Turnbull rejects criticism of coalition NBN policy as 'madness'

  • "Pure Fantasy" says Turnbull
  • How to separate Telstra under FTTN still a mystery
  • Wireless off the table - for now

Alan Kohler, a commentator for Business Spectator, launched a quick and scathing attack on the coalition NBN plan this morning. In “The Coalition’s NBN policy is Madness” Kohler suggests a scenario in which Malcolm Turnbull, as Communications Minister, would be sitting across from a smiling Telstra line up of lawyers and managers, ready to talk turkey on providing last mile communications in a Fibre-To-The-Node roll out - with the coalition government at the mercy of the telco.

Via Twitter, Turnbull hit back with a less-than-convincing suggestion that Kohler’s scenario was ‘pure fantasy’, but there is something to consider here.

The current system is FTTN

There’s plenty of reasons to criticize the NBN – it’s expensive, it’s going to take a long time, and it’s not going as quickly as initially expected. All of these criticisms can be met, but that doesn’t make it any less frustrating.

But after the critique, an alternative has to be suggested. The main thrust of the coalition’s alternative plan has been two-fold:

-    Instead of Fibre to each premises, Fibre will be run to a ‘node’, servicing an area less than 1km to each house, and then rely on the existing copper network to carry the service the rest of the way;

-    Mobile Broadband will evolve sufficiently in the next ten years to provide an equivalent service to fibre, with the same sort of reliability, latency, speed and capacity (gigabytes per dollar) as a fixed-line connection of any description.

The Mobile Broadband argument has wilted under scrutiny- a breakthrough in re-apportioning radio spectrum and overcoming basic physics might be forthcoming, but not for commercial application within the next ten years. Coalition ministers suggesting otherwise have been silenced, on the basis that their assessment is usually scientifically unsound (in that their assessments are ‘wrong’, or ‘complete and utter rubbish’, or ‘suggest that they don’t possess the foggiest notion of where ‘interthewebs’ comes from’).

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Turnbull has shifted the plan in favour of continuing the goal of the NBN, albeit via an FTTN rollout which he maintains would be cheaper and quicker. This argument stutters a bit when put under scrutiny as well, as it fails to meet some of the more abstract goals of the current NBN plan – it fails to account for big increases in demand (at best, it would squeeze 50 – 100 Mbps out of the copper before reaching capacity again, whereas fibre is capable of significantly better throughput) and it fails to structurally separate Telstra.

Put simply, Turnbull’s plan would barely change a thing from what we have right now, pre NBN. The current system is effectively, Fibre To The Node. Fibre networks extend to each telephone exchange, and then jump on to the current Copper Access Network (CAN) which belongs to Telstra. The exchange is the Node.

All the coalition plan would do would be to move the Node closer to each home. This would still leave control of the last bit of the connection in Telstra’s hands. As Kohler pointed out, it would also require several thousand (tens of thousands) of streetside cabinets, much like the Remote Integrated Multiplexers (RIMs) currently employed by Telstra in many new estates.

Telstra is run by people smarter than Malcolm Turnbull.

Telstra’s shareholders have voted overwhelmingly to migrate the company in the direction of being a retailer for fixed-line broadband, and to remain a wholesaler/retailer for mobile. And that makes sense. Their current vertically integrated status attracts plenty of negative attention, not to mention escalating maintenance costs to keep the copper network in tip top shape (which it fails to do). Dumping their wholesale liability means they can be leaner and quicker, rather than a lumbering dinosaur that has to fix problems for both themselves AND for the competition.

But Telstra only really gave it up because it was the best option facing them. If the situation changed overnight, and Telstra could continue extracting value out of that network under a  new regime that had banked part of their re-election on it…they could extract a LOT of protection out of that. They could demand that the government keep ACMA, the ACCC and the TIO out of their hair. What would the government do?!? Go and build their own last mile ne- Ah. Right.

It does seem like Malcolm Turnbull’s solution for separating Telstra is “we just will, mmmkay?” There has been no actual plan for how this would be achieved, though Turnbull has at least acquiesced that it’s necessary.

But actually replacing Telstra’s CAN is exactly the solution required. Even then Telstra is still extracting rents for use of the conduits for 30 years. If the government comes knocking with a request to keep the CAN alive, then Kohler is absolutely correct – Telstra will be very happy to sit down with a coalition government, and they will absolutely be ready to extract an even stronger monopoly position on the Layer 1 link to the communications grid for every single home, unit and office in Australia. It will do exactly what NBNco does, only for a crappier service controlled by a company beholden to no-one but its shareholders, while at least NBNco would have to face scrutiny as a government company.


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