NBN 2.0: From engineer’s dream to political football

By 13 December, 2013 14

fibre optic

By Michael de Percy, University of Canberra

With unwavering confidence Communications Minister Malcolm Turnbull unveiled the consultants report showing Labor’s ambitious plan to provide fibre–to-the-premises (FTTP) broadband to the vast majority of Australian households would have cost A$73 billion.

Indeed, Turnbull suggests NBN projections to date have been “extremely optimistic” with the rollout significantly slower than expected, and completion not anticipated until mid-2024.

On the other hand, he says, the Coalition’s plan to use a variety of technologies will be delivered some four years earlier and at an expected cost of A$41 billion. Despite reports of an A$11.5 billion “blowout” in the headline cost of the Coalition’s NBN, the original figure of A$29.5 billion is listed in the strategic review as the capped funding for government equity, with the remainder to be funded with debt.

The review was conducted by NBN Co with assistance from the Boston Consulting Group, Deloitte and Korda Mentha.

The major difference in the Coalition’s plan is that there will be a variety of technologies, referred to as an optimised “multi-technology mix” (MTM), rather than Labor’s mandated technology (FTTP), and some 91% of users can expect maximum download speeds of around 50mbps by 2019, rather than the 57% with similar speeds or above under the revised strategic review outlook for Labor’s NBN.

From my experience using Labor’s 100mbps NBN service, I suspect most users will barely notice the difference between 50mbps and 100mbps for quite some time. Indeed, Turnbull suggests it’s more efficient to continue to upgrade the network over time as demand increases rather than to attempt to future-proof with FTTP in the first instance. Dr Ziggy Switkowski, NBN Co and a team of consultants agree.

Command and control

There is little doubt the state of broadband services in Australia is still well below par and the NBN rollout to date has had far less impact than envisaged. Labor’s commitment to a single technology meant the capital expenditure required to deliver FTTP would obviously cost more and take longer to deliver than a variety of technologies. In Mr Turnbull’s words, “Moore’s Law does not apply to digging holes”.

Further, NBN Co’s new chief Bill Morrow is expected to fix the problems identified with the company’s culture, which include a “fear of being blamed for mistakes” and clinging to forecasts “notwithstanding… evidence to the contrary”.

But it was always going to be this way.

The Boston Consulting Group‘s own separate research suggests centralised command and control models and a focus on specific technologies are no longer relevant in a dynamic industry. From my own research, adaptive approaches to enabling and deploying the infrastructure are much more important than trying to achieve standardised services.

Labor’s plan was about a particular technology – an engineer’s dream but a policy maker’s nightmare. The Coalition expects its approach to be “less intrusive” for consumers and will focus on enabling high-speed broadband services, rather than providing a particular type of technology. These goals are all admirable and significantly more practicable than the original NBN plan.

But the devil is in the detail, and there is not much detail about what will happen now, other than NBN Co gearing up to deliver a range of technologies.

Bill Morrow’s headache

Australian governments traditionally enjoy highly-centralised control over telecommunications policy, and despite the move to MTM rather than FTTP, there appears to be a great deal riding on the new CEO to make all the difference when it comes to delivering the infrastructure, especially in what is likely to be a much more decentralised environment now other technologies will play into the mix.

Whether one person can make so much difference defies the odds, but the experience of other jurisdictions indicates the MTM approach will enable deployment sooner than the FTTP model.

The sticking point is what will happen to NBN Co once the policy objective is achieved. Will it remain under government control, or will it be privatised and create yet another monopoly in Australian telecommunications? Either situation is far from ideal, yet the Coalition suggests firms will be allowed to compete with NBN Co, a significant difference from Labor’s plan.

In the meantime, it seems our government’s role in providing telecommunications services remains firmly entrenched. Whether a dynamic telecommunications market will ever materialise in Australia is doubtful, and politics will likely ensure that many citizens are unable to purchase broadband like one would any other commercial service.

