Malcolm Turnbull Talks NBN, Technology, Startups And Queue-Jumping

Shadow communications minister Malcolm Turnbull talked the National Broadband Network (NBN), technology and innovation at a press conference at the Kickstart event in Queensland today. Read on for his thoughts on running a startup, why broadband speeds don't matter, why businesses should be able to jump the NBN queue and the "barking unreality" of Australian technology writing.

Photo: Brendon Thorne/Getty Images

Detailed discussions from the Coalition on how it would approach broadband if it were in government remain a fairly rare event. As such, I figured it was worth covering Turnbull's statements in some detail, even though most of his speech talks about innovation policy rather than the NBN as such.

Innovation Nation

Turnbull kicks off by talking about innovation and why Australia "does not feel that it is doing a good enough job at innovation". "In terms of innovation, and I know many of you are involved in startups or would like to be, the critical learning is to be thoroughly resilient. Do not regard a failure as anything other than a learning experience. The critical lesson in innovation is to keep on innovating and keep on trying something else."

"The other thing is to be thoroughly and remorselessly open-minded. It's critical if you're doing business in uncertain times to give yourself as much optionality as you can."

There's an inevitable through line of criticism of current government policy here. "Just in terms of Australia and innovation, since 2004 there's been a broad decline in what economists call multi-factor productivity. It's been declining at an average of 0.4 per cent a year after a decade where productivity was growing at 2 per cent."

There are several factors at play here, Turnbull notes, included lower-grade mining and a lack of investment in infrastructure at state level. And then we're at the NBN, albeit briefly initially. "Despite the wonders of broadband, the NBN is also a utility, and over-investment can create perverse outcomes for consumers."

"The fact is that the rate of change — the speed at which we are pushing the frontier ahead — is actually slowing." Turnbull then runs through familiar figures on how Australians like and adopt technology quickly.

The big barriers to innovation are a lack of skilled worker and a lack of funds for business, he argues. "In terms of education, there is evidence we are starting to fall behind the world in key areas." Science and tech graduates are below 20 per cent of Australia's tertiary students, for instance.

With all that said, we move on to the NBN. "The narrative that Labor has created is that the NBN will alleviate all of these problems and create a digital nirvana . . . At the outset, I want to say there is no one more committed to delivering fast and affordable broadband than I am. My criticism is that it will take too long and cost too much."

Access is less of a barrier to innovation than staff and funding, Turnbull suggests. "While upgrading our infrastructure is an important and very urgent task, it is not a panacea, the government needs to be engaged in how the pipes are being used, not just putting them there."

"Part of the challenge with the NBN is ensuring its benefits are enjoyed by as many people as possible. The focus of government policy should be on universal accessibility and affordability rather than being obsessed with very high headline speeds."

"One of the things that is forgotten is that the biggest barrier to accessing the Internet is not technology, it is lack of income. The lowest percentage of people online are in the lowest income brackets, and so affordability is absolutely critical."

Having made this point (without explaining how it might actually be solved), Turnbull moves on to discuss venture capital issues in Australia and the difference between Australia and the US. "Australian startups and Australian entrepreneurs find the American market very, very accessible. We need to do a better job of commercialising technology here in Australia."

"What can the government do about that and where is the government doing too much? Few startups look to the government for help." Turnbull then reviews the success of the R&D tax concessions introduced by the Howard government.

"I have been critical of the changes to the R&D tax concession introduced by the Labor government. They narrowed the range of activities, and created uncertainty by changing the eligibility rules." Cutting unnecessary red tape will be a priority for a Coalition government, Turnbull said. Improving efficiency in universities and CSIRO and improving private sector links would also be a priority. Australia has far more university-funded researchers than those in the private sector, he notes. The number of startups funded by public organisation has decreased and is an inefficient process, Turnbull says (and he is quoting plenty of research to back that up — more than I'm going to type out here in detail).

Turnbull then turns to the current government's recently launched innovation policy, which he says is largely a matter of rebranding and drawing on existing investment funds and projects.

"As we continue to pursue the important goal of improved productivity, which is closely linked to a better utilisation of technology, we have to ensure that governments are doing everything they can to make it easier for people to innovate. I'm not persuaded that governments and bureaucrats are any good at picking winners."

NBN Questions

And now we're moving on to questions, which I suspect will be more NBN-centric. But first: how would public organisations like NICTA change under a Coalition government? "We're very supportive of those institutions. We'll certainly continue to fund them. I can't give you a commitment to a particular dollar amount, because that's something we'll announce in the lead-up to the election." Any indication of timing? "That's really a matter for Sophie Mirabella, who has the ministerial responsibility for it." In other words: were not going to tell you.

