Rubbish NBN 'Policy': The Coalition At The Podium

There's lots of arguing about the National Broadband Network (NBN), but there's very little actual discussion. Positions on both sides are now so rusted on that the chance to discuss it meaningfully seems to have entirely evaporated, and the need to actually justify a position or contemplate market reality seems to have disappeared as well.

Yesterday, at the Kickstart Media Forum in Queensland, Liberal MP for Bradfield and former Optus executive Paul Fletcher offered a detailed presentation on the Coalition's view of why the NBN is a bad idea. It was not an edifying spectacle. Indeed, as one of my colleagues sagely observed, it was more like the Sylvia Plath version of a keynote speech than an actual statement of how we could improve the status of broadband in Australia. "It is timely to reflect on the proper role for government in making ICT policy," was Fletcher's opening statement, but that never happened.

I'll give Fletcher credit for offering a discussion that was more sophisticated than the usual "this is going to waste $50 billion and I hate it" ranting that talkback radio and most of the Coalition normally adopts. And I'll also give him credit for taking questions from journalists, even if he failed to answer most of them. But his position — and by extension that of the entire opposition — doesn't stand up to scrutiny.

In part, that's because the assumptions underpinning it were never examined. Fletcher took as gospel the notion that services delivered by the private sector are inevitably, inextricably, unquestionably better than those delivered by government. This viewpoint is simply taken for granted, ignoring the possibility that in a country with a small population and a large area, some services aren't going to ever be made available if we wait for the private sector to deliver them. If the private sector was the only provider, how many hospitals do you think we would see outside of capital cities? Schools? Highways?

But even allowing for differences on that question of political philosophy, Fletcher's position was hopelessly contradictory. On the one hand, he argued that the biggest problem with the NBN is that we can't outline dozens of reasons why the higher speeds of the network are actually needed:

If you can't tell us what people are going to use the technology for, you do not have a very persuasive case.

On the other hand, he suggested that one of the challenges of technology is that you can't predict what will be popular:

You can’t mandate take up. You cannot know in advance which applications people will find useful and incorporate into their lives, and which applications will leave them cold.

If you believe both of these positions, you'll never do anything. We can't predict what's going to happen, so we just have to wait and hope the private sector might offer something. The history of ADSL is Australia suggests that waiting can take a very long time and doesn't result in great consumer outcomes.

On that point, Fletcher also attempted to argue that the privatisation of Telstra had resulted in universal competition for providing services, especially in terms of unbundled local loop (ULL) offerings that allow consumers to switch away from Telstra entirely:

It was ULL based competitors who were the first to introduce ADSL2+ and forced Telstra to respond. It was ULL based competitors who were the first to introduce naked DSL – so a customer could take a DSL service without also having to pay $30 a month for a voice line rental service that the customer may well not require. In other words, it was ULL based competitors who drove prices down in broadband

As anyone who has tried to sign up for naked DSL knows, this is basically pure horseshit. If you can get naked DSL on your exchange at all, you will face a wait of a month or more while Telstra disconnects your service and the new service is added, even though this doesn't normally require a change in your premises. If you move into a new house, Telstra might have to connect a service you will never use simply so you can acquire a service from someone else. It is a slow and flawed process, and Telstra has done everything it can to make it difficult.

Furthermore, those competitive options didn't appear evenly or sensibly. Telstra's first rollout of ADSL2+ only happened on exchanges where competitors had already appeared; if there was no competitor (often the result of Telstra, which controls the exchanges, saying there was no room for additional equipment), then no services were offered. There are still plenty of areas in capital cities where that remains the case, let alone what is happening in regional areas.

It's the question I never see answered by NBN critics: if the NBN didn't exist, what did you propose to do to handle the obvious market abuses by Telstra: the blocking out of rivals from exchanges, the selling plans to consumers at lower rates than you sell it to wholesalers, the lousy service via pair gain lines?

That situation was created when the coalition privatised Telstra, and in its decade in government the problem was never resolved. Quite aside from the speed improvements, the NBN forces Telstra to give up its wonky monopoly control of the copper network and ensures services can be offered by any provider who wants to sign up. I've yet to hear the Coalition explain persuasively how it would achieve the same result.

