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Coalition going backwards on NBN « Previous | |Next »
August 10, 2010

There are substantive policy policy differences in this election and the national broadband network is one example. The Coalition's recently announced telecommunications policy explicitly rejects the national broadband network, which which they have labelled “reckless” and a “white elephant”.

MoirAbbotbroadband.jpg

Why it has chosen to fight the National Broadband Network as a major election issue is beyond me. In its place the Coalition's cheaper broadband plan ($6.25 billion) composes four separate aspects, and makes wireless technology the centre of its "affordable" broadband strategy.

* $2.75 billion of public funding and an additional $750 million private funding on building an open access, optical fibre backhaul network
* $750 million on “fixed broadband optimisation” with a focus on upgrading telephone exchanges without existing ADSL2+ capabilities
* $1 billion public grant funding and additional, undisclosed private funding for building a wireless network for rural and regional area
* $1 billion on building a metropolitan wireless network focused on outer metropolitan areas

So it basically stays with what we've got now in the cities (ADSL on the old copper wire +hybrid-fibre coaxial [HFC] cable networks); wireless to the outer suburbs; and gives regional Australia the old Opel network that would bring a wireless system to Australia.

This pre-NBN network would result in the reinforcement of the current digital divide. It's cheaper and much much slower--a minimum of 12 megabits per second compared to speeds of 100Mbps. Only those premises connected to he hybrid-fibre coaxial (HFC) cable networks in the capital cities would get 100Mbps.

This is a return to the past, since the Coalition opposes the structural separation of Telstra and so would allow, by default, Telstra to regain market dominance once more--- a dominant Telstra means that it isable to influence both how quickly rather slow broadband is delivered, and its price. Leaving Telstra and its copper network intact, with all the access concerns that accompany it for Telstra's competitors and the ACCC, means a return to Telstra’s aggressive monopolistic behaviour.

This resulted in Australia falling significantly behind in the international race to provide affordable high-speed broadband. Entrenching the incumbent is how the Coalition's claim that, harnessing the entrepreneurial drive of the private sector, and unleashing competition through the private sector deployment of broadband across arrange of technologies, for national benefit would work out in practice. The Opposition's plan of leaving it up to the market to decide what the last mile will be means leaving it up to Telstra which simply is not going to happen.

The current mess is what the national broadband network was designed to overcome. Fibre, not Telstra's copper network, needs to be a central element in any credible national broadband plan that is supplemented by rapidly growing mobile broadband. The global economy of the future would increasingly be digital and the productivity of our nation in that economy will be one of the major determinants of our prosperity and that requires a national investment in ubiquitous high-speed digital infrastructure that would support smart electricity grids, electronic-health and the digital education revolution.

| Posted by Gary Sauer-Thompson at 3:19 PM | | Comments (33)
Comments

Comments

Does the coalition policy on broadband come as a surprise? No. Maybe this is their alternative to the filter. Keep the whole thing so impossibly archaic and unreliable we all give up and decide to spend our spare time in church or making white babies instead.

I have cable and a friend has adsl2 with iinet in perth. He gets the same speeds as me. We talk on skype face to face all the time and rarely have a problem with quality.
I dont think its an impossible archaic unreliable service by any means.
I would be happy for the NBN to go ahead just for the job creation (If we can afford it) but I do question whether we really desperately need it.

Les,
ADSL2+ is what I have in Adelaide connected to big powerful computers. I cannot access hybrid fibre coaxial, used to deliver pay TV even though I live in the CBD. The HFC network, mostly owned by Telstra, only runs past 2.5 million homes. What use is that?

As Stephen Conroy pointed out in the National Press Club debate today ADSL2+ (or wireless) is just not good enough for e-medicine, which often relies on shifting large x-ray images quickly and easily.

You can only squeeze so much out of the old copper wires. These are a 20th century technology that is degrading and has a limited life.Its on its last legs. So something has to be done about renewing the ageing infrastructure. Even Telstra acknowledges that it needs replacing.

I do think that is reasonable for you you to say that, though I have access to cable I do not think that other people need it. Regional businesses---eg., wineries along the Limestone Coast in SA---are desperate. Satellite just doesn't cut it.

