Why the NBN Should Win the Election

As we move into the final week of the federal election campaign, broadband network policy has been a real hot potato over the last few days.

The Coalition plan has been roundly attacked by many – despite being significantly cheaper than the government plan. The Government plan has been touted as “risky” and “a white elephant”. While there are undoubtedly risks in the Government plan – (as there are with the Coalition plan) – there is little doubt that it shows far more future vision than that of the Coalition plan.

There have been many opinion pieces on the NBN – particularly since it has become a far more publicly visible policy in the run-up to the election – but I have tried to hold back from plopping forward with my own opinion. I’ve wanted to absorb the details, and consider my thoughts before rushing out with one.

Here is where I stand on the main points thus far:

  • COALITION COST – cost is an emotive issue right now. On the surface, the policies of each party are poles apart – around $6.5b for the Coalition plan, and $43b for the Labor plan, and this will win the Coalition some votes. It is necessarily important to have a future view of these though – as even if the Coalition plan becomes reality, and “only” $6.5b is spent, for the most part, 12Mbps is the limit, which many people receive already. Some people will be lucky enough to get faster than that, with people on ADSL2+ in perfect conditions already exceeding 12Mbps RIGHT NOW, and might get as high as 25Mbps RIGHT NOW. Suddenly, spending $6.5b on a 12Mbps minimum seems like a waste. At such time that 12Mbps (or even 25Mbps) is not fast enough, what do we do then? Despite their love affair with wireless, wireless is highly latent – (more so than even ADSL over copper) – and far less reliable than cabled solutions, and businesses will not accept latent, unreliable connections. In 10 years from now when the results of the Coalition plan are outgrown, we’ll have to build an “NBN” anyway, and it will cost more than doing it right now. Is the real cost of the Coalition solution $6.5b to build their solution, plus $43b to build “an NBN” in 10 years from now, plus the lost economic activity from not having it in the intermediary? Since vast numbers of Australian people can already get these kinds of speeds, are they really spending $6.5b to cover 97% of Australia, or to cover the 15% that don’t already get it? Labor’s $43b suddenly doesn’t look so “big”.
  • LABOR COST – spending $43b on giving people up to 1Gbps is a SIGNIFICANT cost difference to the Coalition plan, and while many of the ICT policies of the incumbent Labor government are repulsive to me – (mandatory internet filtering being the obvious example) – I honestly believe that they have this right. The sudden announcement that speeds of 1Gbps would be available, instead of the initial plan for 100Mbps has demonstrated the most important advantage of rolling out the fibre network – future proofing. The Coalition network becomes useless when 12Mbps becomes not enough, however the NBN remains viable for a significantly longer period of time. The fibre being laid is reputedly capable of 40Gbps, and the change announced last week demonstrates that without a fibre change, speeds can be significantly increased without “ripping and replacing” it. In comparing a $6.5b network that will be obsolete in 10 years, or a $43b network that will measure its life in decades, and be significantly more upgradeable, the NBN has got to be a better option. This does not include the economic benefits available through the mere existence of a network with those kinds of capacities.
  • UPTAKE – many have commented on the the potential for the “low uptake” of the NBN once it is rolled out. I can’t see this – the rolling out of the NBN would see the parallel decommissioning of the existing copper network, thanks to the Telstra infrastructure deal, so even if you completely ignore internet connectivity, almost all people will have to migrate to the NBN for pure POTS service regardless. Anyone with any type of xDSL connection would also have to migrate that service to an NBN-based service – simply because the copper will be turned off. Uptake will necessarily be close to 100%.
  • SPEED – while the Labor announcement of last week – (curious timing notwithstanding) – has seen NBN speeds upgraded to 1Gbps rather than 100Mbps, it is true that most people would not want, need, or be prepared to pay for such speeds right now. Will they want, or need it in eight years from now? Maybe, and maybe not. However, if the Coalition broadband plan is implemented, when the need for much higher speeds arrive – (and it will) – it simply won’t be able to be achieved without starting again, and we will wish the NBN had been built anyway.
  • ACCESS – The Coalition have promised “at least 12Mbps and up to 100Mbps” for 97% of Australians. On the surface, that doesn’t sound terrible, but needs to be looked at a little deeper. Under their plans, speeds of 100Mbps will only be available in areas where there are existing HFC (Hybrid Fibre-Coaxial) systems in place. This will only cover some – (not all) – parts of Melbourne, Sydney, and Brisbane (via the existing Telstra and Optus HFC networks), and a few select regional centres where companies like TransACT and Neighbourhood Cable have also rolled out an HFC system, such as Geelong, Ballarat, Canberra, and Mildura. That’s it, nowhere else – only areas covered by HFC right now. If 12Mbps is the “legislated” minimum, nobody is going to go to the expense of installing new, expensive HFC infrastructure to provide 100Mbps – (which the NBN’s fibre would have done anyway) – when they can just run out through existing or upgraded ADSL2+ infrastructure, and still meet the 12Mbps “minimum” requirement.
  • BROADBAND vs INTERNET – the terms “broadband” and “internet” are NOT the same thing. Internet services can be delivered by broadband, but they can also be delivered by narrowband services such as dialup. Broadband can deliver internet services, but can also deliver far more than just internet. The Coalition has fallen into the trap of believing that the NBN is just about “fast internet”. It is not. It is about providing the telecommunications industry with the platform to provide new services well into the future – services to go far and beyond the realms of just “fast internet”. Services which haven’t even been dreamed up yet. It provides the scope for innovation that the Coalition plan simply cannot deliver.
  • WIRELESS vs CABLES – wireless is great, and I depend on it everyday to remain online when I am mobile and away from either my desk at work, or my desk at home. It is however, susceptible to interference from weather conditions and other radio interference, it is highly contested when you can have potentially thousands of services trying to access the same tower, highly latent, and much of the spectrum touted to be used is not available until at least 2014, when analogue television is turned off – presuming that that timetable does not slip. Optical fibre cables don’t go down when it rains, don’t have ridiculously high ping times, and don’t have the heavy and unpredictable congestion that would exist in a contended radio-spectrum environment. You can never be sure just how many people are going to be in a given cell at any given time, and therefore you have a network that is significantly more difficult to predict and manage, ultimately making it far more difficult to deliver the promised level of service.
  • STRUCTURAL REFORM – a truly key difference between both plans is the way in which each plan deals with Telstra. Telstra is primarily a privately owned monopoly, primarily driven towards returns to their shareholders, which it should be. Since it owns basically the entire “last-mile” infrastructure in this country, it can set network access prices for everyone else, to basically whatever it wants. Within reason of course, and the ACCC have been on their back about anti-competitive behaviour for a long time. There is, however, only so much it can do, and without taking the wholesale network away from them, nothing will significantly change. Small players will continue to be price-gouged by Telstra for network access. The Coalition plan actually reinforces their stranglehold on the last-mile market, by ensuring that the industry is still dominated by the copper infrastructure that they own, and will continue to have no incentive to upgrade. The NBN plan sees Telstra relieved of the network infrastructure, and NBN Co becoming the legislated wholesale provider, with the same access cost to everyone. This alone provides a more competitive landscape for the telecommunications industry. It will force incumbent providers to innovate and improve to earn the customer dollar, in the face of competition from smaller operations willing to do that little bit extra to win the business.

