A fibre surprise for the Coalition's NBN

It was inevitable that the calling of the Federal election would return the spotlight to the National Broadband Network (NBN), although the policy positions of Labor and the LNP coalition had stabilised months ago.

But recent events suggest that the coalition’s broadband model, fibre to the node (FTTN) might be implemented less rigidly, especially in areas of high population density, if the coalition were to form the next government.

A 60 day down-tools on the cards

First up, though NBN Co continues to miss self-imposed deadlines, the roll out continues apace.  Your correspondent’s inbox occasionally scores up to two or three media releases in the one day from Senator Kate Lundy or Anthony Albanese or Sharon Bird, (Minister for Regional Communications) bringing the glad tidings that ‘Moonee Valley (is) to benefit from NBN-enabled council services’ or that the ‘NBN (has been) switched on for more homes in Hobart’. 

Progress is being made and shadow communications minister Malcolm Turnbull has maintained that existing cables will not be ripped up nor services terminated. However, the rollout will come to a standstill, albeit temporarily, if and when the Coalition comes to power. 

Earlier this month, Turnbull told Alan Kohler that if the coalition is elected work will stop on the roll-out and nothing will happen until a cost benefit analysis, that he expects to be completed in 60 days, is undertaken. So a 60 day down-tools is on the cards, an eventuality that will raise huge opposition among NBN Co, contractors, and could potentially be the trigger for tens of millions in law suits against the Commonwealth government.

It is not that Turnbull doesn’t recognise that fibre to the premises (FTTP) is a superior technology to fibre to the node, it’s just a matter of cost and who is to pay for what elements in the roll out of the broadband network

Turnbull also told Kohler that ‘he acknowledged that the Coalition’s broadband policy is really for a minimum national download speed (25 megabits per second) rather than a specific technology (FTTN). Where necessary it will be all fibre; otherwise fibre and copper’.

The Telstra X factor

But Turnbull faces a bigger problem than completing a cost benefit analysis in just sixty days, especially if he is to avoid the criticism he levels at the Labor government, that is, making decisions without a thorough business case. The problem has a name and it’s Telstra, which owns that all important copper.

It took several years for NBN Co to negotiate access to the pits and ducts owned by Telstra so that the fibre optic cables that carry the NBN could be installed safely underground. Telstra chief David Thodey has indicated that the company ‘would be happy to work with the Coalition to implement its policy, as long as the contracts the government has already settled with Telstra are honoured."

Which is all well and good but an astute operator like Thodey is unlikely to pass up an opportunity to further sweeten an already lucrative financial deal struck with NBN Co. 

Walking a fine line

If, after 60 days work in not resumed on the NBN, in whatever form, Turnbull will be in hot water and Telstra will have the coalition government over a proverbial barrel.  Pressing on with FTTP installations in many places, especially in areas of high population density where the economic returns will be higher, could be politically and financially attractive to a government trying to be decisive.

There is evidence, too, that Australian business is coming around to support the FTTP philosophy, without abandoning the concerns for cost. Organisation like the Business Council of Australia will walk a very fine line because every cent the government spends on the NBN and, especially, the last kilometre to the factory or office, is a cent their member won’t have to pay, directly at least.

More indicative is the number of business that are anticipating the benefits to their bottom line of being able to reach 93 per cent of Australian homes, offices and factories with a 100 Mbs connection, among them Seven West Media, owners of the Seven TV network,and Foxtel, the Australian monopoly subscription television service.

The Foxtel furphy

Back in March, Foxtel announced the planned introduction of Foxtel Play , an internet protocol television service (IPTV) that would not require the consumer to be locked into a long term contract.  Foxtel management have been moving over the past two years to sure up their competitive position and seek greater loyalty among existing subscribers by offering services such as Catch Up TV, Xbox/T-box subscriptions and a Foxtel Go iPad app.

While the NBN is not the threat to Foxtel’s hybrid fibre copper cable (HFC) network and its satellite service as some have made out, the NBN is an alternate delivery system that can do things the HFC cable network cannot.  Remember, too, that Optus runs a similar HFC cable network and decided the cost of upgrades to be competitive was not worth the cost, and did a deal with NBN Co to migrate its HFC customers to the NBN.

Foxtel Play launched in June and the basic price is $25 per month. It will be available for "selected connected TVs and games consoles at home as well as on the move with compatible smartphones, tablets and PC and Mac computers".  Smart phone and tablets will have access via 3G/4G or Wi-Fi, so seekers of instant satisfaction can always be sated.

This new service is dependent on a fast broadband network.  The (minimum) 25 Mbs can handle the demand if it’s the finals of the Mongolian netball championship on air tonight, but not the AFL or NFL final rounds.

Foxtel need the 100 Mbs service of the NBN for continued profitability and their half owner, Rupert Murdoch, will be owed big if the coalition is elected.

The information black hole 

The new chief executive of Seven West Media, Tim Worner, told a business lunch in Perth on July 26 that the NBN was "critical" to the future of Seven West's television business.

Hybrid Broadband Television (HbbTV) is the generic term for the kind of service Foxtel Play now offers. According to Worner, that has already been rolled out throughout much of western Europe and allows for better integration of television and the internet.

It is an on-demand and pay-per-view services, but has further features that interactive devices like smart phones have. 

Wormer was cagey saying "we can't make it (the rollout) go faster or slower with the NBN, we probably don't have much of a say in whether it's copper or fibre, so we're concentrating on what we've got control over and that's being ready to take advantage of it."

He went on "The one thing I would say is I know from the work going on inside our business we will be ready.  Like Foxtel, Seven West Media is laying plans to use the full capacity of the NBN. 

All these factors would point to a future coalition government modifying their plans for the NBN, under pressure from the business community and the coalition’s political backers.

The change will be sold using the reverse black hole strategy. The coalition have experienced a "Damascus Road Conversion" and now know how important the NBN is to the future prosperity of the country. While the focus on costs has been a deeply divisive issue it's important to consider the NBN as an investment in essential infrastructure long ignored by federal governments of both persuasion. 

Vincent O'Donnell is an honorary associate in the School of Media and Communication at RMIT & Media Policy Editor at Screen Hub.

This article was first published in Screen Hub. Republished with permission.