Lyn,
I agree that the coalition policy on broadband does not come as a surprise. We had plenty of leaks from them about going back to Opel for the regions, and saying that wireless is what we need because we are all mobile these days.

But why this? They are standing in opposition to the IT industry.

Is it ideology--private enterprise should build it rather than the state? They've been captured by Telstra? They've fallen in love with wireless? They don't really understand the digital economy? They want to ensure that the digital divide remains?

Thanks for the post Gary. I, as you do, do not understand the libs opposition to the NBN. At a guess it's all about ideology, let the market decide or the real humdinger - private industry (TELSTRA) can do it better, cheaper. As we have seen the market usually just sits on their hands maximising profit for the least expense.

I don't know who is advising the libs on this one, anyone with an ounce of tech knowledge (telecomms)knows that wireless will never reach the speeds of a fibre network. Wireless just does not have the bandwidth (in broadband, bandwidth is king) or the scalability of fibre.

Shaun,
I suspect that it is ideology---let the competitive market build it cos the market is good at building infrastructure. Governments should not do build it cos they are no good at building infrastructure and industrial policy.

They say this even though they know that competition in telecommunications cannot occur in the shadow of a large vertically integrated monopoly. We have a history of Telstra acting to prevent competition.

Most of the comments on Rod Tuckers Only a broadband network will get us up to speed column indicate a lot of ignorance. They don't seem to realize that fibre is infinitely upgradeable as technology advances.

Kenneth Davidson in his Pity the PM didn't hold broadband to the light, then oppose it in The Age makes Les' point:

The market is already supplying more than adequate high-speed broadband for those who need it. Australia has much higher infrastructure priorities - repairing the damage to public education at all levels by the Howard government, updating and extending rail networks and closing the world's most polluting brown coal power stations for starters.

He reckons that the government's obsession with the rollout of fibre-to-the-home as planned by NBN Co has all the hallmarks of a cargo cult mentality. In an earlier article--Scandal of your money being squandered at high speed that the NBN is waste on an unimaginable scale.

Davidson is a voice from the past---he says that it would be more sensible and infinitely cheaper for the government to buy back Telstra and let it get on with the job. Well that ain't going to happen.

The Coalition plan means that we will end up with a real patchwork of services that will entrench the digital divide. It also does not address the last mile of copper from the exchange to the home which is owned by Telstra.

Telstra has a history of resisting competition on the last mile.

Depends a lot on where you sit and look at broadband. The country doctor would say yes its a great idea but my accountant would say lets use the money to pay down 40 billion worth of debt because we dont really know how the world financial market is going to go over the next 10 years.

Les,
viewed in the context of a federal budget that raises $350 billion in revenue a year, the rhetoric over debt just doesn't add up.

As the broadband non-interview on 7.30 Report displayed, Tony Abbott doesn't care where Australia can be. He just wants it back where it was. "Turn back the boats"? Turn back the clock.

Since so much of Abbott's plans for a future Australia seem to hinge on what will be of advantage to his daughters - paid parental leave becoming legitimate, indeed essential, "visionary" (I wonder what premonitions he's had here?), as his daughters enter the age of fecundity - perhaps he should talk with one of them about modern technology. Maybe the one who reckons it's "gonna be awesome living in Kirribilli House". She seems to have the vocabulary and social priorities of a modern girl.

Michael D Porter, director, research and policy, for the "Committee for Economic Development of Australia puts the free market economist case on broadband. His arguments don't stack up. Porter says:

I too would like a Ferrari, but why should it be subsidised by the government? True, fibre is the long-term communications future for almost all of us, but not always at taxpayer expense, and not without a competitive business plan or cost benefit analysis of the suggested $43 billion of government outlays.

National infrastructure building should be run like a business case is the assumption. Why should government be run like a business when they have different objects--the public good versus profit for shareholders?

Porter's second argument is:

Access to the internet is valuable socially and commercially yet the government proposes to separate its funding from those who benefit, and to create yet another government monopoly.The lesson from past telecommunications systems provided through government is that they become lazy monopolies that misjudge rapidly changing technologies. That change will continue, but the Labor government proposal is to terminate competition between cable, copper and fibre.