Any broadband is better than none

While Labor’s plan clearly focussed on equality of outcomes delivered by government, the Coalition appears to have simply outsourced the function of providing services with a view that any broadband is better than none. Something had to be done, but whether government should remain so heavily involved in delivering services remains counter-intuitive.

As far back as 1913, AT&T reported that the biggest problem with Australian telecommunications was the extent that the industry was tied to politics, rather than the market. While the Coalition has today provided evidence to support the broadband policy it promised at the election, it seems like more of the same but slightly slower services delivered at less cost, hopefully more affordably and sooner rather than later.

How today’s announcement will affect the existing arrangements with Telstra, and what shape NBN Co will take once the job is done remain unclear.

Turnbull’s plan leaves some room for competition in the future, and is a practicable plan which should enable much faster penetration of a long overdue technology.

But whether the existing NBN Co – even with a new leader – can transform itself sufficiently to deliver on the Coalition’s promises appears unlikely in the short term.

Until the ongoing regulatory review is finalised, today’s strategic review of the NBN at least provides some formal direction for the Coalition’s broadband policy. But anyone hoping for less government involvement in what should be a vibrant and innovative sector, will be disappointed.

Michael de Percy does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

The Conversation

This article was originally published at The Conversation.
Read the original article.

[Photo by St_A_Sh CC BY 2.0]

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14 Responses to NBN 2.0: From engineer’s dream to political football
#1
howeph11:21 am, 13 Dec 13
#2
MrPC11:29 am, 13 Dec 13

Clearly Michael de Percy is technically illiterate, as he doesn’t understand the difference between bandwidth and latency. Bandwidth on copper may be available at 50Mbps (some day, for some households that are very close to the node, when it’s not raining, and when the microwave oven isn’t running, if you buy newer internal wiring and keep your xDSL modem on a very short cable right next to the primary phone plug in your home).

However, even if all the conditions required to get 50Mbps bandwidth on copper are met, the latency on copper will always be noticably worse than the latency on fibre. He’ll start to notice if he ever has to move back to the bulk of the country which now won’t get fibre.

I wonder how long it will take to extract his foot from his mouth.

I also wonder how long it’ll take for him to realise that an “I’m now alright on fibre, so eff you” article isn’t very edifying.

#3
Grrrr1:48 pm, 13 Dec 13

“Regular” users may not notice the difference between 50 and 100mbit, but Turnbull is no-longer guaranteeing even 25mbit and he’s also not guaranteeing it to be delivered by 2016.

Most users CAN tell the difference between (say) 12/1 on copper and 100/40 (or 1000/400) of FTTH, and in 2016 they’re even more likely to notice.

Turnbull has also said that anyone who can get HFC (Cable) isn’t getting NBN FTTN (or FTTH.) He’s failed to mention what’s happening to approx 65k Canberra premises that can now get TransACT VDSL2 – which offers approximately the same speeds as HFC.

He should just have announced that certain areas are no-longer getting FTTH and he’s leaving it to private enterprise to service them, instead of offering for the government to roll out a half-arsed solution for the remaining 70% of premises nationwide. That way we’d be more likely to get fibre outside of the NBN areas, and NBNCo wouldn’t be spending money on something that’s going to need an upgrade (more $$) pretty much as soon as it’s finished.

#4
Gungahlin Al2:38 pm, 13 Dec 13

Political football indeed.
This piece demonstrates how even the most objective of informed commentators are now disgusted with Malcolm Turnbull:

“Please accept my apologies: I was wrong about Malcolm Turnbull”
http://delimiter.com.au/2013/12/12/please-accept-apologies-wrong-turnbull/

#5
DUG4:21 pm, 13 Dec 13

You’re kidding me right?
Liberals should just scrap it completely and let the market sort it out…. that’s been working so far right?
Yeah right! Why would anyone spend billions on upgrading something that people are happy to pay for and just complain about? (Excluding transACT – though that’s a bit average and only available to select houses)

Just because countries like Korea can justify offering households 100Mbit connections and boasts that it has the most developed internet in the world doesn’t mean that a backwash un-developing country like Australia should. its not like we are competing with anyone in Asia in the IT market.
Do it properly or don’t bother at all!

