Turnbull: NBN gets harder to 'unpick'

By Ry Crozier on Mar 30, 2011 10:10 AM
Filed under Telco/ISP

A Coalition government would now find it tough to sell down the network.

Shadow communications spokesman Malcolm Turnbull has conceded that NBN legislation passed this week made it harder for a future Coalition Government to sell down the network before it was finished.

Invoking Greek and Roman mythology, Turnbull told the CommsDay Summit in Sydney that the Government was "creating a very complex Gordian knot of [Telstra] contracts and legislation that is going to be very hard to unpick".

Reiterating the Coalition's broadband position - that Australians should get broadband but that it should be funded mostly by the private sector - Turnbull said a future Coalition Government would "face some real challenges achieving that courtesy of the NBN legislation".

"The legislation makes it, quite deliberately, extremely difficult - one could say impossible - for the NBN to be sold until the whole network is complete, a date past the lifespan of many of us I suspect, and only after the Communications and Finance Ministers [of the time] have certified [the sale]," Turnbull said.

"Selling the NBN will be harder than privatising Telstra was. That is a very big challenge.

"But on the other hand how can one justify continuing to spend tens of millions of dollars extra to get the policy objectives you desire?

"This is the whole basis of the [NBN] debate that is so frustrating."

Turnbull said the Coalition did not agree that the Government should re-establish "a son or daughter of the old Telecom".

"We want to see facilities-based competition promoted, not prevented," he said.

He also warned that NBN legislation aimed at stopping the rollout of networks that competed with NBN Co "simply to preserve the revenues of the NBN... [was] turning back the clock decades" when state governments legislated to prevent private sector competition against their businesses.

He said that the opportunity cost of the NBN had to be weighed against other infrastructure requirements in Australia.

"As a politician, I can understand a policy of 'No Australian child will live in broadband poverty'," he said, referencing former Prime Minister Bob Hawke's famous words.

"But there's no shortage of infrastructure requirements in Australia and no shortage of Australians who'd like to have tax cuts. The opportunity cost has to be [kept] in mind."

Turnbull pledged that a future Coalition Government would task the Productivity Commission with a "rigorous cost-benefit analysis to identify what is the most effective way of delivering fast broadband".

But he warned it was likely to be very different to the current NBN.

"I imagine it will involve a most significant change to the broadband strategy," he said.

"I would see many areas getting fibre-to-the-node or fibre-to-the-basement but I don't think there will be [much] fibre-to-the-home. I don't think it will [stack up]."

Analyst firm Publicani's director Tim Williams called on Australian politicians on all sides to agree on a vision for broadband to allow the industry to plan for the future.

Malcolm Turnbull.

17 comments in this discussion

"Mr Turnbull rabbits on about nothing. He doesn't know this or that well does he know anything, he knows all the details and actions, he has been there with Ozemail, he is in the midst of the ..."

