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Federal

Apr 7, 2016

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We are all for his nomination for a Gold Logie, and his segments often do “nail it”, as his online fan base often puts it, but there were many things wrong with Waleed Aly’s attempt to take on the NBN.

In a segment titled “Who’s to blame for the NBN” on The Project last night, Aly took on the complex, political football issue of the National Broadband Network and laid blame squarely at the feet of Prime Minister Malcolm Turnbull.

Here’s what he got right:

  • The NBN is not being delivered anywhere near as fast as the Coalition promised prior to the 2013 election, and it costs much more than was promised. Almost three years ago, on April 9, 2013, Turnbull and then-prime minister Tony Abbott announced that all Australians would have access to 25Mbps by the end of 2016. This promise was quickly broken when they got into government and realised it wasn’t as simple as flicking a switch and asking Telstra nicely to hand over its copper and cable networks. Although government equity remains the same (at $29.5 billion), the cost to build the network is now estimated to be up to $56 billion, and it won’t be finished until 2020.
  • Infrastructure projects are built with the future in mind. Quoting one of the men behind AARNet — one of the early forms of the internet in Australia — Aly said that if we were to be the innovation nation Turnbull wanted us to be, we should be going for a full fibre-to-the-premises network. It’s definitely the way to nation-build and have a future-proof network. The difficulty in this lies in the politicisation of the project. Labor mostly abandoned the argument that the NBN was nation-building when the Coalition began mounting a campaign about the cost of it and the delays it was facing. It instead became about a network that could be built on time (but wasn’t at the time) and within budget (but wasn’t at the time). Turnbull saw an opening to argue that delivering users upgraded speeds is better, so he is to blame that the NBN became a politicised issue — but Labor certainly didn’t help with the way it sold the network when in government.
  • Turnbull most definitely didn’t “virtually invent the internet in Australia”.

Here’s what he got wrong:

  • Aly only focused on fibre-to-the-node. This will be a large component of the network, but not the only one. There’s also fibre to the basement (which takes the fibre into the basement of an apartment block or building to use the existing copper in the building), cable, and FttDP (or fibre to the driveway, which is what Labor will likely mandate across the board). As Crikey reported last month, NBN is using a mix of technologies depending on what is most cost-effective.
  • He claimed FttN speeds were a “maximum” of between 25Mbps and 50Mbps. The average speed being achieved on FttN connections on the NBN today (excluding fibre to the basement) is 76Mbps. This is without vectoring and other potential advances in the future that could take it closer to 100Mbps. NBN can offer up to 1Gbps on FttP now, but very few people are actually ordering that service. (Although that could change in the future, depending on demand.)
  • Comparing the estimated cost of the NBN under Labor’s modelling with the Coalition’s estimate is not useful. Aly did briefly mention that the Coalition’s estimation of the fibre NBN is much higher, but the broad comparison claimed that Labor’s NBN would cost $45 billion and be completed in 2021. NBN’s modelling under the Coalition (which is contested by former CEO Mike Quigley) claims that to down tools and return to Labor’s version of the NBN would cost $73 billion and take until as far out as 2028. This is contested, but based on NBN Co’s continual delay and cost blowouts under the former government, neither figure can really be completely trusted.
  • By turning the NBN into a political football, Aly claimed, Australia had slipped from 30th to 60th place in global rankings on internet speeds. But as El Reg‘s Simon Sharwood points out, we have dropped down the rankings behind other countries that have been deploying fibre to the node, such as the United Kingdom, while at the same time for the majority of the Abbott-Turnbull government, NBN has mostly continued to roll out fibre-to-the-premises. The number of houses able to order FttP connections stands at 1.5 million, while the number of FttN connections stands at 303,000. The Australian Bureau of Statistics reported this week that between December 2014 and December 2015, the number of Australians accessing the internet by fibre to the premises actually almost doubled from 324,000 to 645,000.
  •  As I have written before, Akamai’s rankings are used by both sides of politics to make claims about what the other side should be doing, but they aren’t actually that useful a metric. If, at the end of the rollout of the Coalition’s NBN — should the party get a second term — Australia continues to slide down the rankings or fail to move up, that would be Turnbull’s fault, but at the moment it is far too early to blame the NBN when most of the NBN is still fibre to the premises.
  • Aly blamed the time it takes for videos to buffer on Turnbull’s NBN policy. This is wrong for many reasons. Firstly, the entirety of the NBN is just one small component of the internet, and there are a number of reasons why a video might buffer. The server might be overseas, meaning the information has to travel down subsea cables that can, and often do, have connectivity issues, the customer’s ISP might not have secured enough bandwidth to allow that user to stream video while all its other customers are also streaming video, or it might be a dodgy wi-fi network in the house. There are so many factors that determine whether a video will stream live that blaming one component of the network for it is silly.