Fletcher stated when questioned that "separation is a desirable outcome", but didn't explain how that would be achieved. It wasn't a point he made in his actual speech, even though that was meant to outline how broadband would be improved. Given that the Liberal/National coalition never pursued that outcome when privatising Telstra or in the period that follows, it's hard to take the assertion seriously.

One of the few bits of concrete policy the opposition has is the notion that there should be a national database identifying existing speeds at every Australian household:

The Coalition has called for comprehensive and transparent database identifying the broadband speed available to each premises.

Fletcher couldn't explain how this database would be created or what it would cost, beyond suggesting that the carriers already have this data. Balderdash. Try moving house and asking Telstra what options will be available at your new address. Try asking any mobile carrier if you'll get coverage reliably in a particular location. Getting this data will be a very expensive process, and having no explanation of how it will be done underscores the lack of actual policy. Solving Australia's broadband lottery — the reality that when you move house, you'll have little idea of what you're going to get and good odds of no competitive choices at all — is going to take more than an uncosted list.

Following his speech, I asked Fletcher what measures the coalition would introduce to try and eliminate the current ludicrous delays in service switching for ULL — an obvious problem if you believe, as Fletcher does, that competition is all that is needed to provide better service. He had nothing to offer. He agreed that there was a problem:

Are there flaws in ULL provisioning? I continue to believe there are.

But asked — repeatedly — how that acknowledged market problem would be resolved under coalition policy, Fletcher had, quite literally, nothing to say. He simply returned to his mantra:

It has been a tangible demonstration of competition.

Sadly, this is what it seems broadband discussion is fated to always be like. You don't need any degree of consistency, any willingness to really engage with the issues, or anything like an open mind. You're either for or against, and you don't have to make sense. Contradicting yourself? Not a problem. Ignoring problems your party's own policy created? Standard operating procedure. It's a lousy way to conduct politics, and it's a lousy way to improve broadband. And if we're going to get a change of government in the near future, it's a lousy omen for rational decision making in the future.

The right role for government in ICT policy [Paul Fletcher]


Comments

    Good article, but can we please do without the expletive. They do not enhance your argument and lower the tone of your piece.

      Fuck off.

        perfectly said

      Expletives have a place and I for one think they were used effectively here.

        +1
        a single expletive used in an appropriate scenario.
        If it were changed to, say;
        "As anyone who has tried to sign up for naked DSL knows, this is basically pure balderdash."
        then it would have understated the argument.

          I agree with Davo, I'd much prefer to read the article without the expletive. I'd also like the Coalition to come up with a better NBN policy.

      "Good article, but can we please do without the expletive."
      Davo, it was the right descriptive word to describe a wrong polcy.

    Politician failing to provide answers? Say it ain't so!

    Good article though, and further reason for me to keep promoting the Pirate Party and the Sex Party over the clowns in the politial duopoly. FTR, I have always been opposed to the NBN simply because $50 billion can be better spent elsewhere. HOWEVER now that it's started, it's an expensive project that we just have to grit our teeth and finish.

    Personally, I'd rather see the money spent on other infrastructure such as power, water, transport and emergency services. But the ball is rolling now, and to stop it would be far more deleterious in many ways than to let it take its course.

    Until the NBN is rolled out I don't think I can afford to vote anything but Labor. It says a lot when one policy is enough to make me sit on my hands instead of doing the usual due diligence on each party's policies.

    The Lib party shouldn't rubbish the NBN nor should they get rid of it. The problem I see with the NBN is the cost and time of building the NBN and teh cost to customers. At the moment I'm pretty sure that I would pay less on ADSL2+ including land line then I would if I moved over to NBN completely and this is something that MUST be looked into and changed by whoever is in power and running the NBN.

      You're 'pretty sure', but you're actually wrong.
      http://delimiter.com.au/2012/02/03/correction-nbn-prices-will-not-be-higher/

        I'm on an exchange where I can't get Naked DSL, I can only get a non Telstra offering through carriers who wholesale from Telstra, I'm in the wrong teir to bundle services through those same carriers, and when the NBN rolls through, looking even at plans at todays prices, I would already be better off, with faster speeds, a higher cap, better phone bundles AND ALL AT A CHEAPER PRICE.