National wholesale infrastructure with open access for all telcos to compete on a level playing field selling retail services is not the same as Telstra (vertically integrated as wholesale and retail) being the dominant player frustrating competition at every twist and turn. Its apples and pears. No one seriously suggests that we should duplicate the national road system or the national electricity grid because these are "monopolies."

Porter's third argument is a competition one:

The government proposes to make the NBN viable by a negotiated $11.5bn proposal to Telstra, by killing the delivery of broadband over HFC cable and copper after eight years, a model of telecommunications euthanasia.Yes, we will at last have vertical separation, but we will have lost horizontal competition between fibre, cable, copper and wireless.

A model of telecommunications euthanasia? There will be competition between wireless and fibre because they are complementary. I dare say that I will hang onto copper and ADSL2+ for as long as I can. Copper is at the end of its life. It cannot deliver much more.

These kind of arguments are basically defending the neo-liberal belief that government should get out of the way and let the free market sort things out. That belief is like a faith--- the foundation that cannot be questioned. So they hunt around for arguments to justify the belief.

I suspect the 'let the market take care of it' aspect is down to ideology, but the technology mix and wireless bits I think come down to a lack of understanding and imagination. Remember, this was Howard's policy too. I daresay people like Turnbull would cringe over it, but the dominant elements of the Libs are not exactly forward thinking people.

I'd like to know what the Nats think of it. Or the Nats rural supporters anyway.

The economic argument doesn't stack up as Annon pointed out, but it also doesn't stack up for the same reasons that saving by not investing in any other kind of infrastructure eventually falls over. NSW is a great illustration of what happens when govts fail to think ahead and plan for the future. Leaving broadband to a market that has so far been happy to fatten off the status quo is a policy to do nothing. We're already behind. How much further behind do we want to be?

I love these free market business types. Telstra will build a Ferrari broadband for big business whilst in Victor Harbor I can only access ADSL on copper wire controlled by Telstra who control the backhaul to Adelaide. Or I can have Telstra wireless which is expensive and very limited in download quotas. It is not great value for money.

The Coalition is not going to spend much on providing alternative backhaul to Telstra--no funding had been allocated to rolling out competitive fibre in the first two years.

So I'm stuck with Telstra's lousy service that a 'peak' 12Mbps but is much slower because of the limited backhaul to Adelaide. Porter is saying that the digital divide is okay. I should accept digital inequality because fast, reliable and affordable broadband service is to help businesses to be more productive, reduce costs, reach more customers here and overseas and employ more Australians.

Meanwhile the deficit hawks bang on their drum about government debt (that is around 6% of GDP) sending the country broke because of the high interest payments. We cannot afford it. Instead of spending big on white elephant that will financially cripple the country we should be slashing and burning public services, getting rid of public servants, and privatising welfare, education and healthcare.

Andrew Elder on failure to understand and consult, and subservience to Telstra:

http://andrewelder.blogspot.com/2010/08/why-coalition-telecommunications-policy.html

Andrew Elder is spot on when he says that:

The prime challenge in Australian telecommunications is to stop Telstra charging first-rate prices for third-rate services. Telstra has a chokehold on the entire ICT industry in this country...To address this, even in a tokenistic way, is to get the prime policy challenge facing this sector. To fail to address it, to not regard it as an issue - or even to bleat about tall poppies - is to have a firm grasp on the absolutely wrong end of the stick.

My view precisely. Telstra is the elephant in the room. Many who defend the current market have sold their souls to Telstra.

Lyn,
I agree re the Coalition's lack of understanding and imagination. The importance of broadband for the nation's future is not one they have put forward. For them Australia is Quarry Australia period; they are opposed to any legislation aimed at structurally separating Telstra; and their rejection of the NBN is limited to the $43 billion cost.

I watched the National Press Club broadband forum before a tech-savvy audience and Tony Smith, the Opposition's Communications Shadow Minister, was unimpressive. He doesn't really understand. A hard but justifiable criticism of Smith's performance. They are tech ignorant, don't get digital communications and are contemptuous of the tech sector.

