the question becomes, if the leaks are showing costs for fibre coming down while costs for cable and fibre-to-the-node are going up, why isn’t NBN using the superior, cheaper option?

The answer, like the project, is complex. The documents likely don’t paint the whole picture of what is happening inside NBN, and, as Turnbull has often said, you can’t take a one-size-fits-all approach to the NBN. In a statement, the company said the current cost per premises to build is $4419 versus $2300 for fibre-to-the-node, and the former still takes more time to build.

In 2016, much like in 2013, the NBN is not an election-deciding issue. Although a vitally important project, it just doesn’t shift that many votes — but the government should be held accountable for what was promised in 2013. We were promised a national broadband network that was quicker and more affordable. It has turned out to be slower and more expensive.

Two years on, NBN isn’t anywhere near where most Australians would have expected it to be under either government. Unfortunately, we can’t peer into a parallel universe to see exactly how many premises would be connected under “Prime Minister” Kevin Rudd and “Communications Minister” Anthony Albanese. The track record before the election wasn’t great, but those who used to work on the project before the change in government, like former NBN CEO Mike Quigley, claim that the costs were coming down, and the company was preparing to scale up construction. The NBN remains an information war, where both sides have self-interest at heart.

Turnbull’s problem is that over two years into government, most of what he has to show for the NBN is the legacy of Labor’s policy. Most of the premises connected today are using the technology choices planned under Labor. NBN is meeting the broad targets it has set, but fibre-to-the-node and cable connections are nowhere near where the government would have wanted in 2013. He can campaign on passing many more premises than the Labor government ever did, but he can’t campaign on his preferred model of the NBN.

Labor will no doubt continue to make use of the future leaks, if NBN is unable to determine and stop the source. Despite Labor’s communications spokesman Jason Clare saying last week that Labor had the policies ready for an election, the party still hasn’t announced what its alternative NBN policy would entail, outside of stating it would involve “more fibre”. No doubt Clare is aware of the dangers of promising too much with too little information from inside NBN on the state of the network, and Labor will not want to repeat the Coalition’s mistake of making massive changes to the project again just to make it cost more and take even longer. Labor will likely aim for minimal disruption in the project, while promising more fibre connections.

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17 comments

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17 thoughts on “Disruptive, yes, innovative, no: NBN leaks bruise Turnbull

  1. klewso

    Turnbull – proving it’s only a stumble from NBN to PM?

  2. James O'Neill

    I had a phone call last week from someone representing NBN conducting a survey. She seemed genuinely surprised when I said there was no sign of NBN in my street, let alone to my premises. She double checked the address. I live in Brisbane and NBN seems to be no more than an expensive pipe dream for delusional politicians.

  3. Jaybuoy

    The carefully cultivated cult of Turnbull needs to be smashed.. six years of polishing the product and plotting revenge and this it.. nothing…ffs..

  4. Peter Darco

    My son is planning to move to Dunedin in New Zealand. They have gigabit broadband.

    How is Australia taking more than a decade to build a NBN to yesterday’s standard?

    Is that Turnbull’s exciting future?

  5. Graeski

    So either way, the Australian public gets screwed over again. Either the current strategy continues and we end up with a second-rate, antiquated piece of junk (which is all the mixed technology model was ever going to be) delivered years after we need it, or we have to spend billions of dollars back tracking to the original plan (once again wasting years as Australia falls further and further behind the rest of the world, thus undermining any chance of becoming the ‘innovative’ economy Turnbull promised us).

    The Liberal party’s rabid anti-NBN stance was always driven by ideology rather than technical, or even commercial, concerns. Now we all pay the price for their blindness.

  6. bjb

    The relentless focus on cost per premises shows the LNP knows the cost of everything and the value of nothing. The NBN is a national infrastructure project, if done right, would have a 50 year or more lifespan.

    Malcolm is promising 25Mbps, where other countries with FTTP are getting 10Gb i.e. 10,000Mbs. We could too if Turnbull and Abbott hadn’t destroyed what the NBN could have been. Turnbull’s legacy will surely be the person who wasted 10’s of billions of dollars on a complete white elephant.

  7. JennyWren

    Pity we can’t sue him. He could probably afford to fix it!

  8. tonyl

    I know of one holdup in the roll out due to a lack of copper cable. That’s right , they are laying new copper cable.

  9. Norman Hanscombe

    Sadly this is still a far too challenging matter for emotively-blinkered devotees of all varieties of ideological faith.