The Coalition NBN: more fibre than nodes?

With four reviews in various stages of beginning and with no set end days, it could be a long time before the government can make evidence-based policy decisions. In the meantime, the fibre roll-out looks set to continue.

In opposition a political party is omnipotent. It can make promises (non-core of course) that are quiet fanciful.  In government, the party’s promises become the playthings of a political reality where law and due process, not reckless rhetoric, rules.

Indeed, the opportunistic hubris of opposition can become a toxic tonic when in office.

In mid-August, I reported on new forces coming into play that would shape the NBN that the Liberal-National opposition intends to deliver. (A fibre surprise for the Coalition's NBN, August 14)

Notable among them were the number media and communication companies that were factoring into their forward planning the commercial value of access to a 100Mbs pipeline into the homes and businesses of 93 per cent of Australians.  That the pipeline was doubly attractive: it was being delivered at no individual cost to the companies or to the Australian homes and businesses.

Earlier still in August, the shadow minister for communication, Malcolm Turnbull, told Alan Kohler of Business Spectator that, on election to government, he would immediately halt the roll out of the NBN on a fibre to the premises (FttP) basis, pending a thorough-going review of the NBN. This would be a prelude to turning the NBN roll-out towards the coalition’s stated policy of delivering broadband on a fibre to the node (FttN) network, with the customer connecting via the existing Telstra-owned copper pair telephone network, or paying for a fibre connection themselves.

This instant succession of work seemed unlikely. A 60 day down-tools will raise huge opposition in NBN Co., those about to be connected, and among contractors, and may be the trigger for tens of millions in law suits against the Commonwealth government.

One review good: three or four reviews better?

So it was no surprise last week to read that the NBN’s FttP rollout would continue, where work had started, until the review was completed, or more correctly, three reviews: a strategic review to be conducted internally, a cost-benefit analysis and an independent audit.  A fourth, less urgent review, will look at ownership structure.

No down tools

Now a further 300,000 premises whose connection has been contracted will be OK and work will continue on a further 645,000 premises where connection plans are well advanced. There are also a further 66,000 premises which are passed by fibre but not connected.  Work will continue on their connection. 

That’s just over one million premises that would have missed out if the threat of a September 7 stop-work had been implemented. 

Work to connect a further 900,000 premises, at an early planning stage, is now suspended, but may recommence especially if contracted staff become available before the various reviews are complete.

In August, Turnbull was confident the strategic review would be completed within 60 days of election to office. But when the policy rubber meets the unyielding macadam of Canberra’s corridors of power, speedy ambitions become skid marks.

Goodbye board

The former chief executive, Mike Quigley, announced his resignation in July, and the one-time head of Telstra, Ziggy Switkowski, is favoured to take over the job. But a company’s board normally has a large say in the appointment of a chief executive and, as of Monday 25 September, technically speaking, the NBN has no board.

Yes, it seems, the new minister had discretely invited the NBN board to quit along with the chair, Siobhan McKenna, just incidentally, a close business colleague of Lachlan Murdoch. That would clear the way to appoint members who had the minister’s confidence and, potentially, to shape the strategic review towards government policy.

But the appointment of a new board is the business of cabinet not the minister.  Certainly the minister’s office does the work but approval comes from cabinet, so the approval and appointment of a new board must wait until at least this week, more likely next month. 

Work on the strategic review has commenced and the minister has directed the NBN to conduct trials with the node technology, but almost half of the original 60 days schedule has passed since the election.

The goal posts have been shifted slightly, with the ascension of the new board now set to be the starting point for the 60 day review.

Costs and benefits

The need for cost-benefit analysis of the fibre to the premises (FttP) strategy was a demand of Messrs Abbot and Turnbull from opposition and their agency of choice was the Productivity Commission. Now they have cooled on the Productivity Commission idea as its chairman, Peter Harris, was formerly head of the Department of Broadband, Communication and the Digital Economy, under whose auspices the FTTP/NBN Co. strategy was developed.

This certainly means the cost-benefit analysis will be done by one of the big accounting firms. As none of them answer the phone twice for under $100,000, the work will probably have to go to tender. In the meantime, the fibre roll-out continues.

The same applies to an independent forensic audit, but that is an exercise in historical accounting, with just the possibility of a lynching or two down the road

The government has also flagged the prospect of opening up NBN Co to private sector investment, but to attract investment the NBN has to show the prospects of returns. For the moment, there is still a lot of blue sky in the broadband project.

The Telstra factor

Key to the success of the new government fibre to the node (FttN) strategy is the use of the existing copper pair telephone network to connect the fibre nodes to the home or business. Two factors bear directly on the implementation of the strategy: the quality of the copper network and the willingness of Telstra to sell access to it.

Telstra has already sold access to its pits and ducts to NBN Co for $11 billion. Under the FttN strategy, there will be less use of the pits and ducts, but extensive use of the copper network, and Prime Minister Abbott has intimated that Telstra shareholders will not be worse off (or kept whole in Abbott-speak) under the new deal.

The copper network will require long term support. Formerly, the telephone service was to be carried on the new fibre network and the copper phased out over time. Telstra could decide that it’s a zero sum game and just take the $11 billion or it could seek more compensation to meet long term maintenance and replacement costs of the copper.

The negotiations for pit and duct access took 18 months, so access to the copper network itself, as well as the cost of the access, could be a long time coming.

And then there is split opinion on the quality of the copper network that has developed over the past century. The early network cabling was multiple copper wire pairs wrapped in paper insulation and enclosed in a lead sheath. Your correspondent’s home phone was connected to such a lead shielded cable. Constantly noisy and routinely failing after rain, Telstra replaced it with a plastic insulated cable about 15 years ago.

How much old cable is still in service is unclear, as is how much of the network is capable of meeting the target data speed of 25 Mbps.

Between the conception and the creation…

The coalition government is under pressure on a number of policy fronts, climate change, refugee policy and the NBN.

The NBN will be a particular test of Malcolm Turnbull. There’s a gulf of difference between punting policies in opposition and delivering results in government. Having sold a minimalist model to his colleagues he has to deliver. The more delays in the implementing the government’s FttN policy there are, the more homes and business that will be passed by the FttP network, the Labor Party’s pilloried model.

With four reviews in various stages of beginning with no set end days, it could be a long time before the government can make evidence-based policy decisions. In the meantime, the fibre roll-out looks set to continue, moving us closer and closer to a FttP network.

And after months of spruiking ADSL technology and its derivatives, Mr Turnbull has become technological agnostic. Very interesting! Is it time for masterful ministerial inaction while the fibre rollout proceeds?

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.