Analyst Paul Budd questions the Prime Minister’s personal commitment to the NBN saying he still has not embraced a truly future proof NBN – “one the country wants and needs” - “let alone taken full ownership of the project or its potential”.
According to Budde, there are no indications that the Prime Minster is “willing to put his weight” behind securing the future-proof broadband network, not only for his own innovation policies but also “not for the many other aspects that a modern digital, sharing, networked economy demands”.
Budde was commenting on media reports this week that the government has denied that it is negotiating with Telstra and others with a view to them taking over the NBN.
“While the government has denied that it is negotiating with Telstra and others with a view to them taking over the NBN, it is unfortunately beginning to make sense to start such discussions.
“Denials and promises from the government are never ironclad and we know they can take a great deal of liberty with the so-called ‘economic truth’. The sale of the NBN was already on the table back in 2011, in the very early discussions of the then Opposition’s plan for the national network.
“What is worrying – and could indeed indicate that the end of the NBN as we know it is on the table – is that even after 2 years the PM continues to blame the previous government for his own NBN troubles.
“And despite his repeated promises of delivering his version cheaper and faster we now have a delay of 2 years, with cost blowouts being reported at regular intervals.”
According to Budde, if the Prime Minister believes in his version of the NBN he would have used it as a spearhead of his innovation policy, “since in the end this policy should be all about implementing the innovations that are already available to us and the many others that will be developed in the future – most of which will be centred on accessibility, distribution, interconnectivity, cloud computing and data analytics”.
“In short, they all depend on a first-class digital infrastructure to deliver innovations to businesses and the broader Australian society (medicine, education, agriculture, energy, mining and so on),” Budde writes in his BuddeComm report.
Budde says Prime Minister Turnbull continuously saying that Australian people are smart – “and that is true”. “He is fully aware that the majority of the people in Australia don’t support his financial concerns re the NBN. Instead they would like to see a first-class broadband network rather than a second-class one.
Budde goes on: “Rather than using his political power to change the NBN policies and allow the country to make that quantum leap into the digital future, the government - according to The Financial Review - is now considering throwing in the towel.
It is very sad for the country that the government has made such a mess of the NBN, as all of the elements associated with the potential failure of his policy were well-known before he started to develop it. True the original version had its own problems but they could have been fixed in far more smarter way.
“As we have mentioned before, the original NBN would have been a quantum leap forward, surpassing all of the existing ageing telecoms technologies. Apart from the Australian business and residential broadband users, all the operators were happy with that, as it meant they didn’t have to upgrade their old networks, and the smaller players were happy as well, since the FttH infrastructure would be made available on a wholesale-only basis, overcoming the previous monopoly problems the country had with Telstra.
“If FttH were to be the ultimate fixed technology for at least the next 20-30 years, given its sheer capacity there would be no economic incentive to overbuild such infrastructure, and so a national infrastructure makes sense to all parties involved. The only people rejecting it were those who placed their political ideology before the economic and technological realities of the project.
“Without the use of new technology there is now plenty of economic incentive to overbuild the MTM NBN – where it makes sense and where it is legally possible – with proper fibre networks. It would be a crime against innovation and against the national interest if policies and regulations are now going to be used to stop competitors from delivering the first-class infrastructure that is clearly needed for a modern and innovation-based economy such as the one the PM envisages.
Budde says that in addition to the technology cost blowouts that are already taking place in relation to copper and HFC networks, “there are also the cost blowouts related to a further 2 years of delay, as well as the threat of competition”.
“Furthermore, because of the use of the ageing technology we still don’t know what surprises are around the corner when the MTM is rolled out in the real world (something that is only just starting to happen now).”
Budde suggests that it look like the NBN policy is “rapidly becoming a millstone around the neck of the government, and in that context, for political reasons alone, it makes sense for it to look for a way to get out of the hole it has dug itself into”.
“It is just lucky for the government that the Opposition is not using this failure to its own political advantage – obviously it is also worried about how to get the NBN out of the mess it currently is in.”
Budde says that, as there is no indication that the Prime Minister is willing to throw his support behind a first class NBN, the question that needs to be asked is – “since the owner of the project doesn’t believe in it, is it the right organisation to run it? ? While the answer, of course, is clearly no, the alternative is equally unpalatable.
Budde warns that any changes will result in more reviews and more delays, with very uncertain outcomes if the NBN is sold back to Telstra and/or others. “Think about the financial consequences and the legal and regulatory implications – just mindboggling!
“However the current situation is also not an option, unless the government takes full responsibility for the long-term strategy of the project.”
“A simple denial by the government of the possible sale of the NBN will not solve the problem. If we don’t see some speedy policy changes to the NBN – favouring long-term FttH solutions – the political situation surrounding the national network will only deteriorate further and push the government further and further into a corner.
“And this is the last thing the Prime Minister needs in trying to rebuild the future of Australia – a goal that, as I have said on many occasions, I whole-heartedly support, from my perspective the NBN has nothing to do with politics.
“I simply want the best outcome for the country. His innovation policy is one of the good things we can expect from the PM if he is willing to throw his weight behind it.”