Turnbull's charm won't sell the Coalition NBN

The opposition's "mix of technologies" goody bag may work on paper but it might not be as cost-effective as promised.

An ever articulate Malcolm Turnbull took the stage at the Kickstart 2013 forum this week and connected the issues of productivity, innovation, start-ups and the NBN with his usual aplomb. This was a seasoned performance by Turnbull who relishes every opportunity to project his image as a conviction politician. Along the way, he not only managed to berate the fans of the Labor NBN but also drop a few subtle hints about what a Coalition alternative might look like.

Far be it for him to deny the usefulness of a NBN, the shadow communications minister robustly declared that the Coalition will deliver the benefits of the broadband to Australians at a far quicker pace than Labor. And lest we forget, there will be that cost-benefit analysis as well, to light the way as the Coalition scurries around the country rolling out its cheaper NBN.

All of this is pretty par for the course. Couched within the motherhood statements about encouraging innovation and bolstering productivity is the tired old trope of why the Labor NBN is an ill-conceived endeavour, supported by an ill-informed posse of zealots. More on that later.

As far as the Coalition’s NBN is concerned, the hybrid fiber-coaxial (HFC) network is set to be revived and Turnbull has hinted that the idea of users on the fibre-to-the-node (FttN) network paying to upgrade to full fibre (a la British Telecom’s Openreach “Fibre on Demand” model) was palatable.

The BYO Fibre option is viable on paper but this is really just one of the many potential options in the Coaliton’s “mix of technologies” goody bag. The important thing to keep in mind is that there is no way we can nail down just how much a fibre on demand scenario is going to cost.

According to Ovum analyst David Kennedy, the cost could range from hundreds to thousands of dollars purely dependent of geography. With the bulk of the cost being civil works, the final price will depend on how far the premises are from the node and whether there’s duct capacity available. This won’t be a fixed price scenario and while we know that there is an appetite for high speed fibre services right now we will have to see if that translates to demand when the household has to put its hand in its pocket. The Register's Richard Chirgwin provides an insightful look at just how the model is working in the UK and his words are well worth reading.

As for Turnbull’s HFC revival plans, a lot of ink has already been spilt on why this is a bad idea, and while the HFC networks can indeed be used as a stop gap measure this gambit could end giving the Coalition a substantial headache.

The existing HFC network footprint will bring with it significant rehabilitation costs, simply because Telstra and Optus haven’t been in earnest in the upkeep of their respective networks.  Getting Telstra to get serious about its HFC network and open it up to competition, albeit on a temporary basis, will be an almighty task for Turnbull (or whoever ends up wearing the mantle of communications minister).

Good quality HFC and VDSL2 networks will quite possibly survive for another couple of decades but there is little incentive for the telcos to change their long-term investment and business strategies. There is still life left in the existing HFC networks but extracting sound value (high-speed, quality services) will require substantial upgrade work. Higher uptake of high-speed services will lead to delivery and reliability issues and just how economically viable this proves to be remains to be seen.

Labor’s NBN gambit hinged on making Telstra an offer it couldn’t refuse and Optus was given a sweet price to decommission its HFC network. Just how the Coalition will convince them to throw away the bird in hand will make interesting viewing. The impending re-negotiation process with Telstra will ultimately determine the fate of the Coalition’s NBN. Turnbull has unequivocally stated that he would like to see the existing “anti-competitive” deal rescinded but while Telstra is open to the idea its first priority will be to ensure shareholder value.

None of this changes the current state of play with regards to the future of the NBN, Turnbull has hinted a few scenarios which are technically viable but may not be as cost-effective as professed. The most important consideration for the public is the cost of the NBN. We know how much the Labor NBN will cost but only have educated guesses on the price tag of the Coalition’s counterpart.

For all of Turnbull’s indignation about the state of the NBN reportage, he will be hard pressed to deny that when it comes to real dollars and cents, the Coalition is yet to reveal the numbers. We are told that the financial modelling is all there, just waiting to make an appearance post-election, but for now all we have is an ode to pragmatism unsubstantiated by a real ballpark figure and the promise of a quick cost-benefit analysis without a concrete timeline.  

Supratim Adhikari attended Kickstart 2013 as a guest of event organisers, Media Connect.

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