        So this notion that it is more expensive, is, to quote the article, pure horseshit.

          + 1

    Regional telecommunication cabling is a natural monopoly. It's fine to outsource installation and maintenance to gain market efficiencies. It's fine to have the companies control the hardware at the premises and points of presence to gain market efficiencies but we need a government owned cable just like we have Government owned sewerage and water pipes.

    Lets be clear here, I am all for the NBN but it really is a shame that criticism of the policy has been and still is treated like blasphemy and is not allowed. The main things that worry me about it at this point is that while it is not a vertical monopoly like Telstra, a monopoly is still a monopoly and will have to be run by the government (wasteful beyond measure regardless of who is in power) or we will end up being held to ransom by a super powerful company holding a monopoly on the wholesale market. That last bit feels like a lose-lose to me :-(

      The government doesn't want to end up owning the NBN. They intend to sell it.

        Rossco, it's a shame that you just make unsupported statements like "Government... wasteful beyond measure regardless of who is in power", because this is a statement that has no foundation in fact.

        There is simply no sustainable evidence that the public sector is inherently less efficient than the private sector. There are heaps of individual examples of where inefficiencies have been found in the public sector, but you'll find that this happens because the public sector is transparent, constantly being evaluated, and is open slather for political parties of both persuasions to use for their own political ends. The private sector, on the other hand, is not.

        One of the problems with our current political mindset in Australia is that the neo-classical economists of the 70's built this myth that government is inefficient by default, that governments must be in surplus all the time, or they kill economies, and that government debt is bad while private sector debt is good.

        Break free from the paradigm and show us concrete examples of where there are inefficiencies. Then they can be fixed. But make your decisions based a 30 year old failed economic ideology and we're all doomed.

      Burn the heretic!

      I agree - any concern over the NBN and the creation of another government run telecommunications monopoly are immediately dismissed out of hand.

      I found the final paragraph of the article a bit ironic in that sense - as if the author approached the speech (or anything not blindly pro-NBN) with an "open mind".

      I think you're misunderstanding the term monopoly. There will never be a monopoly. There's nothing stopping Optus to build its own fibre network, or Powertel/AAPT/TNZ. It will never, ever happen as there's no payback.
      Would you propose Transurban develop a separate road system because you believe RTA has a monopoly? Would you prefer that Lend Lease develop a parallel waste disposal network because you're not happy with the way your excreta is flushed? Would they? Would anyone?

      The NBN is a PUBLIC UTILITY and it will be a service provider. If you don't want to use it, you don't have to. It's not being forced down your throat. Go wireless, and hope to your god that no-one else on your street, or in your suburb takes up wireless lest it have a exponential drop in your performance.
      SK

        Err - I think you are misunderstanding the term monopoly actually.

        Whether it is a "good" monopoly is a different argument - but there is no argument the NBN will have a monopoly.

          Attila,
          Please elaborate - I'm happy to have this debate and send you copies of my University degree for your perusal.
          SK

            You have already elaborated (partly correctly and partly incorrectly) in your own post - the NBN will have a monopoly on wired broadband because there will be huge barriers to entry and no competitors will enter the market.

            As for having a qualifications dick measuring contest, I'll pass thanks.

          It's not helpful to claim that all monopolies are like.

          There is such a thing as a "natural monopoly". Roads, water pipes, electricity wires etc.

          The NBN only exerts monopoly over this NATURAL MONOPOLY component - the so-called "last mile" (a reasonably accurate description in the city; more like "last 100 miles" in the country). Everything else, from the 121 POIs nationally, is the responsibility of the RSP, and there will be a fair measure of competition over this segment.

          It's only the last segment, the last mile, where the NBN takes place. While in a few dense urban areas there is a possible case for overbuilding, for most of the country it simply isn't viable to build redundant, high quality infrastructure over this segment. Hence the open-access, future proof NBN.

    Can we say what people will use the technology for? Absolutely.

