Shadow communications minister Malcolm Turnbull has divulged more detail on the Federal coalition’s NBN strategy should it win the next federal election, suggesting that its FTTN approach could be cheaper than FTTP by a ratio of three or four to one.
Speaking at an American Chamber of Commerce lunch in Sydney in the wake of a decidedly mixed reception to NBN Co’s revised corporate plan, Turnbull addressed a number of key points – including the role for infrastructure competition – and some of the early concerns raised regarding the coalition’s proposed methodology.
“If you want to get an insight into the approach that we’ll be taking, and I’ll be taking as the minister, just ask yourself what a rational businessperson would do,” he said. “We are committed to completing the NBN. We know we cannot turn the clock back… so our task is to complete the job in a cost-effective manner… the approach we’ll take is very, very close to that which British Telecom has taken. We will bring fibre further into the field, we will connect it to the legacy copper infrastructure such that the length of the copper is short enough to enable very high speeds to be delivered, both in terms of upload and download, over that copper. If you want to look at an example, BT offers… 76Mbps down, and 19Mbps up.”
“That’s the same approach that AT&T took in the US… and it’s a proven one. How much does that save? Well, in high-wage economies – and there is no economy that is more a high-wage economy than ours – the cost differential of FTTN and FTTP is between three and four to one,” continued Turnbull. “So the savings are very, very substantial… now, that means that we can say confidently that we can deliver very fast broadband to all Australians much sooner… and at a much lower cost to the taxpayer, and therefore more affordably to customers.”
RESTORE COMPETITION: In contrast to the current NBN, Turnbull said that a coalition government would promote infrastructure competition, including from fixed wireless in metro as well as rural areas. “We will, as far as we can, unpick all of the barriers to competition. The NBN Co is a throwback to the economics of the 1950s, in the sense that you have a government-owned business where the government uses legislation and regulation to prevent people competing with it,” he said. “Ideally, we’d love it if Optus rescinded its deal! But I suspect now that they’ve got their deal and are happily banking the money, that might be a bit hard. But the more competition the better.”
The shadow minister also told one questioner that he’d prioritise the infrastructure required to get fixed-line connectivity to regional areas. “As you know, the NBN is proposing to only do FTTP to communities of 1,000 premises or more – and there are a lot of country towns that have fewer than 1,000 premises,” he said. “Those towns, under their approach, would get fixed wireless; under our approach, I think many of those communities would be very viable in terms of FTTN. The fibre comes to the existing exchange, and maybe you’d create a couple more mini-exchanges.”
Some aspects of the network plan would remain the same. While reiterating his commitment to structural separation of retail and carriage networks, Turnbull said that while a coalition government would not want to own the NBN indefinitely, it would likely do so for “the forseeable future.” And he noted that while the coalition would have handled certain aspects of the NBN very differently – including the satellite and fixed wireless components, which he suggested could have been better contracted out to existing companies – they might no longer have that option “because of the monolithic control-freak culture of NBN Co.”
Turnbull was, however, quite confident that a coalition government would be able to negotiate access to Telstra’s copper. “Telstra has a vested interest in the network being rolled out sooner rather than later, because they get paid as premises are decommissioned… and that would mean the net present value of those payments will be higher,” he said. “So I don’t anticipate any difficulties in achieving that; in a [FTTP] NBN world, their copper has no value at all. In an NBN/VDSL framework, the copper has some value to the NBN Co.”
ANSWERS CRITICS: Turnbull also answered some of the early concerns that have been raised about the coalition’s FTTN plan – including arguments that the copper network is an old and degraded asset, and that to incrementally upgrade to FTTP at a later stage would be cost-prohibitive.
“People say the copper network’s degraded; well, in some parts of the copper network that’s true, and in some areas you may decide to do FTTP,” he told CommsDay. “You’ve got to weigh up that maintenance component. Talking to BT and AT&T, what they’ve done; in most parts of the network, the copper’s been fine, but in most parts of the network where there’ve been problems with the copper, it’s been cost-effective for them to upgrade it. And certainly AT&T’s done that, they’ve made a program of that.”
“I’m not being dogmatic about this, this is not ‘one technology right, one technology wrong’,” he added. “Of course I understand that FTTP gives you the greatest potential bandwidth. But it’s a question of whether that is worth the very substantial additional cost and time… you’re talking about getting FTTP a decade or more away [under the current government plan].”
“One of the interesting things is that… the [network] devices enable you to provide connectivity both to VDSL and GPON. BT is doing this in the UK. So if you are in a position where you have several hundred premises and you have one or two people – they might be businesses in an otherwise residential area – that want to have a lot of bandwidth, you’re in a position to provision them with fibre. So you’ve got the flexibility, as you roll out these networks, to upgrade them to fibre progressively as and when demand requires.”
But having pledged to do a full cost-benefit analysis on the NBN if the coalition takes government, is Turnbull concerned that that could cause further delays? “It’s not going to create any delay. We will get moving; I think Australians have had enough of delay,” he said. “We will accelerate the rollout of the NBN, but we will do that as the same time as we do a proper cost-benefit analysis. I’m very confident that the analysis will find a technologically-agnostic approach is the most sensible one.”