The NBN strategic review - designed to provide a clean slate from which the Coalition’s NBN takes shape - will get a public airing; but not in a hurry, and certainly not at a time of the opposition’s choosing.
The draft document holds the ‘unvarnished truth’ that Communications Minister Turnbull is so keen to hear. But it’s becoming clear that there’s a lot in the report that the minister may find somewhat unpalatable.
NBN Co executive chairman Ziggy Switkowski will be relieved that his part in the opening gambit by the Coalition is done for now. However, as his predecessor Mike Quigley pointed out this week, Dr Switkowski and his team face the perilous prospect of getting stuck in a political mire of reviews and rollout targets.
As for the contents of the strategic review - at least the bits that we will get to see - the emphasis will almost certainly fall on the mess left behind by Labor. That allows Turnbull to set the scene with regards to making his timetables and costs look positively radiant against Labor’s alternative.
On paper, the Coalition’s $29 billion price tag doesn’t look all that attractive when compared to Labor’s $37 billion, especially when Fibre to the Premises (FTTP) is clearly the better technology option. Just how big an underestimation that $37 billion figure is still unclear, but the Coalition will rely on the strategic review and the cost benefit analysis to inflate that number to provide as much distance between it and Labor.
The same applies to the rollout targets.
It’s an entirely predictable outcome of what was always designed to be an inward facing exercise. The stipulated 60 day review period provided room for nothing more.
Presumably, the Coalition government now has a picture of just what went wrong at NBN Co, and the internal dysfunction that hamstrung the rollout will no doubt be gleefully put on display by Turnbull. But it's the same dysfunction that could also potentially prove fatal for the Coalition’s NBN.
The copper question
Making informed decisions will be crucial to NBN Co meeting the deadlines and perhaps the biggest decision facing Dr Switkowski is how to best utilise Telstra’s copper to get Fibre to the Node (FTTN) up and running.
It boils down to the state of the copper - that critical last mile - which may or may not be fit for purpose. Telstra’s network is a mess, but not quite as bad a mess as some would imagine.
Communications, Electrical, Plumbing Union (CEPU) official Shane Murphy told the Senate Select inquiry a few weeks ago that with 75 to 80 per cent of Telstra’s network in a state of disrepair, paying money for the copper would be akin to perpetuating a “fraud to the Australian public.”
That's a rather simplistic assessment. The copper is in fact in various stages of disrepair, with the good, the bad and the ugly bits all pitching in to keep the ADSL market chugging along. The network isn't perfect by any means but neither is it in total disarray.
The copper network simply gets the job done, but can it do the job the Coalition wants it to do?
The problem of maintaining the copper has escalated since privatisation and Dr Switkowski might not recall how things were under his tenure but former Telstra director Greg Adcock should be acutely aware of which parts of the network are workable and which are beyond hope.
The somewhat rapid appointment of Adcock as NBN Co’s chief operating officer was designed to bring some of this knowledge on the table as quickly as possible, and the next step - whether to buy the copper outright or lease it from Telstra - hinges on this knowledge.
Buying or leasing - what’s the best option?
From a technical perspective, buying the copper outright helps NBN Co.
It allows NBN Co end to end management of the rollout and the management of the copper network. However, without a thorough forensic audit of the entire copper network, there’s no way an outright purchase of the network can be justified.
It’s no wonder that the leaked NBN Co document strongly stressed against any such purchase, even if Telstra might be keen on it.
Leasing the copper is the other alternative, with Telstra charged with the maintenance of the network. Ovum research director David Kennedy says that a managed services deal with Telstra maintaining and operating the network is the best option for now, but some of the operational aspects could over time be transferred to the NBN Co. There's also a potential for the deal to see some of Telstra's maintenance workforce migrate to NBN Co over time.
It will be a fiendishly complex deal and at the end of the day NBN Co pays no matter what. As Kennedy puts it NBN Co will just have to bite the bullet on the copper.
While Fibre to the Basement and FTTN trials are currently underway, the strategic review will not provide any meaningful insight on vectoring, other than that to say it’s a viable option for some areas. Despite Malcolm Turnbull’s vehement cheerleading on vectoring, the fact is that it’s still not commercially deployed anywhere. Belgacom is tentatively set to get the ball rolling in the first quarter of 2014 but until then no one has turned on the switch on vectoring just yet.
The good news for NBN Co is that the experience of the European operators throughout much of 2014-2015 will provide crucial insight on making the promise of vectoring work.
The condition of the copper will still be final arbiter and there is still an enormous amount of diagnostic work that needs to be done. Mike Quigley’s advice to Dr Switkowski isn’t too far from the mark; NBN Co just needs to keep its head down.