Turnbull then gets into what might politely be described as a brawl with the ABC's tech editor Nick Ross, who has frequently clashed with Turnbull over the lack of a detailed Coalition policy. What are the benefits of broadband? "It's for everything. Broadband is used for every form of communications, entertainment, everything," Turnbull responds.

What about telehealth? Is that only possible with fibre? "The areas where telehealth is probably most important is in regional and remote Australia, and nobody is proposing there is going to be fibre rolling out across the desert. We use a mix of technologies. Many telehealth applications do not require much bandwidth at all." Ross quotes a series of studies, and Turnbull loses his patience. "That is just absolute nonsense. I don't know where you'll get this from. Let me just say this to you. These are the sort of issues that could have been examined if there had been a proper cost benefit analysis of the NBN."

I'm often critical of rusted-on NBN opponents, who just blindly argue that it's a waste of money. But Turnbull has an equally valid point when he notes, as he does here, that NBN supporters can be equally locked in with their views. Discussion frequently degenerates quickly, no matter which side you're approaching from.

After some banter about FTTN in the US, the question arises: will businesses have to pay to be connected in a fibre to the node scheme, as has happened in some cases in the UK? Turnbull notes that many households were connected for free (around two-thirds) and that there is careful regulation to ensure equity of access. He would "absolutely" support the option of allowing businesses to pay for fibre-to-the-premises if they wanted to. "I'm not making a pledge on this here, but I struggle to see why you would object to that."

"The mistake the Labor government made in the NBN was saying we are going to do FTTP to 93% of Australia. They should have said 'we are going to do very fast broadband' and identified where the deficiencies are and that's where the cost-benefit analysis would have been so useful. Because of the approach they're taking, people will have to wait a very long time. Broadband availability is patchy. Surely you would prioritise the areas where the need is greatest."

Next: what would happen to the HFC cable network under a Coalition government? "HFC is a very big player in broadband everywhere in the world. It's the biggest in many markets. As far as our policy is concerned, what I've said about HFC is that we're going to prioritise the areas that are poorly served. [Overbuilding in] HFC areas would not be the highest priority. Any change would clearly require extensive renegotiation with Telstra."

Turnbull also suggests that aiming for high speeds in itself isn't always a worthwhile goal. "A lot of people are prepared to accept lower performance at a lower price. One of the challenges that telecom companies have is that they invest a lot of capital to upgrade services and then they struggle to get people to pay any sort of meaningful premium for it. Many people can do everything they want to do at a lower tier."

Will NBN Co be privatised under a Coalition government? "Not any time soon. But the reality is the government shouldn't be owning this business. We don't like that. But we are where we are. I don't see that the NBN could privatised for the foreseeable future. It just isn't in a state you could sell in any sort of satisfactory way. Our focus has to be to complete the NBN and up and running in a viable and sustainable form."

How could NBN Co be more transparent? Turnbull suggests monthly updates on premises passed could be useful. "NBN Co should be an open book. It doesn't have any competition. What we will do as soon as we get in is we'll very very quickly ensure that there is produced by NBN Co a fully transparent analysis of what it is really going to cost in terms of dollars and time to complete the build on the current plan." That would be compared to variations that might save money, such as FTTN in brownfields areas. The subtext is important: we're not going to be given a detailed plan ahead of the election.

Another question: Why can't some of that analysis be done now? "If I put out a set of financials, I want them to be right. We do not know enough about the NBN's commitments. If the NBN were to open their books to us, we could come up with some much more robust numbers."

Turnbull can't resist pointing out where he thinks coverage is wrong. "There is an air of complete barking unreality about some of the commentary here. There is a lack of interest in what is happening in other markets."

What's consistent through all this (and not unexpected) is we still don't have any more detail about the Coalition's broadband plans, and indeed we seem to have a commitment to not develop them unless the Coalition is elected. Turnbull knows the market well, but how that knowledge would be deployed is, still, something we'll have to wait a little longer to learn — quite possibly longer than this year's election.


Comments

    rate of change slowing what?

    Does this man UNDERSTAND what he's talking about...

    I'll just sit here in a growing startup...

      Yes itroll... you are a blathering troll. Go Malcolm! You will make Mr Troll's start up start up faster when you are in power.

        Current internet speeds are rubbish.

        The wholesaling of copper is a problem, not just for speed. It causes small businesses headaches getting connected.

        Turnbull's proposal to maintain the copper wholesaling is maintaining the problems I face every time I help a business move or start from scratch.

        The NBN will remove the problem by elminating the interconnect between the old phone system and the DSL line. This is a significant step forwrd. Turnbull wants to stop that step forward.

        Turnbull is not promising to make anything faster, just to stop us getting the speeds we will really need, unless we pay big $ to be special and get that fiber.

