Coalition's NBN on the right track?

With the NBN debate more divisive than ever and the policy framework held hostage to petty politics, there are signs of some positive thinking from the Coalition.

With the national broadband network debate proving to be more divisive than ever, the policy framework has been held hostage to petty politics. There is ample evidence that the creation of a new, ubiquitous national infrastructure holds enormous potential for social and economic benefits. It’s only after these benefits have been fully factored into the policy framework that we can start talking about the plumbing.

In most countries it took some time for governments to understand that the next generation of digital infrastructure was much more than just telecoms infrastructure. However, most are now well aware of this and are putting policies in place, on both the supply side (infrastructure) and the demand side (applications). Australia was one of the first countries to recognise these benefits, and they were taken into consideration in the current broadband plan.

However, Canberra has failed to fully implement this within the policies that have been developed. The legislation and regulation in place clearly makes the NBN a telecoms infrastructure initiative and there is little indication that the business and financial models underpinning NBN Co are taking social and economic benefits into account. The implementation of such a model has always been fraught with risk, since traditional telecoms income for NBN Co will decrease and the real value of the infrastructure will come from the services that are built on top of it.

At the same time the Coalition has wasted an enormous amount of time banging on about why the NBN will be a waste of time and should be killed off. This myopic approach has not served the cause of delivering better broadband to Australians. Many people and organisations in Australia tried to get the Coalition involved in the nationwide discussion – over a thousand industry and consumer volunteers worked together between 2007 and 2010 to develop what they believed would be the best infrastructure for the country.

Interestingly, this debate had already started in 2005 when the (Liberal) minister for communications, Helen Coonan, was leading the debate. However, unfortunately the Coalition cut off all ties with the debate when it lost the election in 2007.

Under Turnbull's leadership 

It wasn’t until in 2010, when a new shadow minister for communications arrived, that the Coalition started to become more engaged in the debate. Under the leadership of Malcolm Turnbull, the waste of money and kill-at-all-costs one-liners have started to disappear. However, it must be said that as recently as a few months ago the Leader of the Opposition was still claiming that the NBN would be killed off, and the Shadow Treasurer, Joe Hockey, remains a NBN denier.

The good news is that despite the rhetoric, the NBN is no longer under threat and will be built.

Nevertheless the Coalition’s contribution to the debate has so far remained concentrated on the plumbing of the NBN, and the fact that it could be done cheaper. This brings us back to the comment at the beginning of this article – why are we building an NBN? Unless the Coalition indicates what they think we need the NBN for, there is no way that proper policies, business plans and financial models can be developed.

Recent discussions have made it clear that the Coalition is now also moving into these broader issues and that further progress has been made. In this respect my understanding is that in principle the Coalition agrees that:

  • The NBN is not a waste of money. It is important for the digital economy of this country as a key enabler of productivity.
  • Fast ubiquitous broadband is a ‘must’, not a ‘would like to have’.
  • They also agree that there are good reasons to believe that over time FttH could be the end result and that any technology path chosen should enable this to happen.

This acknowledgement reinforces the view that the future of the NBN would be secure under a Coalition government. No doubt they will skin the cat in a different way, but with these very important principles in place it will be interesting to see what alternatives they can come up with.

Can the Coalition learn from history?

A key problem that the Coalition will have to overcome is that, based on lessons learned from history, changes to telecoms policies and regulations often take a long time. One of the Coalition’s criticisms is that it took five years to get the NBN to where it is now. We can look at other changes. A proper telephony wholesale arrangement took 10 years to reach a point where the industry could work with it, and local loop unbundling took 8 years.

If the Coalition has to make changes to the legislation and the regulations their promise of delivering broadband faster to the market will not be achievable. If little or no changes are needed this could perhaps be done within a year; anything beyond that could take two or three years. Just think of renegotiating the lucrative contracts Telstra has with NBN Co. There is a lot at stake here for the telco and it will not shy away from legal action if its financial situation is threatened. Winding back the clock and giving Telstra back its monopoly is also not an option, and the Coalition has clearly indicated that they most certainly do not want to do that. But there is very little wriggle room here.

However, the Coalition’s broad NBN framework is now more or less in place and the principles that we understand they agree to are providing a good platform to look for alternatives. Of course, if within this framework the Coalition believes it can deliver the NBN cheaper and faster then such a plan deserves our full consideration. 

This is an edited version of a blog originally posted on November 13. Paul Budde is the managing director of BuddeComm, an independent telecommunications research and consultancy company, which includes 45 national and international researchers in 15 countries.