The problem with this debate in an election year is that while Labor continues to use the Akamai rankings and leaks to claim the NBN is going down the wrong path, the party is not promising a return to its nation-building fibre-to-the-premises policy after the election.

We could be less than three months from an election, and we have yet to see Labor’s NBN policy announcement, aside from simply stating “more fibre”. The party’s communications spokesperson, Jason Clare, has indicated that Labor would likely adopt FttDP (which brings fibre right up to a person’s driveway and uses the existing copper line to their house). This is technology NBN is already looking at bringing in, but is at very early stages. Labor appears to be making the most out of leaks from NBN and issues with the copper to get political mileage on Turnbull, but its likely the opposition’s own policy will also be to use copper in their NBN — just a tiny bit less.

Federal

Mar 7, 2016

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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.

Federal

Feb 29, 2016

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New South Wales

Feb 18, 2016

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Steve Ciobo and Malcolm Turnbull talk NBN at a Telstra exchange

Infrastructure Australia has recommended the government look to privatise NBN for almost half the price it will cost to build. The recommendation was formed on the basis that, well, it went so swimmingly when Telstra was privatised.

No, really.

In its Australian Infrastructure Plan released yesterday, the organisation suggested that NBN (formerly NBN Co) should be transferred from government ownership to private ownership “in the medium term”. It suggests this could be done by splitting NBN along technology lines, so there would be one company for fibre to the node, one for cable, and one for wireless/satellite; or alternatively the government could sell it geographically, so instead of being a “national” broadband network, it would become the “New South Wales Broadband Network”, the “Victorian Broadband Network”, or the “Sydney Broadband Network”.

Labor paints the NBN as a nation-building infrastructure program that will give the country an invaluable asset for decades, but in reality, the party always had plans to sell it off. In an attempt to downplay arguments from the then-Coalition opposition, Labor said NBN would need to have a decent rate of return in order to justify it as an asset that could then eventually be sold off. Initially the sell-off was slated for five years after the rollout had been completed, but the Greens forced the government to conduct a public interest test before any potential privatisation of the network.

Now with the technically inferior version of the NBN being constructed under the Coalition government, Prime Minister Malcolm Turnbull has often joked that he believed NBN would be ready to privatise sometime during Wyatt Roy’s prime ministership.

But Infrastructure Australia has suggested NBN be privatised when the rollout is completed (currently scheduled for 2020), provided there are adequate regulations and after a scoping study has been completed. It says privatisation will benefit competition and investment in infrastructure in telecommunications in Australia. The basis for this assumption? The privatisation of Telstra led to an adequate competitive environment for telecommunications, or so it says:

“Because of these … reforms, the telecommunications sector’s regulatory and market structure has responded effectively to major technological disruption, such as the development of mobile services and the growth in demand for data services.”

This somehow overlooks that one of the main reasons NBN was created in the first place: to address long-term structural and competition issues created by the privatisation of Telstra, and Telstra’s recalcitrance to upgrade its infrastructure.

When Telstra was privatised in the 1990s, the government opted to keep it as a single company that both owns the network and operates as a supplier of services to the general public. This has meant that the retailers like Optus, iiNet and others have had to compete against the company from which they also buy services.

Legislative changes over the years have attempted to restrict the competitive advantage Telstra as a retail company has over other telcos because it also runs the network, but the company still fights against most restrictions placed on it. For example, Telstra is currently fighting the ACCC in the Federal Court over the price it is allowed to charge for services on the copper network it is in the process of flogging off to NBN for the multi-technology mix.

Any major advances in telecommunications infrastructure in Australia have largely been on the back of Telstra’s structural advantage. High revenues from fixed-line services that were more costly than in other parts of the world were plugged into rolling out Telstra’s Next G mobile network, which then allowed Telstra to dominate the mobile market, while resisting any substantial upgrades to its fixed network.

