29 September 2016

There’s nothing surprising about the editorial in The Australian Financial Review critical of Labor’s national broadband network (‘‘Red underpants on all our heads’’, September 22). It coincides with numerous reports in these pages and beyond that broadband retailers’ profits are being decimated by a government-funded infrastructure monopoly.

What is being overlooked, however, are the consequences of what former NBN Co chief Mike Quigley has accurately described as a colossal mistake: the decision to abandon Labor’s fibre-dominated NBN model for Malcolm Turnbull’s multi technology mix, favouring copper in its place.

The trinity of promises for the Abbott-Turnbull version of the NBN to be faster, delivered sooner, and more affordable was smashed long ago. And one only needs to review the recent knee-jerk commentary from the Communications Minister to realise that despite talking such a big game, this government actually has no coherent strategy when it comes to Turnbull’s legacy network.

First, principles are useful to understand how we arrived at this point.

John Howard and his three communications ministers presided over a decade of information poverty that left Australia languishing in a broadband backwater.

The regulatory farce they bequeathed entrenched Telstra’s dominant market position. The bold but necessary task of structural separation was swept under the rug. Facilities-based competition had failed.

Meanwhile in our region and beyond, ICT superpowers were well into development of fibre-based networks to drive a new economy.

Time was running out for an Australia being left behind in the Information Age. The cycle had to be broken.

Don’t take my word for it: this was the theme of the AFR’s own editorial, which bemoaned Australia’s fall to joke status in the global broadband development rankings (‘‘Time’s running out on sensible broadband deal’’, March 14, 2009). Regarding Labor’s NBN policy, it went on to note: ‘‘History shows it may take years for true competition to emerge on access regulated infrastructure, but the [Rudd] government does not have this luxury because, as Access Economics notes, the longer the NBN is delayed, the less economic benefit it brings.’’

Spot on. It was the Labor government that delivered a wholesale-only national piece of utility infrastructure, with a uniform access price and regulated terms of service, enabling retailers to compete on the most level of playing fields.

But what do we have now in its place? The Abbott-Turnbull NBN is the wowser calling last drinks on the broadband profit party.

The biggest challenge for retailers isn’t just the fact that Turnbull’s NBN costs more. It is the fact that it does less. It is much harder to grow your revenue if you can’t offer your customers a reliable service with guaranteed access speeds. We also know maintaining the second-rate copper will be a significant burden on cash flow, and on the internet experience of Australians, for decades to come.

Which leads to a raft of other issues about the lack of government strategy while the clock ticks down to year end on its public equity stake. Turnbull’s eye is on privatisation, not innovation.

Contrast this with the Financial Review’s own reporting last week (‘‘Small business tapping into NBN’’, September 19), which featured a case study of a regional cycling shop that transformed its business utilising the NBN. And which NBN is it? It’s Labor’s NBN, a fibre-to-the-premises solution, not Turnbull’s jumbled mess.

Stephen Conroy at least did something the Howard government failed to do and which the present one continues to deny, namely that broadband policy wasn’t something that could be simply surrendered to the market. It hadn’t worked up until 2009, and today it is a principle recognised around the world.

In comparison, all Turnbull has done is break promises. He can’t deliver at least 25Mbps to everyone by 2016. His network doesn’t cost $29.5 billion. In fact, it’s now higher than sticking with the original plan.

Recently it was revealed that the HFC component of Turnbull’s plan will be scaled back from 4 million to about 2.5 million premises. Why? Because like all of Turnbull’s other assumptions about achieving lower costs, he’s been proven wrong.

Turnbull can’t even successfully manage the installation process for NBN satellite services. He originally labelled Labor’s satellite program ‘‘wasteful spending’’ and advocated leasing capacity from a third party (which went bankrupt). Now he hails the birds as a game-changer.

It’s a salient case study of how the absence of vision and a lack of conviction really does cost all of us in the end.

In the meantime, the single biggest source of unsolicited complaints from my constituents (individuals and businesses alike) continues to be the lack of accessible, reliable, affordable broadband.

The tragedy of these frustrated consumers is that by the time they do get Turnbull’s NBN, it will already be obsolete.

This Opinion Piece was first published in the Australian Financial Review on Thursday, 29 September 2016.