        Oh yes HFC (where available) could deliver us speeds nearly as good as the NBN in theory - but we don't have the HFC network to support that anyway. Otherwise we would have the speeds now.

        I have a 100Mbps HFC connection now, and it is of course a shared channel and it ranges from 33Mbps to 100Mbps depending on number of users. The upload speed is 1.8Mbps - which is nowhere near acceptable and again this is purely to allow shared use of a much faster channel.

        So yeah - who is the Troll and who is actually having experience and talking sense?

        Turnbull is not making sense, he is bundling a lot of facts together to make something they just don't.

        Sorry buddy, but I actually do work for a software startup.

        And Turnbull has no idea.

    Of course he doesn't know what he's talking about. He's changed his stance on the NBN and delivery mechanisms more times than I care to remember.

    His outrageous claims of delivering his "alternative" at 1/4 the cost and 1/4 the time have no substance because there's no costings.

    Turnbull's claim that he needs to see the NBN books before he can provide costings is an outright lie. He can provide costings without this, but he refuses to because he knows that his idiotic claims of 1/4 the cost of the current NBN are just not true.

    If the Coalition just supported the NBN the way Labor is doing it I would have no hesitation about voting for them, but as someone that has terrible internet I can't allow myself to vote for them.

      "my personal needs are much greater than the needs of the entire country" the fact that you can vote is my biggest concern.

        How about we reverse that? The NBN is for the entire country, not just the single person.

        If the libs get in, it was be a sad sad day for Australia, Labour is far from perfect, but they are the lesser of the 2 big evils.....

        Vote independent!

          That is funny, I am pretty sure what the above article alearly shows that the coalition still has a plan for an NBN of some sort. Yeah I hate those evils that kept the country in a stable position for so long only for that lesser evil to plunge the country into a constant shit storm.

            Only reason they kept the country in surplus was because they sold everything off ie. Telstra and cut funding to crucial things like Health, Roads and education, the Howard government was our most wasteful government ever. I'm sad that people like you can vote. Oh and Labor plunged our country into a constant shit storm? maybe you are forgetting that our economy is growing, we have low unemployment compared to most Western countries and they kept us out of the recession.

            Last edited 19/02/13 3:11 pm

              Wow thats amazing, I predicted this very reply, though i am not at all surprised it was from you. I just reread my reply to make sure but I am almost certain I did not mention the economy specifically AT ALL, sorry to see your view of politics is so one dimensional. Congratulations on once again showing you can't hold your own opinion.

                haha stop trolling, you sound like an absolute idiot. I mean you have no idea what the Coalitions NBN plans are even though they have told us multiple times, you really shouldn't have an opinion on something you know nothing about.

                No, you didn't mention it specifically but you did make a nice broad sweeping statement with nothing to actually back it up.
                "I hate those evils that kept the country in a stable position for so long only for that lesser evil to plunge the country into a constant shit storm."
                So that brings in many other arguments than just broadband. Which is why the reply had something other than broadband in it.

                your showing why democracy is dangerous to the masses...

        haha you're an idiot, the Coalitions NBN is worse than Labors so I am not voting only because of my needs.

          lol nice theory with absolutely nothing to back it up. If you had said "i dont know what the coalition plans and would rather stick with the plans that are currently under way" you would look a whole lot less ignorant.

            They have said what they plan to do, FTTN which is horrible compared to FTTH, sorry that you have no idea what you are talking about, but there is no need to troll.

        Every samll business I have been to help in the last weeks has bad internet.

        All of the use the internet as part of their business.

        The coalition plan is to maintain the things that are the cause of the problems for every ADSL connection I have ever had to get connected for any business.

        I vote for the country and therefore for the NBN - your wish to stop voters who need internet and have a brain is worrying.

        So it sounds like you only vote for the greater good of everyone (subjectively, as to whatever you believe of course) rather than voting for what may affect you personally. Weird?

        I know that I vote in mind for whatever changes I can see immediately to myself as well.

        It's their vote, they can do what they want with it. There is no requirement to only vote for the common good. In fact most political "promises" are aimed at the individual as that is how most people vote. Ultimately you are voting for your own local representative in the hope they will represent the collective wishes of their constituents but it usually comes down to what benefits are they promising me and/or my local community.

    Unfortunately Labor has made too many mistakes, brought on mainly because of the hung parliament. I just hope that people can see past that to the greater good and that means voting for the NBN not the Libs. Truth be told I would be happy if they got in with Turnbull at the helm but only if he puts the NBN first. Although I will vote Labor as allays. I will fight tooth and nail to keep Mr Rabbit out though!

    I'll just bring out the old engineering adege here - "Good, Quickly, Cheap. Pick two." Sounds like the Coalition has settled on quick and cheap. Although I have to say with government work, neither of these ever seems to pan out.

