Where to now for the NBN?

With the 2016 Federal Election this weekend and the National Broadband Network proving to be a thorn in the Coalition's side, it is time to discuss in The Australian what the options are for the Prime Minister Malcolm Turnbull if the Coalition is returned to Government.

Read the full article below

Both Labor and the Coalition have put forward their broadband policies for the 2016 Federal Election and while the National Broadband Network (NBN) may not be the standout election issue there should be concern within Coalition ranks that the ABC Vote Compass found that about 70 per cent of Australians favour returning to an all fibre fixed access network even if it takes longer and costs more.

The Coalition government may be returned on Saturday and if it is then there needs to be a quiet rethink about why the Government has adopted such an unpopular policy and what can be done to quell the disquiet.

It would be naive for the Prime Minister Malcolm Turnbull to believe that the NBN can be completed before 2022 without further reducing reliability, resiliency and construction quality or that the electorate will be happy in the lead-up to the 2019 Federal Election with a second rate NBN that is slow, congested and does not perform as promised.

Turnbull has remained steadfast in the face of mounting criticism of the Coalition’s broadband policy but that doesn’t mean it’s too late for the Coalition to truly deliver on its technology agnostic promise.

Now that Labor has announced a pragmatic and sensible broadband policy on how it will tackle the NBN if it wins the 2016 Federal Election, the Coalition is faced with the stark reality it is being left with little wriggle room and claims that Labor’s revised NBN policy will cost $30 billion more and take 8-10 years longer to complete will not stand scrutiny.

For a Turnbull Government, elected in its own right next Saturday, there would be a short window of opportunity for the Coalition’s broadband policy to be revised before it would be too late to change course.

At the heart of the Coalition’s policy is the $29.5 billion cap on the public equity contribution to the NBN and Labor has announced it would retain this cap if it is elected.

A bipartisan approach to limiting taxpayer exposure provides an opportunity for the shackles to be removed from NBN Co so that the management team lead by Chairman Dr Ziggy Switkowski and CEO Bill Morrow can take a fresh look at how the NBN should be built and financed. NBN Co should be given increased flexibility to grow the wholesale products that it can offer.

However, removing the shackles from NBN Co should not go so far as to remove uniform wholesale pricing lest NBN Co open a whole new can of worms by offering volume based reduced pricing to the larger telecommunication companies. It is vital that NBN Co be positioned so that it can facilitate a fair and open competitive retail telecommunications market.

NBN Co’s figures show that seven years after an area goes live the cost of FTTP becomes cheaper than FTTN when construction and operational costs are taken into account and seven years is well within the ten-year window after which typical infrastructure projects today are expected to move to becoming cash flow positive.

Around the world we’re now seeing the economics of fibre coming to the fore, especially with the ‘Netflix’ effect over the past three years driving up data usage and the result has been a significant increase in average revenue per user (ARPU).

What this means is more fibre, higher speeds, more data and NBN Co becomes profitable much faster than if it continues with the second rate copper based technologies.

The practicalities of how this can be achieved is fairly straight forward. The incoming Ministers for Communications and Finance would provide NBN Co with an updated Statement of Expectations that removes all reference to the now discredited Strategic Review.

A much smaller Statement of Expectations would identify the constraint of a public equity capital limit of $29.5 billion, that fixed access connections after 1 July 2017 be at least 100/40 Mbps, fixed wireless and satellite connections be at least 25/5 Mbps and capacity be provided to ensure that total link throughput (peak information rate) of 80 per cent or more is not attained in two consecutive months.

By taking the first step and seeking a bipartisan agreement on the NBN, a newly elected Turnbull Government would be rid of a major headache that could only get worse over the next three years.

Mark Gregory is a Senior Lecturer in the School of Engineering at RMIT University.