Labor sets aside NBN myths

Labor's plan for the National Broadband Network (NBN) has been released and the outcome is discussed in The Australian. In what can only be described as a pragmatic and sensible approach Labor will tackle the NBN with the goal of shifting back to full fibre as soon as possible, and for two million Australian premises this will be as soon as the FTTN rollout can be stopped and the FTTP rollout resumed.

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Labor has finally lifted the lid on its plan for the National Broadband Network (NBN) and from the looks of it the strategy could deliver the best possible outcome for the long-suffering project.

There’s no turning back of the clock to the full-fibre vision laid out in the original NBN plan, instead Labor is hoping to bury the fibre-to-the-nodes (FTTN) folly for good and provide Fibre to the Premises (FTTP) to an additional two million premises. It may seem limited to those hoping for more dramatic action from Bill Shorten but the policy is fiscally responsible, technically sound and shifts the focus back to providing Australia with a more reliable broadband infrastructure.

The decision to continue with the remediation, upgrade and integration of the existing Hybrid Fibre Coax (HFC) networks into the NBN is significant. It may have its detractors and the cable infrastructure may not be in the best condition but decommissioning this asset is simply no longer possible. About 34 per cent of premises will be connected to the NBN using HFC and contracts were signed earlier this year with Telstra for HFC remediation, upgrades and new construction to ensure that customers within the HFC footprint can connect to the NBN and achieve 100/40 Mbps, which remains the target connection speed for the FTTP rollout.

Most Australians want the NBN rollout to be completed as soon as possible, and this impetus has clearly impacted Labor’s policy. Its decision to let existing contracts run to completion is a sensible one but the downside is that about 21 per cent of Australian premises will have been connected to the second rate FTTN by the time the NBN construction ends in June 2022.

A fiscally and technically responsible infrastructure plan is needed that identifies how to transition premises from FTTN to FTTP and whether the HFC networks should be upgraded to DOCSIS 3.1 or replaced with FTTP. Labor has announced that it will commission Infrastructure Australia to carry out this review and to provide a report prior to the 2019 Federal Election that takes into account the views of Australian experts, consumer groups, business and the telecommunications industry.

Fortunately, it would seem that Labor’s NBN tweaks are not going to be held hostage to another lengthy round of negotiations with Telstra. Shadow Minister for Communications Jason Clare told The Australian that changes to existing agreements with Telstra would not be necessary and this removes the need for construction to halt or be delayed while a new agreement clears the way for a rapid transition back to FTTP.

When it comes to time and cost, Labor is confident that it can get the initial build done by June 2022 and the revised price tag is set to come in between $49 billion to $57bn. The Coalition is likely to point fingers at the longer time frame and higher upfront cost but let’s not forget that the cost of building the NBN has ballooned significantly under the Coalition’s watch. The cost of Coalition’s copper laden NBN is expected to fall between $46bn to $56bn and the current state of the FTTN and HFC rollout means that NBN Co is unlikely to meet its December 2020 rollout target.

Labor’s new NBN plan may be marginally more expensive but the increased construction cost will be offset by a reduction in the operational cost because FTTP is cheaper to operate and this means that the public equity contribution remains at the current cap of $29.5bn.

With FTTP customers expected to connect at higher speed tiers, more fibre means more money for NBN Co’s coffers and that’s the assumption that underpins Labor’s plan to deliver an internal rate of at least 3.9 per cent. It’s a significant improvement over the current internal rate of return that has slumped to between 2.7 and 3 per cent.

The Prime Minister Malcolm Turnbull — the instigator of the muti-technology NBN — has understandably been quiet on the issue of the time and cost blowouts and Labor’s NBN policy certainly does its best to add to his discomfort. The two great myths perpetuated by the Coalition Government, that Labor’s NBN plan will cost $30bn more and will take ten years longer than the Coalition’s NBN plan, can now be set aside for good.

Mark Gregory is a senior lecturer in the School of Engineering at RMIT University.