Im rocking 2Mbit in Calwell, my exchange is 4.5 km away, and the node….. Let’s just say if the old copper doesn’t get replaced you may as well not bother. And for all of those people who only use internet for eBay and face book.. 2Mbit is useless; I can’t establish a reliable remote session to my server or perform any other meaningful business related work from home or via my home business systems!
And as for those who say “you can afford to install FTTH yourself” get stuffed! It will be much more than $6k and as is I live pay check by pay check.. Right now with all the winding back of social programs that Liberals are doing Im wondering what my high Australian Taxes pay for, they are not even propping up any worth while big businesses! Unless you’re foolish enough count mordoc, Telstra and foreign mining companies who barely employ any Australians anymore.

#6
Deref5:44 pm, 13 Dec 13

Gungahlin Al said :

Political football indeed.
This piece demonstrates how even the most objective of informed commentators are now disgusted with Malcolm Turnbull:

“Please accept my apologies: I was wrong about Malcolm Turnbull”
http://delimiter.com.au/2013/12/12/please-accept-apologies-wrong-turnbull/

Hands up anyone who’s surprised.

#7
agent_clone6:16 pm, 13 Dec 13

My question with all of this is how are they planning on getting even the 25Mbps over the copper network in the suburbs? My understanding is that to even get 25Mbps over copper the house needs to be within 400m of the node. Given that they are planning on having around 200 homes per node in the suburbs this would be a wider area than the 400m required to get the nominated speeds.
There is also the fact that at current speeds we are likely to have dug all the potential copper out of the ground by 2050, which while copper can be reused it will be more expensive. This means that more people will steal the copper wires.
The coalitions plan will potentially be cheaper in the short term, but I would say a lot more expensive in the long term, which in turn means that unlike what they claim the cost to connect to the NBN will be more expensive via their plan as network maintenance costs will be higher.
Also with the coalition wanting to let the market sort it out, part of the reason for the NBN was to allow rural areas to have a network developed, with the cities subsidising them, these areas would not be services otherwise as the companies would not see the point in the investment required.
I honestly don’t know that the current coalition thinks long term rather than short term (in this or other items such as investment in national rail networks as opposed to some road in Sydney that will just mean that people reach car congestion slightly faster than they did before). In my opinion if you want to think long term you want to be moving away from copper.
Also with the slowness of the roll out of the NBN currently my understanding was that a number of issues had been from a) negotiations with Telstra and b) The asbestos pits didn’t help.

#8
260410:06 pm, 13 Dec 13

Gungahlin Al said :

Political football indeed.
This piece demonstrates how even the most objective of informed commentators are now disgusted with Malcolm Turnbull:

Yep, so objective that he’s published articles in the past two months including “How Labor can take on Turnbull – and win”, “NBN review stacked with Turnbull cronies”, and “How Turnbull’s first 100 days have been a disaster”. No anti-Turnbull bias there at all.

At the end of the day, the guy is just another rent-seeker who (like liberals everywhere) expects other people to pay for his preferences rather than stumping up money himself. Sounds familiar, I’m sure.

#9
LSWCHP11:29 pm, 13 Dec 13

I live in Giralang at the maximum possible distance from the exchange, so I get the minimum possible ADSL2 rate, which is about 1.5 Mb/s.

It’s a bloody miserable effort, and it’s hard to believe that we are in the capital city of Australia well into the 21st Century.

I have two teenage boys who are bigtime internet users, and one of whom will be voting at the next election. They hate the Libs passionately, solely because of what they’ve done to the NBN. It would be funny to hear a 13 year old boy railing against the Prime Minister, if his complaints weren’t valid.

#10
howeph12:05 am, 14 Dec 13

2604 said :

At the end of the day, the guy is just another rent-seeker who (like liberals everywhere) expects other people to pay for his preferences rather than stumping up money himself. Sounds familiar, I’m sure.

The objective of the NBN was to provide an equitable infrastructure service to ALL Australians, not just those who happen to be in the situation to afford it (i.e. middle class and live in the large cities). That’s why it’s called the NATIONAL Broadband Network.

