The NBN's only hope?

Labor's NBN version looks headed for oblivion and love him or hate him, Malcolm Turnbull might be our best bet for a decent broadband future.

National Broadband Network CEO Mike Quigley opened up a huge can of worms when he professed his willingness to consider the option of the NBN being re-designed using different last-mile technologies rather than the current full fibre to the premises (FTTP) model.

Shadow communications minister Malcolm Turnbull was quick to shoot down the suggestion from Quigley, telling his longtime adversary that his call was too late and that any review should have been conducted before the NBN was launched. As far as Turnbull is concerned, it’s too late to talk about other technologies now.

Putting politics and their personal enmity aside you would have thought Turnbull would be relived to finally get a discussion going about using fibre to the node (FTTN) or even upgrading existing Hybrid Fibre Co-axial (HFC) networks for the NBN.

After all, whenever Turnbull tries to do so the reaction he gets from many – especially in the ICT community – is similar to what a father of young children might get if he offered them a fortnight’s family holiday at the Burleigh Heads Caravan Park – after his wife has already promised them a two week dream holiday in Disneyland.

Now it’s payback time

The truth is that while Australia’s current FTTP-led model would – if finished – put it in the broadband ‘Premier League’ with Korea, Japan and Hong Kong that it is actually going very much against the global trend of operators using existing network assets to avoid the huge costs of FTTH in brown field sites.

On a global basis FTTP remains a niche technology with only 14 per cent of global subs currently receiving FTTP services – and if you exclude the ‘boom’ FTTP markets of Asia Pacific only three per cent of global subs are taking FTTP services right now, with most subs actually getting fibre to the building (FTTB) rather than full FTTP anyway.

So, accepting that FTTP under the current NBN Co. plan is expensive, complicated and very time consuming to deliver – witness the fact that NBN Co. had passed only 72,000 of the targeted 12.2 million FTTP homes at end-December – and that the current Labor Party led government seems doomed to defeat in the September election, can a compromise deal be reached?

The chances of Turnbull – even if his good wife Lucy banged him over the head with an antique vase from the Turnbull abode and he awoke a die-hard FTTP backer – being able to persuade the Liberal Party caucus in Canberra that they should stick with Labor’s current model are non-existent.

In fact, the irony is that despite the “uninformed, bilious abuse” that Turnbull says he has received from NBN supporters, he is probably the best hope they have of actually ending up with anything like the current NBN, albeit using different last-mile technology, in the near-term.

Many in the Liberal Party loathe the fact that the current NBN has been foisted on them by the Labor Party, they hate the fact that it creates a monopoly in the telecoms market, are appalled at the closing down of working infrastructure such as Telstra’s HFC network and are vehemently against direct government intervention via NBN Co. in what they feel should be a private market.

That’s before we even talk about the $37 billion price tag for the NBN which many Liberals are not exactly over the moon about either.

The truth is that if you are a backer of the current NBN model there are far worse people who could be taking over the NBN than Turnbull, he won’t deliver them exactly what they want but given their druthers, other potential Liberal Party communications ministers could deliver something much further from the current model.

Lesson from America

In what must be bitterly disappointing times for the current NBN’s most committed backers, they should bear in mind that big structural changes such as the overhaul of an entire telecommunications system very rarely happen over a single government term, or even two for that matter.

The best example of this comes when you look at how President Obama handled the passage of the Affordable Care Act – AKA Obamacare – back in 2010 when he was urged by the left wing of the Democratic Party to go for the ‘Public Option’ and take on the power of the private health insurers head on.

In an ideal world Obama would have loved the ‘Public Option’ of government provided health insurance for all who wanted it but, ever the pragmatist, he realised that going for the end goal in one big, bold move would result in the same all-out war with health insurers. A war that Bill Cinton's Health Care Task Force failed to win back in 1994.

So, Obama compromised and worked instead on a deal he could actually get done, that being to mandate private health insurance for all – thereby tipping millions of new customers into the hands of private health insurers – while they in return agreed to drop some of their more controversial practices and provide fairer coverage.

Sure, this was not the ‘Medicare for All’ dream that many in his party wanted from him but Obama realised that big changes to healthcare – a multi-trillion dollar industry – cannot be done via a revolutionary approach, the change must be incremental or you risk creating so much turmoil that you end up with no change at all.

The same goes for achieving universal FTTP in a difficult market like Australia, rolling fibre direct to homes via NBN Co was always going to be a tough challenge unless the Labor Party held power for a very lengthy period and got most of the job done. That doesn't look likely now and was a difficult endeavour to begin with. 

Instead, in the longer run, we might end up seeing the arrival of NBN Co into Australia’s telecoms market back in 2009 as actually being the first step towards eventual FTTP, with the next Coalition government deploying widespread FTTN and a future Labor government eventually re-launching the FTTP dream further down the track.

Tony Brown is a senior analyst with Informa Telecoms & Media. He is a key member of the Broadband and Internet Intelligence Centre team, covering the broadband and Internet markets of the Asia Pacific region.