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Why? Why does the opposition want an NBN?


Paul Budde

Telco analyst Paul Budde believes the Coalition must tell us why it wants the NBN.

Telco analyst Paul Budde believes the Coalition must tell us why it wants the NBN.

There is a great deal of good language in the opposition's NBN policy that indicates it believes the NBN is important for Australia's social and economic development. Tony Abbott said so himself in the U-turn announcement of the Coalition's alternative NBN plan. But still the Coalition fails to clearly indicate why it wants the NBN.

Without knowing why the opposition wants an NBN we cannot know – and we cannot check – whether they have selected the right policy for the technology they have chosen for their version.

If you don't know why you want an NBN, how can you develop the right policies and strategies to achieve what I assume they agree is necessary, a national digital infrastructure outcome?

The Coalition has foreshadowed a cost-benefit analysis for their current plans without actually saying why they believe an NBN is needed. Only once the vision is known can key policy strategies be developed to ensure the right social and economic outcomes.

Once you know why you want an NBN you can turn to technicians and ask them to design the right infrastructure for it.

What we see happening now is the wrong way around – first we get a technical plan and then we figure out what we are going to do with it.

The government's initial plan for the NBN also failed to address the social and economic issues upfront and this created ongoing political and financial issues for the government and NBN Co ever since, so there are lessons to be learned here. But so far the opposition has failed to state that NBN Co should be not just another telco, but an essential basic infrastructure provider. The difference between the two will lead to vastly different business models.

NBN Co has been established as an ordinary telecoms company. At the same time, and increasingly so, it is being required to develop the network in such a way that it also delivers a range of social and economic benefits. The problem is that its business and finance models do not take these benefits into account and therefore there are no incentives for the company to divert from its telco model.

If properly treated as a basic and essential utility, the real (financial) benefits of the NBN are more likely to lie in increased productivity and innovation in business, healthcare, education, government and so on.

If you launch a project on the wrong business model, you face ongoing problems. If, however, the social and economic benefits appear upfront in the business model, NBN Co can be a rather different organisation and more emphasis can be placed on ensuring that the network is designed and developed to deliver those benefits.

The good element of the opposition plan is that since it has not formulated its vision on these issues, it still has the option to change NBN Co's business model to better reflect its role as an essential, basic infrastructure provider.

But the longer the opposition waits to provide a blueprint, the more entrenched the faulty telecom business model becomes. All further policy, legal, financial and technical decisions should be based on that.

The present government has from the beginning talked about nation-building, essential infrastructure and the like, and while it still has many questions to answer, at least it has in place policies such as the national digital strategy, with dozens of projects already launched aimed at stimulating developments in teleworking, the digital economy, healthcare, education, sustainability, government services, and so on.

Some of the outcomes of these social and economic developments might be three, five or even 10 years away, but the infrastructure will be here for the next 25-50 years; so we need to know what we want to achieve with the NBN to ensure that it will support the right national outcomes.

It is good to see that the opposition does acknowledge that fibre-to-the-premises (FTTP) may eventually be needed. But it raises questions about how it will do this after installing 60,000 street cabinets for the rollout of its fibre-to-the-node (FTTN) version of the NBN.

There is not necessarily anything wrong with an intermediate step and it is possible that such a plan makes sense within an overall cost-benefit analysis, but without a proper vision and a proper policy that addresses these national interest issues, it is based on very shaky foundations.

The opposition wants to implement its version of the NBN quickly, but we need to know what its plans are beyond the next five years as by that time we will need to move on to the next step of the plan. Be it in five or 10 years, over time the entire old copper network will need to be upgraded if the country is to achieve the national socio-economic outcomes we assume the opposition is also interested in.

The fact that it aims to include competition in its infrastructure rollout could indicate the opposition indeed sees NBN Co as a national utility. If infrastructure competition is allowed then that competition will concentrate on the most lucrative markets – along the same lines as we see now around developments in ADSL2+ and HFC upgrades.

If that level of cherry-picking is allowed then there will be no way for NBN Co to deliver a positive financial outcome, as it will be left servicing only the areas that are not commercially viable – roughly 50 per cent of all broadband connections.

It follows then that the NBN Co under the opposition will not be based on providing any serious commercial return.

The prognostics could change, but at this stage we do not know what the opposition's NBN vision is, or whether it has a larger strategic plan for the infrastructure.

Paul Budde is an independent telco analyst and principal of


  • Looks to me like the COALition has already installed it's version of modern communications at Paul Budde's place judging by the antique looking phone on the wall in the photo!

    I wonder if he had to pay $5000 to have it installed at home instead of in a box down at the street corner? ROFL

    Funny how during all those years that the COALition was in power their mates at Tel$tra were very busy removing all the telephone boxes from our street corners and now they want to replace them with internet boxes.

    Kind of ironic that!

    I guess that's the COALitition's idea of updating technology hey?
    Going from phones in boxes to antique copper internet in street boxes.

    The whole situation would be laughable if it weren't so important for our country to have modern communications.

    Date and time
    April 19, 2013, 2:39PM
    • There's no heart in this project from the Libs at all. They don't believe in building things for a start. In the end it's a $30 billion LEMON. When the Libs waste money, they do it on a grand scale. We should also be asking them why they want Direct Action too. It's hardly a policy they believe should happen.

      Date and time
      April 19, 2013, 4:18PM
    • "....all those years that the COALition was in power their mates at Tel$tra were very busy removing all the telephone boxes from our street corners......"

      Now you know why you havent seen Superman lately.

      Date and time
      April 19, 2013, 10:25PM
  • I find that Malcolm Turbulls calling Quigleys figures at the Senate Inquiry "misleading," somewhat farcical . That statement coming from the man ,who along with Teflon Tony, is one of the leading practitioners in the art of miss information is without doubt one of the greatest repugnant statements of all time. In my book that makes the old adage "the pot calling the kettle black" redundant.

    nambucca heads
    Date and time
    April 19, 2013, 2:47PM
    • Isn't Miss Information Tony Abbott's mistress?

      I wonder if Margie has noticed?

      The Realist
      Date and time
      April 19, 2013, 3:00PM
  • i think their plan is improving speeds but no so much as to damage Rupert's cable TV business model.

    Date and time
    April 19, 2013, 2:49PM
    • Spot on!

      Western Victoria
      Date and time
      April 19, 2013, 4:29PM
    • +1 you hit the nail on the head. What a sad thing for all of us is if these jokers get in, and sabotage the NBN so that Murdoch can make more money.

      Date and time
      April 19, 2013, 10:10PM
    • Totally agree. This is Abbott's way of a political "policy" - help Uncle Rupert fight any diminution of his political & business models while appearing to have a policy on the NBN. It is has been all about Murdoch's cash & influence. Political corruption, period.

      Date and time
      April 20, 2013, 7:27AM
  • Great Article. The Coalition never wanted the NBN, the are prepared to waste $20.4B just to buy votes.

    invest now
    Date and time
    April 19, 2013, 2:56PM

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