Labor’s National Broadband Network policy is a sensible acknowledgement that any drastic change in policy would further delay people getting connected. But it means millions will continue to be connected under the Coalition’s NBN policy, for the immediate future.
Labor’s original plan for the NBN was to roll out fibre direct to 93% of premises, with the remainder to be serviced by wireless and satellite technology. When the Coalition was elected, then-communications minister Malcolm Turnbull kept fibre rolling out initially but has now switched to a “multi-technology mix”, using existing copper and hybrid fibre-coaxial networks in a bid to reduce the cost of the rollout.
It hasn’t gone as quickly, or as smoothly, as Turnbull would have hoped. In opposition, Turnbull promised that everyone would have access to speeds of 25Mbps by the end of this year, and it would be a quick switch — and everything would be all good. In reality, three-quarters of us are still waiting for the NBN. And most of those connected now are still connected via fibre-to-the-premises (FttP). HFC and fibre-to-the-node (FttN) services are barely getting off the ground.
It’s not surprising then, that Labor is being much more cautious in its approach to the NBN policy in opposition. The late campaign announcement shows that, for all the talk of a “fibre NBN” over the past few months, the party was preparing for a let down. Under Labor’s policy, many Australians will miss out on the fibre NBN, and get HFC or fibre-to-the-node instead.
Labor’s policy is not promising the sky, but a more practical switch back to the original fibre-to-the-premises model for a lucky 2 million premises that aren’t included in the current construction schedule for FttN. The change will mean that instead of 20% of premises getting the full fibre treatment, up to 39% will be getting fibre. The devil will come in the detail. If Labor does win government, what will it say to those in rollout areas scheduled to get FttN, given it is connecting them to a technology it doesn’t support? There’s a vague promise to get Infrastructure Australia to develop a plan to get the rest upgraded, but no promise it’ll follow through with the upgrades.
In practical terms, the switch should be easier than the change to the multi-technology mix model. NBN CEO Bill Morrow told Crikey in March that the company would be easily able to handle a switch in policy. It has a “technology neutral” mandate from government at the moment: it goes to an area and assesses what the most cost-effective method of connecting a house to the NBN will be. In some cases, this is fibre. The only thing that will change is that instead of having the option of choosing whatever technology works in an area, the company will have a mandate to only roll out fibre, no matter the cost. And the cost can vary wildly depending on the area.
A key difference is that, unlike the Coalition, Labor will not need to enter into a lengthy and expensive renegotiation with Telstra as part of its policy.
People in regional areas who are on ADSL now — but may be forced onto the satellite or fixed wireless in the future — will still be on wireless or satellite under Labor’s policy. The NBN is a major issue in regional areas, and yet many of them will get neither FttN nor FttP. Only some in Tasmania due to go onto satellite will now get fibre.
While many agree Telstra’s HFC cable will likely be up to meeting current needs of broadband users, not much is said about the capability of the Optus cable. As documents leaked to Labor — which were part of the reason the party’s HQ was raided by the AFP — showed, the Optus cable is a big issue for the NBN. If it turns out not to be up to snuff, Labor will also need to roll out full FttP in those areas.
These costs are accounted for in Labor’s costing, Crikey understands.
Labor will also continue to use a FttN-type technology — where fibre is installed right into the basement of each building, and the existing copper connections are used from there. The former Labor government refused to consider such a policy, even though NBN Co (as it was known back then) was actively asking for it to be considered as an easier way to connect many apartment blocks quicker and cheaper.
The document does mention the use of so-called “skinny fibre” to reduce the cost of the roll out, but gone is talk of fibre-to-the-distribution-point — A technology NBN is experimenting with in Melbourne and Sydney, which gets fibre even closer to each house than FttN and uses power from those houses. There had been an expectation Labor’s policy would go in this direction, but as it is still very new technology, it seems Labor has opted instead for a gradual switch back to FttP, while keeping an eye on the experiment in the future.
To accommodate the fluctuation in cost, Labor has adopted the Coalition’s approach of giving a range in terms of the cost of the policy — between $49 billion and $57 billion — compared to the current policy of $46 billion and $56 billion. Capital expenditure will be $3.4 billion more. Much of the savings, Labor argues, will be achieved because of the lower operating costs of needing to power nodes with electricity — something full fibre does not require — and the cost of copper maintenance. Labor is also suggesting the internal rate of return with more customers using fibre and at faster speeds will be higher than those stuck on lower speeds on FttN.
As Crikey reported in May, NBN is getting its last dose of government funding on the $29.5 billion cap this year, and will need to go to market to make up the rest of the funding. Labor will not increase the $29.5 billion government cap on funding, meaning, either way, NBN will be going to market for private investment very soon after the election.
Part of the reason the party is being so cautious in its approach is due to the opaque nature of the NBN company, but Crikey understands NBN CEO Bill Morrow was made available to the ALP after the raids on ALP offices for leaked NBN documents. It is understood the ALP did not respond to this offer. NBN’s former and first CEO Mike Quigley is due to speak about NBN policy in a public speech in Melbourne next week.
Update: Story updated to reflect that ALP was offered access to the NBN CEO.