Any plan to privatise NBN would need to be coupled with strict guidelines to continue to prevent NBN from offering retail services in competition with its direct customers like Telstra and Optus, and with pricing controls that would prevent the company from seeking a higher return on investment.

That makes it more difficult to justify privatisation. If the company cannot maximise returns, will that make it less appealing to buyers?

It also seems illogical that the government would seek to acquire an asset it once sold off (the copper network) only to then again sell it off at a lower price once the network has been finished being rolled out in 2020. PricewaterhouseCoopers, which analysed the assumptions made in the infrastructure plan, estimated that the NBN would only fetch about $27 billion, less than the $29.5 billion capped investment from government, and much less than the $54 billion the government has estimated the Turnbull model of the NBN would cost. Once the $29.5 billion investment from the government has been used up by NBN, it will need to go out and seek private investment for the remaining funding for the construction of the project.

PwC found that privatising the NBN would have the smallest impact on GDP of all the proposed reforms in the plan. It assumes a 5% efficiency gain, and would generate a GDP per annum of $119 million in 2031, and $126 million by 2040.

The government said NBN would not be sold off in the short term, in response to a similar recommendation of the Vertigan review. Turnbull said in 2014 that NBN’s cable network division would be kept as a distinct business unit to make it possible to sell off that component of the business in the future, but he said that any immediate split of NBN would incur large costs and would be “an unacceptable distraction” during the rollout.

Turnbull yesterday did not speak about privatising the NBN, but he said that it, along with other projects outlined in the Infrastructure Plan, would be vital to Australia’s future prosperity.

Media

Jan 22, 2016

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A covert recording of a meeting between former ABC technology editor Nick Ross and ABC head of current affairs Bruce Belsham proves the ABC exec wanted Ross to write a piece, or several pieces, examining problems with Labor’s NBN policy. But the recording, excerpts of which were published last night in New Matilda, doesn’t appear to prove Ross’ claims that the ABC gagged him to keep incoming communications minister Malcolm Turnbull happy.

Ross left the ABC last week, accepting a redundancy three years after he abruptly ceased writing on the NBN for the national broadcaster. Ross’ silence followed a Media Watch episode that concluded his writing was veering close to advocacy for Labor’s NBN, and a piece in The Australian that (incorrectly) said Ross had been “disciplined” by the ABC after he wrote an 11,000-word opus that savaged the Coalition’s NBN plan. Last week, Ross explosively said he had been gagged from writing on the issue because the ABC wanted to keep the Coalition onside.

Last week, Ross told Crikey:

“I got told at the time by senior ABC management that [the ABC] was preparing for the Liberals to win the next election and didn’t want to piss them off, particularly with Malcolm Turnbull being in charge of the ABC.”

The allegation is not backed up by the quotes produced from the recorded tape with Belsham. While New Matilda has not published the transcript of the entire recording, which in itself only details one of Ross’ numerous interactions with managers, Crikey understands the full recording does not include Belsham making a comment on keeping Turnbull happy. The recording is largely concerned with mapping out a potential article examining the faults in Labor’s NBN.

The parts of the recording published by New Matilda appear to show Belsham asking Ross to give him something he can then take to his own managers to justify Ross’ continued writing.

“We’ve got to give you some kind of insurance policy, you know,” Belsham says in the recording, according to New Matilda. “An insurance policy is an article where you are hard-headed about something to do with [Labor’s] NBN failings, or, you know, potential failings. One of the quite basic failures is it’s not going to happen.”

“I like the [latest] piece, and I would like to publish it. But I’m just saying, before I can let you do that, so I don’t have screams from the 14th floor … we need to give ourselves [some insurance] and say ‘Look, this guy is prepared to be critical of some aspects of [Labor’s plan], he’s written this tough article about X.'”

The 14th floor refers to the floor at ABC Ultimo that houses managing director and editor-in-chief Mark Scott, the ABC board, and the ABC’s corporate affairs team.

Crikey pointed out to Ross this morning that the Belsham quotes in New Matilda’s piece did not support his claim that the ABC gagged him in order to keep Turnbull onside. Ross responded that the ABC had made a point about the politics at an earlier meeting, and that this was what prompted him to record a meeting with Belsham.