Well there it is in a nutshell. Those that are unhappy with their service are for it and me that is happy with my service (which is Telstra) wonders whether it is necessary.
Democracy will dcecide it maybe.

Gary,

Bernard Keane also pointed out that broadband was a major point of difference between Rudd and Howard that marked Rudd out as a man of the future and Howard a man of the past. That symbolism feeds into Labor's campaign against Abbott as a man of the past. This policy says it's not just symbolism. Abbott thoroughly deserved the hammering he got from Kerry O'Brien last night on the topic.

Lyn,
Labor are leaving it a bit late to put some content into moving forward. Relying on Gillard's personality and gender is not enough.

Nan,
This campaign isn't meant for the likes of us who pay attention. It's meant for the disinterested who start paying attention in the final fortnight. So while I agree with you that it's a bit late, for plenty of others it will be just in time. Not that you could expect a lot of people to grasp the real and long term implications of broadband policies, but it is one point of difference.

They have given some people here a reason to vote labor again.

Les,
and so we would have the continuation of Telstra's long-running legal war with its access regime. Recently Telstra copped a $18.5 million fine over denying competitors access to the copper network.

Telstra's stranglehold has to be broken not entrenched.

The Coalition are in denial about the Telstra problem that ISP's have been battling the last 10 years. Optus says:

Ownership of the copper network, the only fixed access connection for the vast majority of Australians, has allowed Telstra to undermine competition and dominate the fixed line sector to the detriment of consumers. It is not clear from the Coalition’s policy how this bottleneck will be resolved...

The large portion of the Coalition’s broadband solution based on wireless means that many Australian’s will miss out on services demanding high-bandwidth such as IPTV and remote medical applications.

The conservatives if they win would need at least a year in government to get up to speed on this question. That is, at least a year to ditch the retro-howard image that got Abbott in as leader of the opposition by one vote.

So which way will the content providers like murdock go on this? My guess is that a year will be unacceptable. Gillard will do...just fine.

This article-- We need to think in multiples on broadband--- by Trevor Clarke makes an significant point:

The irony was that as my team of journalists and I - four in total - watched the announcement broadband policy on ABC News 24 and then the ACS ICT debate on YouTube, we were constantly frustrated by the video feeds dropping out to re-buffer. This happened so often we were forced to close three of the four browsers to ensure smooth viewing.

We were, of course, trying to report on one of the biggest moments in this election campaign for ICT, but when the speakers were talking about broadband our own experience really drove home the point that regardless of whether you like Labor's NBN, the existing infrastructure isn't good enough. It's as simple as that.

Especially for schools with several hundred students and admin staff, and an ADSL2+ connection that synchs at less than 10Mbps. Multiple use households are becoming the norm.

The NBN is not perfect, but it does provide a very strong platform to support the multi-user, mutli-device scenario that is arguably going to be most common in future. An actual example.

Apparently Telstra is going to reinvent itself again. The new-look telco will emerge in 2012 as a customer focused organisation. Wow.

I do recall that the previous management, led by Sol Trujillo, told us the focus of their five year transformation was also going to be the customer with wonderful service levels. It was hype of course. Telstra was just was an engineering and technology company that delighted in bashing customers, competitors and governments.

Nan,
I am not convinced that Labor will follow through on their NBN. We may get a watered down version from one election to the next with blame distributed in all directions.

The Australian continues to bash away away at the NBN as part of its general waste case of against Labor's big government.This time it is Grahame Lynch in NBN is welfare for tech-heads

He makes three points apart from the standard one that here was no business case for the NBN which shows that Labor is an responsible economic manager. Firstly, it is expensive to do compared to Singapore or Korea. Granted, given the large territory and small population. Secondly,

many of the benefits touted by Communications Minister Stephen Conroy of a high-speed broadband world this week - things such as virtual classrooms, smart grids and videoconferenced health care - are as achievable over the platforms envisaged by the Liberal plan as they are over fibre.

ADSL2+ is no good for multi users and for services requiring high bandwith.

