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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

NBN: hostile responses « Previous | |Next »
December 21, 2010

The business case (or corporate plan ) for the National Broadband Network (NBN) has been released by the Gillard Government. It will offer $24.00 wholesale and $53-58 retail per month for the basic 12 Mbps / 50GB NBN plan; have an internal rate of return on investment of just over 7 per cent; 70 per cent of businesses and homes expected to use the NBN eventually; and in the short term about half will stay with the most basic service of 12 megabits a second.


It wasn't just the Liberal Party, who basically said it wasn’t worth spending government money on a telecommunications upgrade which would primarily be used to fuel the nation’s passion for high-end video and gaming content. The NBN is essentially a video entertainment system for them.

The reaction in the mainstream media was hostile. The editorial Murdoch's naysaying Australian said that the business case is not a cost-benefit analysis; does not assess the opportunity costs of spending billions on this project rather than other services or infrastructure; does not negate the need for a comprehensive analysis by the Productivity Commission; and is not considered an important area of policy reform by business executives. Therefore, the NBN is not in the national interest and it is not the best value for our money.

Jennifer Hewitt in saying that the business case is more about political cover for a government nervous about increasing public doubts over whether the promise of the National Broadband Network offers value for money. Or Michael Stutchbury saying that if the NBN were such a smart-money bet, then private investors would be rushing in, which they're not. Therefore, the NBN is flawed.

The hostility is not limited to Murdoch's naysaying Australian. At Fairfax we have Adele Ferguson saying:

The federal government's much awaited business plan for its national broadband network is three parts puff, two parts smoke and mirrors with a pinch of fact thrown in. And while the government's twin messages that the network will be transformational and the billions of dollars in taxpayers money will be repaid with interest may sound impressive, dig deeper and it is based on a lot of assumptions and hyperbole.

There is no argument provided to justify the claim. It is Ferguson's piece that is puff and smoke and mirrors.

Katharine Murphy, in contrast, acknowledges that her qualified coming around to the NBN has been a slow process has largely been driven by the competition policy principles that rest beneath the whole idea. She refers to the market model (Telstra) failing to meet national needs:

Without the promise of a national broadband network, the government would not have been able to undo 20 years of terrible policy in telecommunications. John Howard's single greatest economic policy mistake was turning Telstra from a public monopoly to a private one with the capacity to strangle competition and innovation at the retail level, leaving us less well-off for communications services than other comparable nations. That mistake is now on the road to being rectified through the breaking up of Telstra, the concept the pointy heads call ''structural separation''.

But the positive note ends there. Murphy says:
The NBN project is full of risks. Some of the myriad assumptions in the business case are more than likely flawed. Costs have already blown out and could well again. (Remember when this idea cost $4.7 billion? Now it's $27.5 billion of taxpayers' money.) There may not be sufficient skilled labour to deliver the rollout on time and on budget....The attack lines Turnbull has been running (transparency, value for money, whether the technology will be future-proof) are all solid.

Assumptions may be flawed because they are assumptions. The difference between the cost $4.7 billion and the $27.5 billion is for two completely different projects--fibre-to-the-node and fibre-to-the-home; a difference Murphy fails to acknowledge. So we either have deception or ignorance. How does the fibre will be obsolescent argument go?

These kind of articles indicate that we have vested interests opposing the NBN. They want it to fail; to see it destroyed. So they spread misinformation to those people who do not understand the NBN making it seem “pointless” and not worthwhile.

| Posted by Gary Sauer-Thompson at 8:33 AM | | Comments (9)


Murdoch must be worried about Foxtel if high speed broadband does the same job ---eg., a streaming IPTV service such Fetch TV, or online video on demand such as Netflix-- and by the looks of it it may be cheaper.

The NBN is bigger than being just a video distribution network. Then again, doctors performing procedures is a form of video. School lessons and lectures are a form of video. Real time meetings are a form of video.

The NBN will provide for all our fixed communications services – phone, TV, internet.

The Coalition saying that the NBN is a video entertainment system is equivalent to saying that roads are for families to go the movies. Therefore roads are a waste of money.

The TV "argument"---its not value for money---is yet another way to attack the NBN by those opposed. They ignore the possibilities for better health and education services, more parents able to work from home a few days a week, and regional businesses competing on level ground with city businesses.

In At last, the NBN Business Plan at Crikey Bernard Keane says that the Corporate Plan is unlikely to change the debate over the NBN:

There will still be demands for a cost-benefit analysis, regardless of the financial rate of return predicted by NBN Co; economists will continue to insist that the copper network and wireless will provide high-speed downloading and uploading speeds and partisan commentators and journalists will still continue to predict that fibre will be outmoded by an as-yet unidentified technology just around the corner — presumably on the basis that someone will discover a way to go faster than the speed of light.

How right Keane was. No matter what kind of information is placed into the public domain the anti-NBN arguments remain the same. The NBN is a proxy for arguments about economic ideology

Is it time yet to say that media coverage of the NBN has been as bad as media coverage of the last election? Journalists just don't seem to be interested in reporting it in any terms other than those suggested by the coalition.

All these ridiculous questions about how much will various deals cost retail. The obvious people to ask about that would be the retailers, surely? They're so stupid it hurts to watch them.

“There may not be sufficient skilled labour to deliver the rollout on time and on budget”

This is probably the only vaguely valid argument. With the breakup of the PMG the expertise became less and less the property of the nation and more and more the property of corporations. There is, I feel, far too much reliance upon the dollar conscious private sector, and I fear that the job may not get done properly

re your comment: "Is it time yet to say that media coverage of the NBN has been as bad as media coverage of the last election?"

for sure.

re your comment: "Journalists just don't seem to be interested in reporting it in any terms other than those suggested by the coalition."

Journalists have little interest in policy and are opposed to the NBN because it means they may lose their jobs as newspapers continue to decline.

Opposition communications spokesman Malcolm Turnbull's claims that most of the high-bandwidth applications mentioned in the NBN business plan such as Fetch TV currently being offered by Internode and iiNet .

What Turnbull is silent about is that consumers can access these services if they are very close to an exchange could get HD TV or multiple streams, but the number of houses with access fell the farther they were from the exchange.

With the NBN it is obvious that many households will replace their current cable TV to "Foxtel Fibre" and similar IPTV services.

re " Journalists just don't seem to be interested in reporting it in any terms other than those suggested by the coalition."

the journo's appear to think that because a 1.5Mbps link is suitable for them it is for everybody. They don't seem to realize that the future of the Internet is multiple devices and multiple people using one internet connection at the same time.

All the nonsense about wireless ignores the low data limits, congested networks, high latency, unreliable service and expensive plans, then by all means go with a wireless provider. Wireless is good for backup or being on the road.

Check out Matthew Stevens' Little to justify expensive national broadband scheme

NBN is the product of the government's desire to force structural separation on Telstra and the failure of that former branch of government to invest its shareholders funds in the challenge of connecting the nation to fibre.

Given it is born of pure, vengeful politics, it should be no surprise that NBN is wildly schismatic: it has its true believers who argue it is the only rock upon which an internet-savvy nation can be founded; and its emphatic sceptics who suggest if we needed it we would be prepared to pay for it, and if we were prepared to pay for it, then commerce would find a way.
Doesn't the NBN have something to do with investment in digital infrastructure for an information economy?