“On March 8 2013 I was told by [Bruce Belsham that] ABC management … were preparing for the Liberals to win the next election and didn’t want to piss them off, particularly with Malcolm Turnbull being in charge of the ABC. I made a note of this when I left and decided to record future meetings because I didn’t want to get caught up in a conspiracy like that without protecting myself,” Ross told Crikey. The ABC last week said the only advice Ross had received about his writing was in reference to its editorial policies.

The New Matilda piece also does not explicitly support the claim that Ross was “gagged”. Belsham appears willing to publish further pieces by Ross on the NBN, provided Ross also writes pieces about Labor. But New Matilda editor and owner Chris Graham argues that “there are a thousand ways to gag a journalist”, and that requiring Ross to write articles critical of Labor’s NBN was an effective one in this situation. He notes Ross was also prevented from responding to media inquiries and the false claim that he’d been formally disciplined by the ABC. “He was gagged on that, and he’s fucking angry about it.”

The issue of the recording has drawn some comment among journalists on social media. The New South Wales Surveillance Devices Act holds it illegal to record a person in the state without their permission.

“We’ve broken the law — we know we have,” Graham told Crikey. “Our detailed legal advice is to throw ourselves at the mercy of the court. The fact is New South Wales doesn’t have a public interest defence in this for journalists or anybody else. So be it.”

New Matilda says it intends to publish the full transcript of Ross’ meeting with Belsham before Sunday. The ABC declined to comment beyond its statement to New Matilda, which slammed the website for not giving the ABC the full context of the Belsham quotes it was asked to respond to. The ABC added that Ross’ “exchanges [with Belsham] used unguarded and informal language, as is commonplace in private conversations that are intended to air issues fully, frankly, robustly and in confidence”.

“It would be a shame if all such conversations had to be conducted as if they were on the record interviews. Nevertheless, the thrust of the sentiments expressed to Mr Ross in all of the discussions held with him were consistently that, as with all other topics, coverage of the NBN issue required adherence to the ABC charter and editorial policies, which require appropriately reflecting all major points of view.”

Comments & corrections

Jan 14, 2016

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On the Essendon saga

Charles Pickett writes: Re. “Rundle: Don to a turn — how spivs and moguls killed the AFL” (yesterday). Crikey really should stay away from sport, its commentary on that subject is invariably embarrassing. Witness Guy Rundle’s attempt to frame the Essendon debacle as an example of market-induced erosion of local loyalties and social values.

Leaving aside the fact that AFL doesn’t get to first base as an example of commercial image-making — where do you buy Essendon shirts in Barcelona? — Rundle is apparently unaware that match fixing and cheating in sport is often concentrated at the local end of sport, where media and official oversight is weakest. If it can be bet on, it can be worth fixing.  There is a long history of sporting skulduggery in Rundle’s sepia toned bastions of working class values, as the career of Melbourne’s John Wren attests.

The poobahs of the AFL may indeed be the main culprits, but for believing their big fish/tiny pond status would protect them from those who saw cheating as more than a public relations problem. In other words, a specifically parochial delusion, helped along by the fawning of the Melbourne establishment and media. Crikey is just tagging along with this crowd.

Cameron Bray writes: Guy Rundle is spot on that the spivification of our national game sits at the heart of the odious wreckage that is the Dons. No doubt many out there will shake their heads and say, well yeah, but what you going to do about it? The commodification and corporatisation of sport as just another arm of the entertainment industry is just part of the modern world. Marketisation is like the weather, right? Everyone complains but no-one does anything.

Well they’d be wrong of course. German football is a fantastic counter-example of what happens when a sport stays true to itself and its fans. The core of it is the ‘50+1’ rule: Bundesliga clubs are required to be majority-owned by German club members.

The result is low ticket prices and big crowds (ya reckon that MIGHT be related? or do you want me to draw you a demand curve) in modern stadiums and serving full strength beer to boot (again – reckon having a real stake in a club as a part of life, not just a brand, makes you behave like a civilised human being – Human Capital 101 anyone?).

By any measure the Bundesliga is one of the most successful sports league in the world, except for the most important metrics of course, around centralisation of money, power and profit into the smallest possible circle.

