Turnbull pops the bubble of broadband nirvana

Malcolm Turnbull now has room to proceed with whatever mix of technologies an NBN Co review recommends. But those who want fibre in the future will find it costs much more than they expect.

Malcolm Turnbull's first media conference as communications minister shone new light on the wholesale resignation of the NBN Co board – there is the possibility of some of them being retained, but they were asked to resign to give the government "complete flexibility" to restructure the company's operations.

That's a relief, and reassurance that the portfolio is not going to be used for political payback. Turnbull, shaking off his opposition role of sniping at every failure, even praised the existing board: "They are all very capable people and for the work they’ve done we owe them a debt of gratitude."

The Coalition has made no secret of seeing the board as 'stacked' with pro-Labor consultants – so many will go – but Turnbull appears to be going out of his way to be even-handed as to which of them has the skills to work on this kind of infrastructure build.  

However, there are some political points to be scored from the full release of the interim corporate plan, some of which was leaked in June, showing NBN Co's progress in connecting homes and businesses, and the cost of doing so.

Turnbull was right, before the election, to claim Labor was concealing the report. It showed a downgrading of the target for premises passed by NBN Co fibre, from 1.3 million, forecast in June 2012, to 981,000 in this June's plan (a figure already leaked).

However, Turnbull says that figure is now 729,000. Those numbers, had they come out during the election, could have been explosive. It is often overlooked that a majority of voters still supported the Labor plan going into the election – though had they seen the targets tumbling and tumbling again, many would have preferred the 'slower, sooner' plan being offered by the Coalition.

Turnbull now has breathing space to proceed with whatever mix of technologies a full review of NBN Co's activities recommends – meaning he won't have to stick to the split he took to the election, which broke the 93 per cent fibre-to-the-premises build into 22 per cent FTTP and 71 per cent fibre-to-the-node.

Turnbull has two immediate objectives with regard to the rollout.

First, he doesn't want the somewhat fragile and already stretched pool of construction labour to be disbanded. Under Labor, NBN Co had to resort to training its own fibre-splicing teams because there just weren't enough around. The last thing Turnbull wants is for the contractors employing them to decide it's all too hard (The NBN is now Malcolm's Mess, September 25).

Secondly, he does not want to disrupt any of the easy fibre installations – he has ordered NBN Co to carry on with greenfield site work. This is a no-brainer. Fibre cabling is barely more expensive than copper, so new developments – particularly multi-dwelling complexes, must have fibre and (at present) it must conform to the gigabit-capable 'passive optical network' architecture devised by the Labor-NBN project.

But beyond those to interim objectives, Turnbull has massive scope to play with optimising speeds, and speed of build. 

His network will be a patchwork of technologies that does not achieve the elegance and commercial benefits of a uniform user experience (in particular the benefits to businesses being able to serve what they like to customers with a uniformly 'unlimited' experience of reliability and speed), but then NBN Co was taking just too long to deliver that vision.

To be fair to the Conroy NBN plan, however, the most recent downgrade to the premises passed figure largely derived from problems with asbestos in the Telstra pits and ducts – a problem David Thodey, not NBN Co, admitted was his company's alone.

The draft report we should have had before the election also showed how far NBN Co had come in refining the construction processes. It notes: "FTTP Access Network cost per premises passed has decreased from an average of $5,000 for the Tasmanian Pre-Release sites to an Estimate at Completion average cost  of between $1,100 and $1,400 per premises passed".

The figure for connecting each home has fallen to an average of $1,100. So even using the worst case, the total average cost of passing, and connecting, a home is now – in practice, not theory – $2,500.

During the election, and to this day, Turnbull has managed to get away with saying that businesses or homes need fibre to the premises, and would pay up to $5,000 to get their own line from the 'node' on their street corner.

However, that figure was based on a BT offering to do the same in the UK. An approximate purchasing power parity analysis I did at the the time – which took into account the high Australian dollar and the lower labour costs in the UK – showed the real cost was likely to be up to $9,600 (A political deathmatch using fibre and copper, April 9).

Australians who want fibre in future will either pay a lot more for it than they expect, or the taxpayer will pay well over the odds to help them do it.

Nonetheless, Turnbull's triumph is having convinced many Australians that rather than grow old waiting for broadband nirvana, they'd be better off with his earthly offering. In a month or two, when the review is done, we'll know exactly what that is. 

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