Deciphering the Coalition's NBN playbook

The NBN debate so far has been a fierce one and with passionate advocates on both sides it was only a matter of time that things went off the boil. ABC technology journalist Nick Ross recently found himself in the firing line and now that Media Watch has had its say on whether or not he crossed the line, let’s consider why he found himself in this predicament to begin with.  

While there are many who consider Ross’ reporting on the NBN generally well researched and unbiased, the vitriol generated in this particular case does beg the question whether the shadow communications minister Malcolm Turnbull doth protest too much?

If nothing else, it has highlighted Turnbull’s deft touch as a barrister - attack the dissenting voices while ignoring inconvenient but essential questions.

The journalist in this case had the temerity to do two things:

• ask the right questions, and keep asking them,
• and not lie down and accept the Coalition’s line.

The political discourse on the NBN needs to focus on some fundamental issues, especially after Turnbull reiterated the Coalition’s broadband pledge last week.

Firstly, why is the NBN important? Are we trying to create an infrastructure framework that fosters future economic growth or simply creating a faster way of watching online videos at home? I would have to side with the former justification.

The Coalition purposely conflates the NBN with the economically unimportant residential deployment. We have a perfect model for a large-scale green-fields VDSL-FTTN deployment, as well as the Telstra/OPTUS HFC network, but neither is economic. Take for example the case of Transact in Canberra, where I live. After a decade Transact’s Fibre-to-the-Node (FTTN) network failed commercially, it was written down 75 per cent and sold to iiNet last year.   

Even with perfect copper, in the richest, most savvy market in the country, the equation is not economic by telco standards. The operators built it but the customers did not come: what’s different about the Coalition’s FTTN offering? We’ve yet to find out.

Avoiding the central question

As for Turnbull, the shadow communications minister has consistently avoided the central question, necessary for a cost benefit analysis - what's his demand forecast model? If he disputes CISCO's Visual Networking Index (VNI) model, which forecasts both average peak rate demanded and aggregate download volumes, what model does he intend to use? He also avoids the reciprocal question, also necessary for a cost benefit analysis – what are the supply-side forecasts for each of his technologies? How will his FTTN and HFC technologies improve over time and what the upgrades will cost?

Both of these forecast models, with hi/low ranging, are required for any useful analysis. Now, Turnbull should know this stuff from his time as a merchant banker and as an astute investor in technology, so why is he opting to ignore these questions? 

Turnbull and the Liberal MP for Bradfield Paul Fletcher, who will no doubt have a role to play post-elections, know the business inside-out, especially in case of Fletcher who spent eight years at Optus. Both should be well aware of the need to model both demand and service/supply sides over 25-50 years to design and dimension the network and to calculate break evens, discounted cash flows, net present values (NPV's) and the all-important free cash flow. 

With the shadow communications minister promising to outline his NBN policy in "eye-glazingly technical detail", it will be interesting to see if the issues raised above will get a mention.

No surprises, no answers

Furthermore, Turnbull has promised to release the Coalition’s plans ‘months’ before the September election, to allow ample time for scrutiny. So hopefully something tangible is on its way, although Turnbull will have us believe that he has so far consistently provided the necessary details on the Coalition’s NBN.  

''You can never criticise me for not providing a lot of detail,'' Turnbull told Fairfax.

''Australians will have more than adequate time to consider our policy and debate it.''

Leaving aside Turnbull’s risible claim of so far providing sufficient detail on the Coalition’s NBN, his comment to give the public ample time to consider the policy and debate seems nothing more than noise. There is no new information or a concrete commitment.

As mentioned earlier, what's missing are the five fundamentals necessary in this debate:

• The precise demand growth model used.
• The precise supply side growth model informing the limits of each technology, with the guaranteed service parameter.
• A geographic demand and roll-out model, including the percentage of premises each technology will cover.
• Firm costings, if not detailed, then with expert opinions on the risks, relevance, accuracy and upgrades possible.
• The user "affordability" and plan-pricing model.

The Coalition’s NBN playbook has so far had a fair share of hyperbole but little on the issues highlighted in this piece. In fact, that’s one thing Turnbull has been quite consistent about. Here’s what he told Fairfax last week.

''The cost of this NBN, in reality, will shock people. If this NBN were to proceed with its construction on the basis of the government's plan, it would be likely in my view, and it's not an uninformed view, to take over 20 years to complete, and a hundred billion dollars,'' Turnbull said. 

''This is the most reckless exercise in commonwealth investment . . . in our history.  To embark on a project like this with no budget, no cost-benefit analysis. They have never said there is a limit to what you can spend.''

At this rate, Turnbull and Abbot might just as well tell the public that "the NBN will cost them trillions and make their grandchildren's grandchildren live in poverty trying to pay it back." 

Turnbull claims the Coalition’s plan wouldn’t surprise people. The rollout will be sped up and will cost a lot less. But if that’s all he has in store for us then there really won’t be any surprises but neither will there be clear answers.

This is an edited version of blog posts originally published on March 15 and March 17. Steve Jenkin has spent 40 years in ICT in wide variety roles including large and small software projects, 7 years writing real-time Exchange software in a Telco and Admin, Software and Database work on PC's Unix/Open Source software and mainframes.