In the end, after fifteen years in this industry, and wrangling with a wholesale market dominated by Telstra for most of that time, I believe the time has come – (it actually came a long time ago) – to truly reform telecommunications in this country. Structural reform, which mainly results in the removal of Telstra as the price-gouging monopoly it has become since the last attempt to “reform” the sector, is the key to the future – not just of the telecommunications industry, but of the Australian economy as a whole.

Yes – $43b or $30b is a lot of money, but the NBN will be transformative, and drive our economy for decades. The Coalition plan is spending almost $7b on changing very little for most people, and doing nothing for the future of this country.

It is difficult for me to support the plan of a government that has so pig-headedly pushed a ridiculous plan such as mandatory internet filtering – however the Coalition, Greens, and independant Nick Xenophon have promised to defeat that plan in the Senate.

Even some of the staunchest critics of the filter – such as the EFA – loudly support the NBN.

How stupid will Australia look 10 years from now when it has an outdated, dying telecommunications network, the type of which the rest of the world will have already turned away from? We’ll be irrelevant on the world stage, and all because we condemned one excellent plan against a failed plan of internet censorship, which is seemingly doomed in the Senate anyway.

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  • Substantially more than $43 billion (in today’s prices) has been spent on the Hume Highway over the last 30 years to make it dual carriageway, and it’s still not finished. Most people in Australia never use the 110km/h highway between our two largest cities, but they paid for it anyway. The biggest benefit is to the trucking industry, reducing journey times for freight. But building and upgrading roads isn’t subjected to the same demands for a cost-benefit analysis as NBN. So I ask the knockers, where is the return on the tens of billions spent on our roads? How much profit did the Hume Highway make last year? NBN isn’t the communications equivalent of a 110km/h dual carriageway Hume Highway, it’s the communications equivalent of the best German autobahn. The Coalition plan is like dropping a bit of gravel and sending the council grader to improve a single lane dirt track.

  • The cost of the Hume Freeway – (or any other freeway) – to build and maintain is/was measured in dollars and cents. The benefits to the economy of the Hume Freeway existing and being maintained is practically immeasurable.

    Fiscally we don’t expect that “cost” to come back – the freeway just exists to benefit the rest of the economy, and the NBN is the same.

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