The Bundesliga shows us the path not travelled: the transition from VFL to AFL could have been, should have been,  so much better. But like most other facets of modern Australia, its all about the payoff of private splendour for public squalor.

On the history of the NBN

David Edmunds writes: Re. “Who you should blame for the NBN (hint: not just Turnbull)” (yesterday). It is quite reasonable to put the whole of the blame on Turnbull.

While of course Josh is correct in his history of telecommunications in Australia, he seems to miss the point that this was recognised by Senator Conroy as minister. Senator Conroy attempted to solve the infrastructure problem with the help of the existing companies, but could not convince them to work with him.

The NBN was conceived as a way of cutting the Gordian knot of Australia’s telecommunications infrastructure dilemma. Abbott as opposition leader then directed Turnbull as shadow minister to destroy the NBN. Turnbull managed to change this policy to one that recognised the need for better infrastructure, but had to develop a model that was sufficiently different from that of Labor to provide room for criticism of Labor.

However, the design of Labor’s NBN was astonishingly good. The hope was that following the 2013 election, Turnbull as communications minister would declare Labor’s NBN a complete disaster, and then build it more or less as planned.

But he did not do that. Instead he insisted that the plan be changed to incorporate a range of obsolete and second-rate technical solutions, as he proposed when in opposition. The cost of this second-rate solution is pretty much the same as the original Labor plan. So he sabotaged the future-proofed and well-designed NBN.

Given that money was not the problem, and in government Abbott probably didn’t care much, the destruction of the NBN is pretty much down to Turnbull alone.

Josh Taylor replies: It’s not really missing the point, just providing context for Australia’s sordid history of telecommunications. As you’ll note in the article I did say that those policy decisions “ultimately led to the Rudd Labor government deciding to pursue a government-owned and built fibre-to-the-premises network from 2009”. Yes, Telstra did not play ball when the former Labor government wanted to build an FttN network with Telstra, but that is a topic for a longer article.

Federal

Jan 13, 2016

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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.

Federal

Nov 27, 2015

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As Labor patiently waits for voters to stop being charmed by Malcolm Turnbull and start demanding some substance, it is adding to its growing policy pile despite the election ostensibly being deep into next year. Today’s announcement of significantly higher emissions-abatement goals than the government’s — 45% by 2030 based on 2005 levels and zero net carbon emissions by 2050 — was the third policy this week. There was also one on providing domestic violence leave, and a nanny-state tobacco excise hike to punish poor people for smoking.

Put those with an as-yet undetailed commitment to return to a carbon price, a plan to reduce superannuation tax concessions and even a politically risky interest in negative gearing (one that had a rabid Tony Abbott claiming Bill Shorten wanted to drive down house prices), and no one can complain Labor is adopting a small-target strategy. Rolling out policy was Labor’s plan before the removal of Abbott, driven by a fear of repeating Tony Abbott’s error of being relentlessly negative in opposition, only to discover once elected you couldn’t switch to actual governing. But the swapping of Turnbull for Abbott has only encouraged the policy process. Shorten can’t hope to compete with the Prime Minister in terms of popularity with voters, so he has to produce some substance and hope that voters eventually start to wonder why Turnbull talks so much but doesn’t seem to do a lot.

Parliament will drift to an anti-climactic close for the year next week, with both Shorten and Turnbull away. Labor spent this week preoccupied first with the non-existent government plan to raise the GST to 15%, about which we endured 11 questions, and then latterly with Liberal MP Mal Brough and the Slipper diary controversy.

Neither topic will offer much joy for Labor. Unlike the Abbott carbon price campaign to which it has been compared, Labor’s incessant repetition of a 15% GST and its supposed effects on low income earners has the disadvantage that the government isn’t actually planning to do anything of the sort. Turnbull almost obsessively repeats over and over that tax reform must be “fair”; the idea that he’s going to repeat the profound error of Abbott and Hockey and try to turn unfairness into a kind of moral virtue is bizarre. The main problem with changing the GST is that the actual benefits to the economy are limited; political pain for minimal gain is the sort of Hockeyesque strategy that it’s hard to see Turnbull making.

