The Coalition’s NBN plan is starting to look interesting

The debate about national broadband networks in general, and the NBN in Australia in particular, needs to be focused on the social and economic benefits that this new national infrastructure can deliver. Only when this has been established as the policy framework will it be possible to start talking about the plumbing. So, before discussing what such an infrastructure should look like, and how much it should cost, one should clearly define for what purposes it is needed and include the requirements attached to those needs in the design of the infrastructure.

Key elements that should be considered are the need for the NBN to facilitate e-commerce, e-health, e-education, digital media, smart grids, M2M and other low-cost utility applications. The network can be designed according to what is required to facilitate these developments.

The following principles should be taken into account in relation to these broader aspects of the NBN:

The NBN is national infrastructure and not just another telecoms infrastructure, and business and financial models should take the social and economic benefits into account.
While current technologies are sufficient for most of today’s network requirements there is international acceptance that, over time, fibre to the home will be the probable outcome for most people in developed economies, and technology models should be based on that, so that we do not end up in a dead-end street.
The most important element of the NBN is ubiquity. In order to deliver e-health, e-education, e-commerce, M2M, all Australians should have affordable access to service quality levels that guarantee the delivery of these services in a ubiquitous way.

In most countries it took some time for governments to understand that the next generation of digital infrastructure was much more than just telecoms infrastructure; however the majority of governments are now well aware of this and are putting policies in place, on both the supply side (infrastructure) and the demand side (applications). Australia was one of the first countries to recognise these benefits, and they were taken into consideration in the Australian broadband plan.

However, as we have indicated on many occasions the government failed to fully implement this within the policies that they developed. They put legislation and regulation in place that clearly makes the NBN a telecoms infrastructure and there is no indication that the business and financial models underpinning NBN Co are taking these social and economic benefits into account. Right from the start (in 2009) BuddeComm warned that such a model would be asking for trouble, since traditional telecoms income for NBN Co will decrease, as the real value of that infrastructure will come from the services that are built on top of it.

At the same time we have criticised the Coalition who for most of the time has simply said that the NBN is a waste of time and should be killed off. In our view this clearly showed that the Coalition lacked any vision on why such infrastructure is essential for Australia. Many people and organisations in Australia tried to get the Coalition involved in the nationwide discussion – over a thousand industry and consumer volunteers worked together between 2007 and 2010 to develop what they believed would be the best infrastructure for the country.

Interestingly, this debate had already started in 2005 when the (Liberal) minister for communications, Helen Coonan, was leading the debate. However, unfortunately the Coalition cut off all ties with the debate when it lost the election in 2007.

It wasn’t until in 2010, when a new shadow minister for communications arrived, that the Coalition started to become more engaged in the debate. Under the leadership of Malcolm Turnbull, the waste of money and kill-at-all-costs one-liners started to disappear and great progress has been made ever since. It must be said that as recently as a few months ago the Leader of the Opposition was still claiming that the NBN would be killed off, and the Shadow Treasurer, Joe Hockey, remains a NBN denier; however there are good indications that, despite all this rhetoric, the NBN is no longer under threat – it will be built.

This has been great progress. Nevertheless the Coalition’s contribution to the debate remained very much concentrated on the plumbing of the NBN, and the fact that it could be done cheaper. This brings us back to the comment at the beginning of this article – why are we building an NBN? Unless the Coalition indicates what they think we need the NBN for, there is no way that proper policies, business plans and financial models can be developed.

Recent, discussions have made it clear that the Coalition is now also moving into these broader issues and that further progress has been made. In this respect BuddeComm’s understanding is that in principle the Coalition agrees that:

The NBN is not a waste of money. It is important for the digital economy of this country as a key enabler of productivity.
Fast ubiquitous broadband is a ‘must’, not a ‘would like to have’.
They also agree that there are good reasons to believe that over time FttH could be the end result and that any technology path chosen should enable this to happen.

If this is indeed the case then we do believe that the future of the NBN would be secure under a Coalition government. No doubt they will skin the cat in a different way, but with these very important principles in place it will be interesting to see what alternatives they can come up with. Some of the suggestions that BuddeComm has made in the past include:

Use good existing infrastructure (HFC and ADSL2+) as long as possible and concentrate the rollout of the NBN in those areas where it is needed most, still linked to further FTTH upgrades when the need for such infrastructure becomes more urgent.
Extend the rollout of the NBN over a longer period of time, eg 15 years, based on when the old infrastructure will no longer be able to deliver the quality of services society needs.

When such alternatives are looked at within the key principles mentioned above there is no reason not to investigate them.

A key problem that the Coalition will have to overcome is that, based on lessons learned from history, changes to telecoms policies and regulations often take a long time. One of the Coalition’s criticisms is that it took five years to get the NBN to where it is now. We can look at other changes. A proper telephony wholesale arrangement took 10 years to reach a point where the industry could work with it, and local loop unbundling took 8 years.

If the Coalition has to make changes to the legislation and the regulations their promise of delivering broadband faster to the market will not be achievable. If little or no changes are needed this could perhaps be done within a year; anything beyond that could take 2 or 3 years. Just think of renegotiating the lucrative contracts Telstra has with NBN Co. There is a lot at stake here for this company and they will not shy away from legal action if their financial situation is threatened. Winding back the clock and giving them back their monopoly is also not an option, and the Coalition has clearly indicated that they most certainly do not want to do that, so there is very little wriggle room here.

However, the Coalition’s broad NBN framework is now more or less in place and the principles that we understand they agree to are providing a good platform to look for alternatives. Of course, if within this framework the Coalition believes it can deliver the NBN cheaper and faster then such a plan deserves our full consideration.

Paul Budde

BuddeBlog