Is the government opening an NBN Pandora’s box?

Without a firm plan in place for the NBN rumours continue to abound. I just spent a few days in Canberra and it is worrying to see the destructive forces at work in what is still a highly polarised political environment. Instead of moving forward the government keeps harking back to the past, concentrating on establishing blame rather than governing for the future.

More NBN reviews have been announced and the rumour mill on this topic varies from the aim being to find reasons to give up on the NBN altogether, blaming it on wrong processes initiated by the previous government, to it being an attempt to get back at Stephen Conroy because of his remarks about the military regarding their involvement in the refugee issue. So far nobody has come up with a positive reason for this review.

Then there are rumours of new handouts to Telstra, and possibly Optus also, in order to make the multi-technology model work. Both Telstra and Optus are reluctant to maintain their ageing networks and they are in a very strong position to get the government to foot the bill for that maintenance. This could be worth one to two billion dollars a year.

If that happens the government will have opened a can of worms. One only has to look at recent developments such as the asbestos scare and the various flooding incidents around the country that exposed the problems with the ageing copper network. Such issues would be a political nightmare for any government. It would also open the political floodgates for people in the bush where repair delays are sometimes measured in weeks and months. Any Opposition would love to get involved in looking after these customers by blaming the government for poor maintenance.

The ‘maintenance’ deal will not just include the copper and HFC networks. It will also relate to the various operational and billing systems (OSS and BSS) – another major problem area. Over the last 30 years tens of billions of dollars have been poured into these systems, often simply to make them as complex as possible in order to game the regulator during the decades of monopolistic behaviour. Despite efforts in recent years to streamline all of these systems that have been built, the situation around them remains messy. One of the positive elements of the FttH NBN was that all of these systems would simply be bypassed by one – wholesale only – new system. But yet another rumour is that this one system, as developed by NBN Co, is also faltering. Hard to know who and what is right.

There still might be a hundred or more such OSS and BSS systems that are linked to the old Telstra networks and in order to run the multi-technology model most of them will need to be maintained – who will do that?

The government has painted itself into a corner with its complex infrastructure model and it will most likely have to pay extra money to Telstra (and Optus) in order to maintain the ageing systems and infrastructure. Perhaps one positive that might come out of this is a clear commitment to an end date for these systems – I assume they will not be maintained indefinitely – and this will at least give us a policy indication of the final transformation of the total fixed infrastructure to FttH.

Pandora’s Box

In the meantime the already complex technology situation has been made even more complex, with conflicting advice in relation to infrastructure and its regulation being given to the government by organisations such as the ACCC and Communications Alliance, as well as by companies like Vodafone, Telstra and TPG (and many others).

The ACCC wants to see more infrastructure competition, something that TPG also has already indicated it would like to pursue, and if that level of cherry-picking is allowed than also Telstra has indicated it wants to jump on that bandwagon. This would totally demolish the NBN model, as NBN Co has already indicated – and the Minister has also raised concerns on that matter.

The ACCC also hints at such a wholesale demolition of the NBN, suggesting that the whole commercial NBN model be changed to one that provides full competition, but also full subsidies to those areas where competition will not deliver high-speed broadband.

Comms Alliances, quite correctly, indicates that VDSL competition would be a technical nightmare and Vodafone wants shared mobile infrastructure in regional areas. This proposal is fiercely opposed by Telstra, which has already indicated it is willing to take any such action to court.

Yes, I think that is what you can expect if you start to unravel the NBN model. As we have mentioned in our numerous analyses during 2012 and 2013, it could take years just to sort all of this out. When in Opposition, Malcolm Turnbull promised a swift resolve. It was first promised that his plans would become clear by mid-2014; he is now talking about December and even that is ambitious. As Comms Alliance also pointed out, we still don’t have standards or guidelines about this mixed technology solution, and the longer that takes the more difficult it will be to create a cohesive infrastructure plan – and the longer it will take to get such a complex plan underway.

The Minister also promised that during the interim period the NBN would continue to be rolled out along its original FttH plan, but here too the communities involved argue that these promises have been broken – we see an increasing number of disgruntled communities around the country.

With no clear direction on the horizon and many competing and contradictory messages coming from regulators and the industry it does not look as though the situation is becoming any easier for the government. With the government, the regulator and the industry all coming up with conflicting solution it will be the broadband users who are going to suffer from all of this.

Paul Budde

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