TECHNOLOGY SPECTATOR: Taking politics out of the NBN

With the NBN debate in Canberra becoming increasingly tiresome perhaps it's time to depoliticise the issue and remove the core bone of contention: money.

Technology Spectator

The national broadband network was always going to be a political beast but three years since its conception has the hollow sabre-rattling in Canberra actually delivered anything meaningful? More alarmingly, do the routine political shenanigans between Labor and the Coalition actually further muddy the waters for everyday Australians?
Now, expecting politicians – irrespective of their affiliations – to change their spots might be a big ask but let’s keep in mind a few salient points.

– The internet is a game-changer across the whole economy and its full impact is yet to be realised.
– Affordable, universal "fast" broadband availability is in our best national interest.
– That for all but a very few fixed connections, optical fibre is by far the best option technically and economically.
– That what we want in the long term as telecom infrastructure is full fibre connectivity.

With that in mind, let’s consider these questions.

– Can ideologically driven political solutions ever deliver good, let alone the best solutions for complex infrastructure like telecoms?
– Is the current political system destined to deliver an expensive NBN full of compromise?
– Can the tone of the current political debate deliver the most efficient, effective and least costly version of the NBN?

The only thing that can be guaranteed with the NBN staying as a political issue is that the public will not get a good value-for-money solution for their broadband needs.

We have two political parties trying to sell us competing versions of a product not yet built and which we'll consume and pay to use for a very long time. I would like to suggest that the only way to get a decent national broadband network is for consumers to take this debate away from the politicians.

We can start a debate ourselves and say what we want and, most importantly, are prepared to pay for. You get what you pay for and we are paying for the NBN and will continue paying for it for decades. Currently, I am not sure if there is anyone who is really happy with any of the solutions on offer.

However, one way to meaningfully depoliticise this debate, is to remove the core issue: money.

Rethinking the NBN funding model

One subject that's never closely examined in the political debate is NBN funding. Each party has always assumed the traditional telco and infrastructure model of "full central funding". One of the reasons that the internet became so popular, so quickly was that it wasn't built or funded by the telcos. The ISP's drove the investment and deployment individually - and subscribers provided their own equipment and connection (modems and phone lines).

Rethinking the NBN funding model might be the way to defuse the NBN as a political issue. And here's also potentially a straightforward solution that could provide definitive information about what the Australian public truly desires.

This solution would entail:

The direct purchase of bonds or non-voting shares in NBN Co.

– Shares would entail maximum risk for owners, but allow maximum returns. Individuals can invest any sum they like, or nothing at all. Being "non-voting", like News Ltd, shareholders can't change the Board, CEO nor directly affect policy and plans.
– While bonds are sold at a single interest rate. I'm suggesting a variation, multiple series of bonds at different interest rates, with the total bonds available in a series decreasing with the interest rate. Possibly offer 5 and 10 year terms on the bonds as well. Oversubscribing series would be distributed either by ballot or proportionally.
a) 3.25 per cent - $20 billion [start under the current RBA cash rate]
b) 3.75 per cent - $10 billion
c) 4.25 per cent - $5 billion
d) 5.00 per cent - $2.5 billion
– Investors who are comfortable with the long-term prospects of the NBN might first think of taking a lower interest rate.
– All these rates are lower than the 7.1 per cent rate-of-return NBN is currently required to pay the Government. Moving the funding to bonds means we, as subscribers/customers, pay less for our services because NBN Co can reduce profits, and we lessen the debt the government enters into for us.

NBN subscribers will be allowed to indicate their commitment now by entering into a binding agreement to take the service when available. These agreements must be rescindable or be varied every 12 months or in the event of force majeure. They wouldn't bind NBN Co to install dates.

– Commit to attaching the service at low- (12 or 25Mbps) or high-speed (50 or 100Mbps), but prepay nothing.
– Commit to service, pay a fee as a 'refundable deposit' (with 3.25 per cent p.a interest till connection) or to purchase a discount plan, only available prior to connection.
a) $500
b) $1000
c) $2000
d) $5000
– Having customers pre-pay deposits gives NBN Co access to cheap working capital.
a) A nice variation would be to apply the prepayment or deposit to the wholesale connection, buying some period of prepaid service. ISP's can still make their margin, but pay NBN Co nothing for that line for the prepaid period.
b) When the prepayment has been consumed, it wouldn't be offered again.
– NBN Co can prioritise deployment based on committed connections, not guesswork or political agendas.
– Individuals or groups with a strong desire for fibre connections might be able to raise enough money to pay for early connection in their area.

Community networking

These ideas of bonds and pre-commitment are very close to what Bendigo Bank currently does with its Community Bank model, which could potentially be a good jump -off point for "Community Networking.”

Another addition would be "sweat-equity" for small communities, currently not in the NBN plans as they'd be unprofitable, or for communities that might wish to speed up connection.

The model is already popular in US schools: "Networking Parties". There's no reason a small town or community of 50-300 dwellings can't dig trenches and lay conduit if the installation is inspected by an NBN Co certified inspector. NBN Co could run, and charge for, these certification courses.

Local communities might be able to find local approved contractors to pull fibre through their conduit. Given that the fibre itself is the cheapest part of the installation it could become a tangible asset of NBN Co.

NBN Co must supply the NTD (Network Termination Device) and they must be connected by a properly trained and approved person, not necessarily NBN contractors. The ethernet switch and GPON equipment must be supplied and installed by NBN Co, though an approved enclosure might be supplied by the Community.

The digital backhaul from these community networks to the nearest NBN fibre might have to be digital microwave, not long-distance fibre. A reasonable starting point could be the rural electricity supply model – where transformers and poles/wires are, like these backhaul links, paid for by the customer, then ownership and maintenance/replacement responsibility is transferred to the operating company (NBN Co).

A win-win scenario

If the proposals presented were implemented and public response was underwhelming, it would reinforce the Coalition’s point that the NBN would be "a great big expensive project that we don't need” and would give them moral authority in the political debate. If Labor truly believes that a full fibre NBN is what the people truly want, it can't object to testing that question.

If, however, we discover that Australians desperately want a full fibre NBN and are willing to put their wallets where their thoughts are, then it's a win-win for the political parties.

Both sides of politics can walk away from the issue without political fallout because they've both got won their argument and we, the customers and electors, get what we want into the bargain.

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