Yesterday, the constant questions on the GST gave way to an extended focus on Mal Brough, mostly from shadow attorney-general Mark Dreyfus, culminating — if that’s not overstating it — in an attempted suspension of standing orders. The problem was Brough appeared entirely untroubled by the barrage of questions. Asked if he would resign, he made yet another hike down to the dispatch box and said dismissively “after due consideration, no”. As both Brough and Turnbull pointed out, there’s precisely zero new information on the whole saga: the ever less relevant Clive Palmer repeating two-year old allegations — on which he’s contradicted himself — in Parliament hasn’t added anything to the story.

Moreover, Brough’s critics seem to have missed that former speaker Peter Slipper was no political innocent savaged in the brutal politics of the Gillard minority government. This was the bloke with a long history of being caught out and having to repay his travel entitlements who swanned around Canberra wineries at our expense. There was most certainly a public interest in any misuse of travel entitlements by Slipper being exposed, regardless of the motivations of Brough or anyone else. And given the track record, or lack thereof, of successful prosecutions of MPs, Labor shouldn’t hold its breath waiting for Brough to quit.

The focus on the GST and Brough meant other, potentially rich political seams went unmined. Shadow treasurer Chris Bowen nibbled at the National Party role in Treasurer Scott Morrison’s rejection of the sale of the S. Kidman & Co properties, but the Coalition’s utter confusion on Chinese investment was left unexploited (Palmer had a crack, and prompted Turnbull to fondly remember the days when Clive of China was a Sinophile). And revelations about the dire state of Optus’ hybrid fibre-coaxial network and the likelihood of yet another blowout for NBN (oops, nbn) only got one question.

Given Turnbull, as communications minister, for two years took delight in mocking Labor and former communications minister Stephen Conroy over the NBN — even as it became apparent Turnbull himself was presiding over an expensive debacle in the transition to his hand-picked “multi-technology mix” — you might have thought Labor wouldn’t have been content to just go after current Communications Minister Mitch Fifield in the Senate on the issue but have a swing at Turnbull as well.

Instead, Labor is having about as little impact on Turnbull as Tony Abbott and his government-in-exile are.

Federal

Nov 26, 2015

5 comments

Has Labor found the smoking gun that proves the Coalition’s NBN plans are about to fall in a heap? Or is it just another political beat-up?

When then-NBN Co under the former Labor government secured an $11 billion deal with Telstra to migrate its ADSL and cable internet customers over to the NBN, it also signed an $800 million agreement with Optus to shut down Optus’ cable network and migrate customers onto the NBN.

Optus and Telstra built the cables in Sydney, Melbourne, and Brisbane in the 1990s for pay television before eventually using them to deliver broadband faster than that on ADSL. The two sets of cables combined cover around 3.2 million premises, but there is a lot of crossover because the two companies were vying for the same customers.

None other than Malcolm Turnbull, who was opposition communications spokesman at the time, slammed the announcement that Optus would shut down its cable (also known as HFC, or hybrid fibre-coaxial) network. Turnbull argued Optus could have easily upgraded its cable network to compete against the NBN, and viewed paying the company to effectively shut down what he saw as a still-viable network was a waste of taxpayers’ money — although it would eventually be paid back through NBN revenues.

At the time, though, Optus told the competition regulator it had effectively written off the cable network as an asset and had no plans for major upgrades to the HFC network even if the NBN did not buy it out. Tech media reported the network would need significant upgrades in technology in order to be competitive with the fibre-to-the-premises NBN.

Now, under the Coaliton’s “multi-technology mix”, both Telstra’s copper and cable networks and Optus’ cable network will be used to provide broadband services on the NBN. Negotiations to change the contracts signed under Labor with both companies were finalised in December last year, although Crikey understands the agreement with Optus was finalised well before the complex re-negotiations with Telstra were completed. Optus was keen to get out of the cable business and, for its part, is not receiving any more funding from the government to hand over ownership of the network instead of shutting it down as originally planned.

NBN has yet to launch services on the cable network, but it has trialed using the Optus cable network in Redcliffe in Queensland to 4500 premises. The company has said in trials it has recorded speeds of up to 100 Mbps (megabits per second) for downloads, and 40 Mbps for uploads.

Just before question time yesterday, Labor communications spokesman Jason Clare released a document (conveniently after Fairfax had been given the document) outlining potential issues with the Optus cable that could cause a cost blowout for the HFC component of the network by up to $375 million, and a delay out past 2018 for customers in the Optus HFC area to be connected to the NBN.

