The nbn: who's to blame?

By Dylan Bushell-Embling
Tuesday, 24 October, 2017

The nbn: who's to blame?

The current government is mostly to blame for the “train wreck” that is the current state of the nbn, according to telecoms expert Paul Budde.

In a blog post responding to Prime Minister Malcolm Turnbull’s recent comments claiming that the decision to create a state-owned company to deploy the nbn was a “big mistake”, Budde said it was Turnbull’s own plan to replace the original full-fibre plan with “a second rate solution” that has led to so many of the problems with the rollout.

“[The policy] among other things resulted in a ban on competitors not being allowed to roll out superior FTTH broadband services; who would have thought such a policy from a pro-business liberal government,” he said.

“It is that second rate solution (FTTN) that is causing the main problem. There are no complaints from the 1 million households who were lucky enough to be part of the original FTTH roll out.”

But Budde did note that there is plenty of blame to go around. He affirmed Turnbull’s assertion that Labor’s original projections of a return of investment of 6–7% were unrealistic, and said he had repeatedly told former telecoms minister Stephen Conroy so. Budde also noted that plans to replace HFC and ADSL2+ connections could have been replaced much later as a next phase of the network project.

In addition, he said Telstra, under former CEO Sol Trujillo, is a major reason the nbn project has turned out the way it has.

“[Trujillo] wanted to maintain Telstra’s monopoly at all cost. He didn’t want to roll out a nationwide high-speed broadband and instead wanted a regulatory holiday to roll out a FTTN broadband network to approximately 50% of the population for which he wanted a regulatory guaranteed subscription charge of $95 per month (later reduced to $85). He sued the government when they wanted to change the Telstra monopoly,” Budde said.

“Yes with hindsight and with the current Telstra management in place a better outcome would have been possible, however in the Trujillo period this was simply not an option.”

The nbn is still feeling the effects of the Trujillo years, with nbn co forced to pay Telstra around $1000 per household for the use of their cables and ducts.

Budde also noted that if Turnbull is correct that the train wreck was inevitable, “why did he then overrule Tony Abbott’s argument who said ‘kill the NBN’? that would have nipped that train wreck in the bud”.

“Obviously, he didn’t see his change in policy as a train wreck in the making as he indicated he could build the NBN for $25 billion and it would be finished by 2016. We all know what happened the price tag is now $50 billion to be finished in 2020/2021 and we now saddled with a second rate network.”

What’s more, Budde said, if the trainwreck was inevitable one would expect nbn co’s engineering experts to push back against the plan, but instead the company was happy to let the multitechnology mix model move forwards.

“On the positive side the current admissions are potentially making it possible to look at solutions. By writing off 50% of the roll out costs, the government could at one stroke of the pen make it instantly possible to deliver more affordable true high-speed broadband,” Budde said.

“This would then also provide for a better platform for the next step of the NBN be it privatisation of the company or finishing the current roll out by the nbn company with FTTH as the end goal, something also the Prime Minister has mentioned in the past as being the preferred end goal.”

In the meantime, Budde called on the government to halt the rollout of fibre to the node (FTTN), replacing it with fibre to the curb (FTTC), a superior technology currently being trialled by nbn co.

“More money spend on FTTN will only make the NBN less valuable and continuous the waste of taxpayers’ money, if the price for this is a delay of another one or two years so be it, better to do it right in the first place,” he said.

ISP MyRepublic Australia has meanwhile rejected the repeated assertions from nbn co that Australia’s telecoms environment cannot be compared to other countries.

“Of course we should compare ourselves to other countries, just like we should be able to compare our internet speeds with our own next-door-neighbours. Not only that, consumers shouldn’t have to experience lower evening peak rates because of the current flawed pricing model,” MyRepublic Australia Managing Director Nicholas Demos said.

He noted that Turnbull himself recently pointed to New Zealand as an example of a national broadband network project done right, which was itself a comparison to another country.

The comparison is not flattering for Australia, Demos noted. In New Zealand, 87% of the population will soon have access to FTTP capable of supporting speeds of up to 1 Gbps. This compares to a mere 20% of the Australian population being able to access speeds higher than 100 Mbps.

“It’s embarrassing that New Zealand’s internet service is far superior to ours. [nbn co] has admitted the wholesale structure simply isn’t right,” he said.

Finally, Demos called out nbn co for being too focused on ensuring a commercially viable business model instead of ensuring customers are satisfied.

“The focus should be on customer value, not nbn needing protection to make a profit,” he said.

“The nbn pricing model isn’t ‘fit for purpose’ and it’s holding everything back. It needs to create more customer value, starting with abolishing low speed tiers such as 25 Mbps and below.”

Image credit: © Crockett

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