The author isn’t asking for other people to pay for his preferences, he wants his taxes to help all Australians equitably.

I think you need to learn about inequality, why it’s important and why it’s the natural state and therefore requires constant hard work to address (free markets don’t cut it). Check out I am President Snow for a quick 4min look at inequality, via The Hunger Games analogy.

#11
CraigT8:09 am, 14 Dec 13

Deref said :

Gungahlin Al said :

Political football indeed.
This piece demonstrates how even the most objective of informed commentators are now disgusted with Malcolm Turnbull:

“Please accept my apologies: I was wrong about Malcolm Turnbull”
http://delimiter.com.au/2013/12/12/please-accept-apologies-wrong-turnbull/

Hands up anyone who’s surprised.

Me.

I honestly thought Turnbull was better than this. He is now responsible for trashing a very successful infrastructure project and replacing it with a very expensive alternative that offers very poor functionality and has a very limited life expectancy.

Somebody with some stunningly bad disinformation is breathing into these guys’ ears.

I honestly thought that even Tony Abbott, once elected, wouldn’t want to be remembered as a retard who trashed the NBN for no good reason, choosing to cost the taxpayer vast sums of mopney to handicap the Australian economy.

#12
CraigT8:15 am, 14 Dec 13

agent_clone said :

The coalitions plan will potentially be cheaper in the short term, but I would say a lot more expensive in the long term, which in turn means that unlike what they claim the cost to connect to the NBN will be more expensive via their plan as network maintenance costs will be higher.

Yes. Those of us who understand this issue have beenj saying this for years.

The Libs’ NBN plan was always rubbish, consisting of very bad maths built around over-optimistic assumptions about that state of our copper.

They need to actually go out there and build tens of thousands of brand-new “nodes” in order to eke just a little bit more out of the existing copper. It is retarded. They just need to get fibre in and stop paying to maintain the decaying copper.

I’m a little older than LSWCHP’s sons, but to me this issue overshadowed all others at the election and decided my vote.

The Libs’ dogmatic policy on the NBN 100% demonstrates they are not fit to govern.

#13
switch9:05 am, 14 Dec 13

Was telling a friend in Europe about my new VDSL2 connection, with 50-60Mbps download speeds. He said that’s pretty much the basic bottom end connection speed in his city now (for € 32 or A$ 48 a month, unlimited data), and for an extra € 10 a month he could go to a connection with up to 1 Gigabit per second speeds.

Note that our Luddite Leader’s New Improved copper based FTTN will never achieve this sort of performance.

#14
260410:38 am, 14 Dec 13

howeph said :

The objective of the NBN was to provide an equitable infrastructure service to ALL Australians, not just those who happen to be in the situation to afford it (i.e. middle class and live in the large cities). That’s why it’s called the NATIONAL Broadband Network.

The author isn’t asking for other people to pay for his preferences, he wants his taxes to help all Australians equitably.

I think you need to learn about inequality, why it’s important and why it’s the natural state and therefore requires constant hard work to address (free markets don’t cut it). Check out I am President Snow for a quick 4min look at inequality, via The Hunger Games analogy.

Social equality through equal access to broadband? Ha ha. You might as well argue that the government buying a car for everyone who can’t afford one or or sending them on holiday to Hawaii would also help to achieve social equality.

Does the NBN “help all Australians equitably”? No.
- It only helps those affluent enough to afford a connection. Many who are close to the minimum wage and paying income tax will be subsidising it through their tax, but may not be able to afford a connection.
- It only offers a net benefit to those who don’t already have access to adequate broadband speeds. People who already have internet access which adequate to their needs are unlikely to use it.
- It is disproportionately paid for by higher income earners.

Regarding inequality, I think you need to learn about opportunity cost. There is only so much money available to government, and every dollar spent on the NBN is a dollar that can’t be spent in other ways which may actually help truly disadvantaged people – for example, increased mental health services, the NDIS, or support for homeless people.

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