The “HFC Plan B: Overbuilding Optus” internal presentation dated November 3 states that the Optus cable network is “not fully fit for purpose” and is currently oversubscribed, with interference, and much of its equipment reaching the end of its life. Up to 470,000 premises that the Optus HFC network covers but are not covered by the Telstra HFC network might need to be connected instead by the Telstra HFC network being extended or using fibre-to-the-node using the existing copper lines.

The idea scenario, using a mixture of the above two options, would cost NBN between $150 million and $375 million more than originally planned. If NBN were to go full fibre-to-the-premises, as Labor had originally planned for those areas, it would cost an extra $600 million, according to the document.

NBN is downplaying controversy claimed in the document, stating it is a risk-mitigation presentation that is designed to prepare the company should it run into trouble connecting customers to the Optus network, and said there had been no issues in the Redcliffe trial, so far.

NBN boss Bill Morrow has always argued that taking ownership of the cable networks for the multi-technology mix, rather than shutting them down, gives the company the option to use those networks if required. If it turns out that the network isn’t fit for purpose for supplying at least 25 Mbps download speeds, the company will not use it.

Additionally, in the company’s three-year plan released just weeks before Turnbull became prime minister, the company forecast that the cost to build the network had gone up from $41 billion to between $46 billion and $56 billion. Blowouts such as those flagged in the presentation were accounted for in that forecast, NBN has said.

At the time, Turnbull told Crikey that there was still a lot of risk associated with the project.

“It’s a big, risky project. Which is why the government shouldn’t have done it in the first place. But it is too late to cry over that.”

Clare also asked the Prime Minister a question about the network just after the publication of the document — just his fourth or fifth NBN question since becoming shadow communications minister more than two years ago. Turnbull, not being across the document, deflected, defending the current work of the NBN. Communications Minister Mitch Fifield also appeared to not be across the issue in Senate question time yesterday.

Former communications minister Stephen Conroy, who keeps a close eye on all things NBN with a view to protect his legacy, relished at the leak of the document, telling the Senate:

“Now we are getting all of this debacle coming home to roost. How could a board make a decision to switch to a $56 billion network without knowing the costs at the time? How could the CEO today say that the board members did not know the costs when the board made a decision to shift to a network that is now costing $56 billion? This board was one of political hacks! They were incompetent and they did not know what they were doing.”

Conroy told the Senate the cable network was not up to the task:

“There is a reason we were going to close it down — that is, because it was not fit for use. We knew it, Optus knew it, and the whole country knew it, but not Prime Minister Turnbull. He decided he knew better than all of the engineers and all of the experts in the country, and Optus today are laughing all the way to the bank.”

A spokesperson for Optus said in a statement that the company had always said upgrades would be needed.

“Optus and NBN have always acknowledged that parts of the HFC network would need an upgrade to support the NBN’s product set. In advance of handover there has been and continues to be major investment into the HFC network to manage subscriber growth and capacity demand.”

crikey15

Oct 23, 2015

5 comments

In opposition Tony Abbott was labelled “Teflon Tony”, as Labor was unable to make any negative stories on him stick, and for now it appears we can call the Prime Minister Teflon Turnbull.

As the first full sitting fortnight for Prime Minister Malcolm Turnbull comes to an end, it is clear Labor hasn’t figured out exactly how to pin down the new Prime Minister. The Fairfax Ipsos poll this week putting the Coalition ahead of Labor on a two-party preferred basis and Turnbull 46 points over Labor leader Bill Shorten as preferred prime minister has Labor hoping the numbers still reflect the honeymoon period for the newish government.

After last week’s failed attack on the Prime Minister’s investment arrangements in the Cayman Islands, Labor this week initially tried to pin Turnbull down on the former Abbott government’s unpopular 2014 budget policies. It went nowhere.

Labor gained little from the Senate estimates process to attack the PM, either. For all the lengthy discussion of marble tables and red-faced emoji, Labor hasn’t gleaned anything that is has been able to use.