    Turnbull is right about one thing - "NBN Co should be an open book. It doesn't have any competition."
    The Libs suspect NBN Co of wasting a lot of money, and when you read stories about how they spent $164,000 on coffee machines for their office, it's not hard to see why.

      When you do the math on the cost of coffee in their office you find out that they did something efficient.

      If you get blinded by big numbers you shouldn't be trying to make decisions on country scale infrastructure.

      So @single_malt you have just shown that you don't have the math skills to judge.

      What do you think a coffee machine in a coffee shop costs?

        @single_malt just reckons that $164,000 on good old fashioned Single Malt Whiskey,

          there is no price on good scotch... good scotch is far more use than the NBN

          when all society is lost, alcohol wiill still ferment

            I almost can't believe this is the point that I choose to comment...
            BUT this is the reason we invest in NBN now! If all goes to crap, we can still make scotch later; Alcohol will still ferment.

      This crap about the coffee machines is so typical of this debate.
      $165,000 on coffee machines translates to roughly 65 coffee breaks saved per day across the entire of NBN co for the company to end up in front in terms of productivity dividends (assuming a coffee break traditionally takes 15 mins when going to a cafe, as apposed to 5 mins when the machine is provided in the office).
      i'm pretty sure 50 cups a day is no hard feat when you consider the size of NBN Co.

      FYI, here's the maths
      Hourly rate = aprox $40 p/h
      10 min productivity dividend per cup = $6.66
      $6.66 cups X 65 per day = $432 per day
      $432 X 365 = $158,000 in productivity dividends.

    What worries me about the NBN is that Malcolm Turnbull's leader had this to say on the 7.30 Report when asked by Kerry O'Brien if he knew what peak speed was... "If you're going to get me into a technical argument, I'm going to lose it, Kerry, because I'm not a tech head".

    I'm afraid that propping up the existing creaking copper system by someone who doesn't know what peak speed is doesn't inspire me with a lot of confidence.

    One of the things that is forgotten is that the biggest barrier to accessing the Internet is not technology, it is lack of income. The lowest percentage of people online are in the lowest income brackets, and so affordability is absolutely critical

    Not in this country it isn't. The entire income argument is inevitably entangled in the location argument - average incomes drop as you move out from major cities and regional centres. And where are the major technology investments made? And how does Internet usage measure up? Smiley-face stamp to you if you notice that when mapping across Australia measure of technology access/ investment, Internet use and income levels, the maps are almost identical.

    Hence, Malcolm is very coy about privatising. The Coalition are incredibly keen to get the regional infrastructure rolled out before they have to finalise their cost-benefit analysis. It'd be awfully inconvenient to have the analysis find the cost is too high for the majority of National Party voters until after it was too late for the Coalition to do anything about it.

      If the NBN actually delivers anything the current government has promised it will do then why aren't they rolling it out to Regional centres first? Cost. Not to mention their goal of 93% fibre leaves a lot of people in the lurch. These regional centres will be on fixed wireless or satellite.

      Even the current plans available aren't lowering the cost of access, as Malcolm said there's no point building a bigger pipe when you're trying to push the same volume of data through it.

      As for Business, where are the plans with SLA's that can help them protect their investment? A company with 1K+ employees isn't going to spend $100/month for a home plan are they.

        "Not to mention their goal of 93% fibre leaves a lot of people in the lurch. These regional centres will be on fixed wireless or satellite."

        When did 7% become "a lot". All major regional centres will be covered. The remaining 7% are remote locations. Who currently pay a small fortune for Internet services, if they get them at all.

        "Even the current plans available aren't lowering the cost of access, as Malcolm said there's no point building a bigger pipe when you're trying to push the same volume of data through it. "

        Telecom/Telstra spent 70 years rolling out the copper line (the work was finished in the late 1980s). Strangely, cost of access to telephones remained high for much of that period, and many people wondered why they should get a phone when they could write a letter. Expecting the price to instantly drop and the usage to explode just as immediately is ridiculous. As with any major infrastructure project, the return is measured in decades, not months.

        "As for Business, where are the plans with SLA's that can help them protect their investment? A company with 1K+ employees isn't going to spend $100/month for a home plan are they."

        No, but under copper, consumers didn't need PABX phone and separate network switch set-ups for their home phone/Internet, did they? Commercial phone services were almost completely separate from the copper roll-out, and were for the most part the only privately run part. If you really dislike the Government's handling of the NBN, the fact they are leaving the commercial space for private companies should be a blessing for you. Or do you want an in your view bungling government to handle that as well. You can't have your cake and eat it.

        Last edited 20/02/13 11:53 pm

    Thanks for a laugh, you guys are hilarious. I don't vote at all, because our politicians behave like primary school kids. It seems to have rubbed off on you lot.

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