Thirdly,

There has been enough private infrastructure investment in recent times to suggest the Coalition's notion of enabling substantial private investment in access is achievable. Operators such as TransACT, Pipe Networks, BigAir, VividWireless and Allegro Networks have built broadband trunk and access networks: with policy and financial support, they potentially could do more.

But they aren't building the backhaul in the regions that address the blackspots, and they would not do unless they were heavily subsidised by the state. Under the Coalition's plan to pump in $2.75 billion to fund an open-access fibre backhaul network, the guts of this won't be built until a second term in office between 2014 and 2017.

Lynch, who supports the Coalition's plan, never addresses the Telstra problem (as a fully integrated and dominant company focused on stifling the competition) that the NBN is designed to address. It is this problem that knocks off the Coalition's claim that instead of creating a new inefficient government-run monopoly, the coalition's plan will stimulate a vibrant private sector-based broadband network with government involvement to encourage competition and ensure services reach all Australians.

Nan,
Telstra has little choice but to compete to improve price competitiveness and service as it has been losing mobile customers fast in the context of declining revenue from its fixed-line telephone services. It is also losing fixed-line broadband customers.

Telstra had assumed that customers would pay a hefty premium to use its higher-quality Next G wireless network. When the smart phone phenomenon took off in 2008 Telstra was completely uncompetitive on price. People switched to Optus despite the latter's degraded network.

So Telstra needs to invest big to winn market share by getting a lot of new customers.

reading the comments on the articles on the national broadband network in The Australian I am surprised by the number who say that they don't think it's something useful; or that it was something the government shouldn't do at all; or that it was "not too important a priority.

How much of this anti-broadband response is more than anti-Labor, anti-government sentiment amongst conservatives? Is most of this anti-broadband sentiment to be found amongst older Australians?

It doesn't surprise me as I don't think its a big issue out there. Big for small a percentage of people only. Lots of people only care to check their emails,work from home,look at facebook type sites,pictures of houses and other daily things and the internet they have is enough for that. Others in the more techno savvy groups are taking advantage of telephone plans that have monthly downloads included and are accessing the internet on the go.
This current campaign by Labor likes to have the issue in the news because it is something that they havent actually failed to deliver in the last 3 years unlike other things.
If you surveyed people down your local shops about their top 5 issues that they think were most important to them Broadband wouldn't feature highly in most and not at all in many. If the question was framed in a way that was linked to the creation of jobs created by establishing a NBN this would change but only for that reason.

Les,
what about schools and education? Or work from home? Or e-health records.

Ben Eggleton and David Moss in The country can't face the technological future through copper wire state that:

By rolling out a broadband infrastructure that boosts the economy by 1 per cent or more, this means the investment will, almost immediately, more than pay for itself... Not only will remote communities have better access to educational and teaching via the internet, they will also have access to better medical care.

I thought that people would care that their kids have the means to, and can, access good online education material. Abbott mocks the computer in school in program, even though a computer is a necessity, not a luxury in education.

Those on the centre-right question whether ---or deny --- the NBN is, in fact, a 'public good' that deserves any government funding at all that the private sector is incapable of cost-effectively providing. If people want fast video downloads and the like then they should pay for them. Let the market supply these things.

Labor should be selling the NBN as a public good and not a private one (ie., for consumption such as movies, Youtube and ITunes).

Malcolm Turnbull has claimed in an op-ed in The Australian that the NBN is a waste of taxpayers’ money:

money spent on the NBN can't be spent on other services. In economics, one of the most important concepts is "opportunity cost", the idea that once you spend your money on one thing, you can't spend it on something else. If tens of billions of taxpayer dollars are invested in this low-yielding yet risky venture they can't be spent on better hospitals, schools, roads or public transit. There is no benefit to taxpayers or the Australian economy from spending $43bn or more if the NBN is worth a fraction of that when sold. Such risk is better borne by the private sector so shareholders, not taxpayers, lose out if the plan goes off the rails.

Turnbull also said the NBN was a risky investment as the commercial value of the project may end up being a fraction of the $43 billion when it is completed.

Turnbull doesn't acknowledge the way that education and health care can be improved with the NBN.