    (I must note that I live on a very slow connection (1MB/s peak, usually slower), but in a major capital city. Everything I list is uncomfortable at best, useless at worst)

    Media streaming (netflix and spotify come immediately to mind, but JB HiFi have a local system too), better Communication (VoIP, Video chat), Online gaming (XBL and PSN are barely usable), eHealth systems (remote doctor-patient communication?), online education (streaming lectures from major universities to remote locations?), legal file sharing (linux downloads?), improvements in science through easier communication and collaboration, more local high-tech businesses (companies are not coming to Australia specifically because our internet is so poor), Cloud based computing (chrome OS)...

    That's just the stuff that we're ALREADY falling behind the rest of the world in. The list of things that COULD happen if we had world class internet is nearly endless, but health, science and education are primary fields that would benefit to a huge degree from better internet across the country.

    The "why do we need high speed internet for anyway" logic is highly flawed. If everyone had that mentality we wouldnt have anything, why use electricity when candles give of sufficient light?, why pave roads when dirt is a sufficient surface?

    Sure 100mbit/s might seem overkill now but Youtube, video on demand services etc... didnt exist a decade ago so we dont know whats coming but when it does the NBN should be more the capable of handling whatever it is to come.

    I would love to vote against Gillard and Labor after their shambolic refusal to listen to the people they are supposed to serve, but as Awnshegh says: We can't afford to have Abbot and Turnbull mess up the NBN.

    Paul Fletcher criticizes the government because at times the private sector makes ambit claims about their poor decisions and poor investments. Gee that makes sense as an arguement doesnt it?
    The broadband network cannot help but make money. There just is no chance it wont. With the entire comunications backbone of the country as its payload, seriously you would have to be pretty stupid to think that it wont pack the dollars in.
    Let us not forget the Optus cable network that was rolled out that became redundant. This was Pauls baby wasnt it? Great decision Paul. I know why you ended up in the coalition.

    You say, "Sadly, this is what it seems broadband discussion is fated to always be like."

    The word "broadband" is redundant in this sentence. All policy, in every field, gets publically discussed in this manner in Australia these days. At least the NBN is mentioned from time to time; plenty of important issues don't even get granted that degree of respect. It's a disgrace.

    The NBN is a great idea for Australia. What we need to do is keep the private sectors lobbying, and politicians dirty mits off it, and leave designing and building a public, socialised network to engineers and scientists, and leaving it a publicly owned network with no sale to the private sector, with stated goals to keep the network globally competitive and free and open. By removing the copper and forcing "all use NBN or nothing" is removing competition in a way that will enable politicians to trivially introduce things like "internet filtering" in a way that cannot be fought at a reseller level, and individuals don't have the time to organise, or tools to fight politically sufficient to prevent such abuses.

    All the back and forward, whining, is political showboating, basically for the benefit of creating new techniques to tax us through removing competition, and creating a whole new monopoly for Telstra to abuse.

    And isn't it following that game plan already -- the conditions it managed to get put on the network for 'resellers' effectively meant you needed a large number of minimum subscribers, which forced internode and iinet to merge, and will leave us with only "a couple" of choices for reseller on the NBN ultimately, and they'll largely be forced to toe the party line on any policies, unlike what we've had with internode going in to bat for us on behalf of what's right, moral and reasonable - and this behaviour is precisely why internode are a much-loved company - non-public, private ownership so there is no shareholder compulsion to "maximise profit over all else" ... It's sad to see the death of the small internet provider, and it's primarily thanks to telstra's lobbying.

    Ben.

    Wow, way to show a political bias, Lifehacker.

    Wow now we have telstra's prices for mickey mouse broadband speeds, I assume that there will be pensioner subsidies to use the service? Rubbish - treat the idiot public like mushrooms. We were much better off financially with ADSL

      "We were much better off financially with ADSL"

      Pfft.... we were much better off with our 28.8k modems. The country sure doesn't need this new fangled thing called ADSL let alone Fibre.....

      While we are here, we were also better off with Steam Trains, Horse and Carriage, Ships powered by oars and slaves, pretty much everything else that has had some form of technological improvement over our many years on this planet.

      Sure, we don't necessarily need 100,00MBps speeds, but when I sign up for ADSL2+ and get something only just a little better than 3MBps (due to the copper network in sore need of replacement) I don't feel like I am getting this value with ADSL that you speak of....

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