Laura Tingle reckons the arrival of Turnbull’s NBN Strategic Review is deja vu all over again:
The raw politics of this is that, no matter how much the Coalition can complain that it has been left to clean up a Labor mess, a mickey mouse broadband network is now a mess that it owns and has insisted it will put its own stamp on. The cost of this decision is that we have to go back to the start to redesign NBN Co itself; the technological platform of the broadband system, the competition regime and a myriad of contracts.
This will take time.
There is going to be a cost benefit analysis and a review of NBN regulation. There will be changes to procurement strategy, renegotiation of deals with Telstra and Optus, of the special access undertaking lodged with the ACCC, reviews of NBN Co’s fixed wireless and satellite programs, a corporate plan, possible legislative and regulatory changes to access multi-dwelling units and utility infrastructure.
Tony Boyd spells out some of the detail. Significantly, the ‘multi-technology mix’ (MTM) is going to mean that
the entire NBN network technology management system will have to be redesigned. The IT systems will have to be changed and operational processes will have to be modified to support copper, HFC and FTTN.
The Review suggests that the Labor plan would have cost $73 billion rather than $44 billion and would have taken until 2024 to complete. Perhaps worse still, the revenues were revised downwards so the the rate of return would be 2.5% making it impossible to keep off budget.
It should be noted here that Labor communications shadow Jason Clare hotly disputes the findings, saying that the new report was written by Turnbull’s mate to give him the report he wanted. Clare has his own report, written by the NBN experts Turnbull sacked.
Turnbull’s report also has some inconvenient truth for him. His plan would see some 90% of premises reached by 2019, rather than 100% by 2016 as promised in the election. Furthermore the cost has escalated from $29.5 billion to $41 billion. But then up 50% will still have to make the connection at their own expense. The technology mix is expected to be 20 to 26% FTTP, 44 to 50% FTTN and 40% HFC.
David Braue pretty much puts a bomb under the Strategic Review with a series of articles based on a leaked copy of the briefing that was to form the ‘blue book’ for the incoming LNP government. You might say it is the third version of the truth, and an extremely inconvenient one at that.
It’s a must-read summary of his critique which fundamentally questions the viability of the LNP proposal.
For example, LNP ideology has deemed that there should be compatition in the provision of telecomms infrastructure. The advice was that NBN needs to be a monopoly to provide the revenue to make the rest of the build possible, and to create the capacity for cross-subsidising rural areas that will never be profitable.
Hence NBN will need to go hell for leather to grab prime customers rather than build the network rationally and fairly. They will have to do this while redesigning the network and negotiating new deals with telecomms, the ACCC etc. Their cherry picking competitors will have a much cleaner run at capturing premium customers in the main population hubs.
Meanwhile equity and universality will be nowhere to be seen. Firms and service providers, for example in education and health, will not be able to assume universal access, even when the network build is complete.
Indeed, NBN Co identified 12 major issues that the Coalition Government would have to remedy – each of them incredibly complex in its own right – within the next 18 months or so if it wanted to have any hope of meeting its objectives.
Not even Turnbull’s Strategic Review can change the reality of the NBN, which is that changing the direction of Australia’s largest-ever infrastructure project not only involves massive change and unknown risks – but could, by virtue of its own technological limitations, prove unable to deliver enough revenues to justify being built in the first place.
The new government may have chosen to ignore the well-considered advice of the very people that built one of Australia’s largest telecommunications carriers from the ground up in just four years – the same people it will task with building its technically inferior alternative NBN – but it now faces an uphill struggle to deliver a functionally limited NBN that will already be outdated by the time it’s complete.
This government has shown itself far better at destroying than at building. Indeed, it looks like deja vue all over again.