Labor rules out sweeping NBN overhaul in new policy

Promising to "make the best of what we have" as a result of the Coalition's $50 billion NBN rollout, Labor's communications spokeswoman Michelle Rowland has committed to a review of the vexed project and $185 million in spending to boost some Australians' internet connections.

$125 million of the money will fund improvements for up to 750,000 people by fixing in-home wiring problems. $60 million will go into trials providing another 20,000 people with high-speed fibre connections, exploring a "pathway for future upgrades" over ten years funded by joint public-private investment.

In a speech on Tuesday, Ms Rowland observed the rollout of the network under the Coalition's "multi-technology mix" model is forecast to be complete by mid-2020 and the business plan does not contain funding for major upgrades.

She outlined that "Labor's policy requires the honesty to acknowledge there are realities we cannot undo, whilst knowing that with the application of will and initiative we can try make the best of the NBN and position it for the future".

The approach is a stark contrast with the original NBN model launched by the former Labor government a decade ago, which would have rolled out direct fibre connections for 93 per cent of premises.

Long critical of the Coalition's replacement model that uses the existing copper-wire network and other technologies, Labor has previously promised to put more people on fibre-to-the-home connections instead of fibre-to-the-node.

With the Coalition's version nearing completion and reporting 4.8 million active connections, Labor's 2019 policy will fund free repairs for people on fibre-to-the-node connections that have in-home wiring issues linked to dropouts and slower speeds.

Ms Rowland described this as a "pragmatic and cost-effective" step.

"Some will ask why Labor is taking steps to patch up problems with the copper network it has so vigorously attacked over the past six years. The simple fact is that our priority is improving consumer experience," she said.

Ms Rowland said targeted trials for 20,000 more fibre connections were a sensible and realistic approach that will assess affordable options for delivering high-speed connections to more people in the future.

"We have to be intelligent, we have to be patient, and we have to do the right analysis in order to understand what is and what is not feasible," she said.

Labor will establish a review of the contentious economics of the NBN, examining cash flow, pricing and capacity for investment in future upgrades. Ms Rowland said the review was necessary to inform any major decisions, warning that care was needed on the fraught issue of pricing.

"The cash flow story is what concerns Labor the most. The ongoing cost to run the NBN has gone up. The ongoing cost to remediate the NBN network has gone up. The revenue potential has come down. The result is that the cash flows of NBN Co have been materially reduced," she said.

Internet service providers have pushed for cuts to wholesale prices to ease pressure on their profit margins and possibly pass on savings to customers. Labor has indicated openness to a write-down of the network's value, suggesting the revenue capacity does not support the $50 billion valuation on the books.

The government has the power to direct NBN Co to lower wholesale prices but the company has warned that major drops would risk the viability of the project. It has also rejected the push for a write-down, backing its current valuations.

NBN Co's revenue reached $1.3 billon in the second half of 2019, up 46 per cent on the year before, according to its latest financial results. The company is forecasting revenue of $5.6 billion by 2021 and expects to meet its required 3.2 per cent return on investment.

The average revenue per user is up to $45 a month, with the company planning to reach $51 by 2022.

Labor's newly announced strategy will also seek to encourage more people onto the network with a "digital inclusion drive" initiative targeting the more than 1 million Australians without broadband connections, including many elderly people and low-income earners.

The measures build on Labor's previous commitment for a NBN service guarantee to set standards and protect customers from poor quality connections.

NBN Co has reported major increases in active users and premises ready to connect. Recent figures show increased appetite for the higher speed tiers of the network as 56 per cent of premises opt for plans of 50 Mbps or higher.

Last week, the company divulged that 183,000 active fibre-to-the-node connections of the total 2.4 million are not achieving required speeds of more than 25 Mbps.

- SMH/The Age