The biggest news came from Turnbull’s old portfolio, with NBN revealing it would be spending $14 million on 1800 kilometres of copper for Turnbull’s fibre-to-the-node NBN. It’s not a great look on the surface, given NBN has insisted it is not replacing the legacy Telstra copper lines with new copper, but due to the nature of fibre-to-the-node mixing in with the existing network, some new copper will need to be installed from the existing Telstra pillars on the streets to the “node” boxes that link homes to the NBN. The existing copper lines will continue to be used from the pillar out to each home. It’s a complexity most people will not care to understand, but Turnbull was only too happy to do some Malsplaining in question time on the issue. Labor, for the first time in the last two years, asked three questions in question time on the matter, but even that seemed to backfire: Turnbull was keen to answer questions on the NBN, and called for Labor to ask more.

The government’s response to the Murray inquiry into financial systems was one of the two major policy announcements of the week, but the weak response to a watered-down report meant it was quickly forgotten. As we reported earlier this week, the government has responded to an inquiry by announcing more inquiries, or working around the edges, such as the planned legislation to crack down on credit card transaction fees, and legislation to make it easier to get crowdsourced equity funding for startups.

It was a mixed week for new Social Services Minister Christian Porter, who, along with his predecessor, Treasurer Scott Morrison, announced changes to the government’s original plan for family tax benefit payments. Gone were plans to drop parents from the payments after the youngest child turns six. Instead, benefits will end at 13, with a focus on getting parents back to work once their children enter high school. Single parents and grandparent carers with children over 13 will receive a yearly $1000 payment from the government.

Porter initially struggled to sell the policy on Sky News, suggesting 15-year-olds could potentially still be in childcare, and grandparents could go back to work. In question time, he also argued not all grandparents are pension-age, and that they are working longer than they used to — just look at the Prime Minister. Given it is unlikely Turnbull is the full-time carer of his grandson, it was an odd comment from the new minister. The key to the passage of this change will be the Senate crossbench. Liberal Democrat David Leyonhjelm is in favour of the windback of what he sees as middle-class welfare, Independent Senator Nick Xenophon said he was keen to keep talking to the much more talkative government, but Jacqui Lambie said the changes would still hit the most vulnerable people in society.

The proposed legislation will test whether Turnbull’s new approach to the crossbench with new Senate leader George Brandis will be more successful than Abbott’s was with Eric Abetz, who spent the week on a strange tour complaining to almost every media outlet that conservative politicians like him don’t get a fair run in the media.

Another politician who claimed he was hard done by the media was Joe Hockey, who this week gave his final speech in the House of Representatives just over a month after being dumped as treasurer after the leadership change. It was the usual blaming of the 24-hour media cycle and social media for the revolving door of politics, and the government’s inability to sell its policy. Perhaps because Turnbull has changed so little of the government’s existing policy to date, there is a current justification in Hockey’s current belief that the government had good policies, but was just bad at the politics. Almost every media commentator has said that, sorry Joe, it was, in fact, bad politics and bad policy.

One area where there was a marked difference between the style of Abbott and Turnbull was the latter’s handling of the China-Australia Free Trade Agreement stand-off. Towards the end of Abbott’s tenure, Abbott was increasingly using ChAFTA to wedge Labor. Labor had backed itself into a corner in arguing it couldn’t support the agreement unless there was sufficient labour market testing for work agreements, a market salary rate for 457 visas, and certain conditions for 457 visas.

Turnbull allowed Labor to be “talked off the ledge” by giving up concessions that ultimately require no change to the ChAFTA legislation. Shorten himself noted that the changes would be made to migration law. Labor was allowed to save face, while the government gets another free-trade agreement under its belt. It is difficult seeing that ever happening under Abbott.

As the week ended, Turnbull made a deliberate point to attempt to earn back the government’s much-maligned science credentials. In a speech for the Prime Minister’s Prizes for Science dinner on Wednesday night, Turnbull said science had to be at the heart of the nation’s agenda:

“Now you have seen the way we have put innovation and science at the centre of our agenda. This is of critical importance, absolutely critical importance, to our success as a nation, to our success in the world.”

We are still waiting for the policy announcements to go with it, beyond just the tech buzzwords of “disruption”, “agile”, and “innovation”, but a good move to start was the government revealing it would not go ahead with plans to fund a $4 million research centre headed by Danish climate skeptic Bjorn Lomborg. The original proposal was rejected by the University of Western Australia, but the federal government was searching for a university to host the centre. The decision to withdraw the offer came from now-Innovation Minister Christopher Pyne shortly before the cabinet reshuffle.