The holes in Coalition's NBN plan

Malcolm Turnbull and the new communications minister Anthony Albanese briefly crossed swords on the National Broadband Network (NBN) this week but there was precious little insight on display.

While Turnbull and Albanese duked it out on ABC’s Q&A program over upload speeds and just how much building a credible network will cost, both found it convenient to fall back on the tried and tested catchphrases.

The one alarming thing that does bear some pointing out , however, is the ease with which the shadow communications minister is allowed to peddle spurious figures on not just about Labor’s NBN but also the Coalition’s alternative.

The media has swallowed and uncritically regurgitated the completely non-credible figures and claims by the Coalition. And it’s an attitude that risk infecting public opinion that has so far overwhelmingly supported the idea of a fibre to the premises (FttP) NBN.

While the Coalition loudly spruiks VDSL2 as a well-proven & economic technology, it fails to address a one curious and unsettling question:

If VDSL2 and nodes were so good and economically viable, why is it that there has been only one new large development (1400 apartments in Adelaide CBD) fitted with VDSL2, since 2005?

Apartment blocks are the cheapest and most profitable telco installations possible, yet it would seem that private ISP's and telcos aren’t willing to commit. Presumably, they have run the numbers & they just don't add up.

If VDSL2 nodes were technically and economically feasible, then with 300,000 apartments constructed between 2006 and 2012, a lot more than 1,400 would've been connected and you'd expect the five to six ADSL2 providers to all be involved.  If VDSL2 hasn't been deemed economically viable until now in Australia, why is it economic now?

It’s important to recognise that the Coalition might have a NBN plan but  it hasn't been  prepared by any telecom experts, nor has its claims, assumptions and figures been assessed by any independent experts. We know this because nobody has signed off on its figures.

In its current form the Coalition’s plan is pure political-fiction concocted for headlines and sound grabs.

Comparing the NBN Co plan with what Turnbull has offered so far highlights particular deficiencies in the Coalition plan.

The NBN Co plan has a risks section, where it spells out the potential costs and mitigations. In contrast, the Coalition’s approach entails multiple “drop dead risks’ which are simply ignored. NBN Co has a $3.6 billion contingency fund, while the Coalition has none.

So far, the Coalition’s plan provides very little in the way of data and details and how its figures have been calculated. Presumably these are things the Coalition means to elaborate on post-election, but for now a lot of Turnbull's sabre rattling should be viewed with a healthy dose of scepticism.

There are also several inconsistencies that warrant further scrutiny. The Coalition plan claims to save on both capital expenditure and operational expenditure while acknowledging that copper is much more expensive to maintain.

The only way to save the claimed $17 billion on nine million VDSL services is if each one doesn't cost anything but they're paid to install it. This is upside down thinking but the machinations can only be disputed once all of the Coalition’s workings are disclosed. The real savings can only be up to $4 billion, provided there are no further "surprises" like the recent asbestos and the pesticide in Telstra’s ducts issues.

The Coalition stress-tested the current NBN Co plan, which is a good thing, but failed to stress-test their own plan. More importantly, nobody has ever run forecasts for high-growth scenarios. If the CISCO VNI forecasts are correct, NBN Co could be running $10 billion to $12 billion ahead of revenue estimates by 2021.

But that's seemingly an inconvenient truth for the Coalition and thus overlooked.

The biggest misrepresentation by the Coalition is that its NBN plan is not a plan for a broadband network any more than a phone network or Cable TV was. The Coalition VDSL/FTTN plan is for a hybrid telephone/DSL network not a pure-digital network like all three other access networks being built.

The VDSL/FTTN plan doesn't allow a pure-digital connection nor the provision of the standard Network Termination Device (NTD) supplied in the other three access networks. This would be at least $1,000 per service, if charged at normal retail prices and installed singly, on-request, not efficiently in a mass-rollout. VDSL modems are not available as Turnbull has stated, for $50. The real price is over $150: we know this because the only VDSL2 service provider sells them for $160.

When challenged on the single biggest project risk, the Telstra agreement, the Coalition merely asserts that the telco will be happy to renegotiate a deal. The supreme confidence with which this assertion is made by Turnbull would suggest that the Coalition and Telstra have already struck a deal. If so, then it should be declared by the Coalition ahead of the election.

The plan also mentions and relies upon vague terms and weasel words: "cost effective", "optional fibre upgrades" and "potential co-funding". These vague terms could well turn out to be "non-core promises". 

The Coalition could well be planning to address the issues raised here post-election but for now it’s simply coasting on NBN Co’s rollout misfortunes. Building the foundations of our broadband future on such a spurious premise would be a disservice to the Australian public.

Alan Kohler will be debating Malcolm Turnbull on Coalition NBN policy at a lunch at the Sheraton Wentworth in Sydney on August 1. To book go to moshtix.com.au and type nbn.

This is an edited version of a blog post originally published on July 1. 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.