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Comments: 17

Ace Mar 30, 2011 11:14 AM	Sounds like the opposition are finally warming up to the NBN strategy!
anonymous Mar 30, 2011 1:35 PM	@Ace, maybe it just takes the facts a while to sink in with some people. Still, better late than never, as they say.
Maxxi2 Mar 30, 2011 1:54 PM	Turnbull and the Coalition have the same problem with the NBN today that they had 12 months ago: A successful NBN under Conroy and the ALP probably keeps the Coalition out of power for another term. Even with the chaos surrounding the current govt today. And for the Coalition, that is all that counts. But what did Turnbull expect, he has been doing axactly the same thing in business for 20 years... Airtight, watertight, hard and expensive to unravel contracts that tie in the partners and customers for as long as you can. He is just not happy that he is now on the receiving end of the standard business practices that have made him wealthy abnd successful... His quote on the NBN build and his lifespan is telling. Is he planning on departing this world before 2020, or just throwing out yet another unsubstantiated soundbyte for the media, as usual...?
djzort Mar 30, 2011 2:02 PM	NBN hasnt rolled all that much infrastructure, and wont have done by the next election. NBN has yet to provide any benefits in enough seats for labor to say "look what we have done for you" Cut it up, sell it off, and spend the money on hospital beds or roads. Chalk up the few dollars lost to costed proof of failure.
umbria Mar 30, 2011 3:06 PM	Not much infrastructure, djzort? By the 2013 election half a million Australian premises will already be enjoying NBN fibre, wireless or satellite delivered services in a 100% competitive retail market. The back-end operations, network and billing systems are pretty much in place now and scaleable to serve all 10.1 million eventual premises. Nearly 6,000 fibre customers in Armidale and Willunga have been connected and will have service by June 2011, so just imagine the electoral effect of two years' worth of good news testimonies by mid-2013. Mr Turnbull actually wants the fibre-based NBN to succeed but Labor to fail, and is zig-zagging between two opposite positions like Asimov's split personality android not knowing whether his masters' orders compel him to apply the First or Second Law of Robotics, to save humanity or his own skin. All a bit sad, really, when the coalition could have won the last election by promising to deliver the technically optimal NBN solution as proposed, but under coalition financial oversight.
advocate Mar 30, 2011 5:13 PM	umbria wrote: By the 2013 election half a million Australian premises will already be enjoying NBN fibre, wireless or satellite delivered services in a 100% competitive retail market. Nice one umbria always ready for the spin, half a million premises is not the same as half a million with a active BB plan is it? The back-end operations, network and billing systems are pretty much in place now and scaleable to serve all 10.1 million eventual premises. They are? - funny that they are just signing contracts with the likes of IBM this week for some of that, that's 'pretty much in place' is it? Nearly 6,000 fibre customers in Armidale and Willunga have been connected and will have service by June 2011, so just imagine the electoral effect of two years' worth of good news testimonies by mid-2013. Is that connected or signed up with a active NBN ISP plan, two different beasts umbria, you didn't mention Tassie and Brunswick in Vic for obvious reasons Mr Turnbull actually wants the fibre-based NBN to succeed but Labor to fail, He does? funny how came out at the Commsday Confrence bagging it, funny how Internode and AAPT also bagged it, best not mention that eh umbria? All a bit sad, really, when the coalition could have won the last election by promising to deliver the technically optimal NBN solution as proposed, Ahh they old BS spin about why the Coalition lost and if only....., funny how they nearly got into power by a whisker on a anti NBN policy and how Labor rules courtesy of the Independents and the Greens.
Ace Mar 30, 2011 5:40 PM	@advocate, umbria's comment was in regard to infrastructure. This has nothing to do with the sign-ups you are talking about. As such, it's difficult to make sense of your comment, which is comparing apples with oranges. Internode and AAPT did not, and as far as I can tell, have never 'bagged' the NBN. (Maybe you can provide a reference?) There have certainly been grumblings about political points and control - but this is just posturing and positioning. And finally, yes, it did seem that Labor re-gained power on the back of the Independents support of the NBN. You can look up their speeches at the time.
advocate Mar 30, 2011 6:02 PM	@Ace Yes I know he was referring to infrastructure, but having it pass your door in the street and maybe even having a 'free' connection is not the same as using it, ask Telstra and Optus re HFC. (Maybe you can provide a reference?) http://delimiter.com.au/2011/03/30/nbn-will-stifle-competition-says-aapt/ http://delimiter.com.au/2011/03/29/insane-nbn-pricing-will-kill-small-isps-hackett/ And finally, yes, it did seem that Labor re-gained power on the back of the Independents support of the NBN. I was referring to the national vote by the electorate, not the minority vote of a few electoral areas MP's of which the overwhelming majority of Australia didn't vote for. Edited by advocate: 30/3/2011 06:04:39 PM
HubertCumberdale Mar 30, 2011 6:41 PM	ITT: Turnbull states the obvious. Seriously though if Turnbull didn't want to be crying these bitter tears all day long then his party should have come up with a decent alternative for a broadband network not the pathetic mishmash of wireless etc that his party thought they could fool the Australian voters with. Also relying on the private sector to deliver it is not a policy, it's a post it note on a real policy saying "connect wires and stuff".
Francis Mar 30, 2011 10:19 PM	Frankly I am sick and tired of this debate and wish the parties concerned would just get on with it and build the NBN. We can argue about the cost and all sorts of other issues but at the end of the day this is the core communications system for the future if not the present. Copper and to an extent HFC have served us well and even wireless has its place but it is time to move on. I am tired of the politicizing of the whole thing. and it is time for the parties both Liberal and Labor to start working for the people who put them in power instead of breast beating and simply belting each other over the head with issues like this to make some silly point that they know better than the other side. Turnbull Abbott and Co could be a lot more effective if they held the government to account on how the NBN is built, an example being overhead vs underground cabling so we see no more instances of whole cities going without communications as we recently saw in Townsville or even in the Ash Friday bushfires in Victoria where whole communities could not be contacted as their overhead links with the outside world were lost when the poles burnt down or the insulation on the cable burnt. So how about it guys, the NBN is so close to being a reality or at least so much of it is either in place or contracted to be built now that trying to stop it at this point will be like trying to turn around the Titanic or if nothing else will result in the loss of an opportunity and a wastage of investments in hard cold cash which have already been made or for which contracts have already been signed. So how about it, lets just get on with it and stop nit picking and instead just make sure the thing is built properly.
Francis Mar 30, 2011 10:31 PM	Sorry to be taking a second bite at the cherry so to speak but I can not help but fell that we would not even be having this debate if Turnbull's party had not sold off Telstra in the first place, or at least the infrastructure side of the organisation, but instead had kept it in Public ownership and ensured its technology was relevant for the times and the organisation was properly run and without political interference.
Ace Mar 31, 2011 12:26 AM	Thanks for the links @advocate, and as I thought, neither mention anything against NBN infrastructure. In fact every ISP appears to overwhelmingly support it. The national vote was pretty much a draw. The draw had nothing to do with the NBN and a lot to do with Labor pretty average performance. However, it appeared that one thing (not the only thing) that tipped the election Labors way was the NBN strategy. (http://www.theaustralian.com.au/australian-it/government/regional-areas-an-nbn-priority-gillard/story-fn4htb9o-1225915505553). You'll be pleased to know that Rob Oakeshott is chairing a joint committee on NBN managerial, financial and technical issues. Ought to be thrilling.
anonymous Mar 31, 2011 12:15 PM	That Oakeshott committee sounds like one of the well-paid government appointments that some of the 'independents' seem to have just happened to find themselves occupying. As a price for their support? No, not everybody may be thrilled by the prospect of the outcome. While the eventual result may be tediously long on quantity, past performance suggests that it is likely to be somewhat short on quality.
umbria Mar 31, 2011 3:49 PM	Advocate, the NBN cost the coalition twice in 2010. First they failed to win a landslide against a very unpopular Labor government. At least three regional seats were certainly lost because their voters knew a coalition MP would mean no fibre and no Telstra separation. Secondly, in weeks of negotiation with the independents they still said they would deliver no fibre and no Telstra separation! After seeing that the national electorate plainly wanted the NBN, and likewise their own constituents, Tony Abbott and Malcolm Turnbull refused to give them the lieline they needed to be able to side with the coalition. Now we have a Green Senate with anti-social policies masquerading as an environmental party, which would not have happened had the coalition not blocked the fibre NBN and Telstra separation. Note to Telstra shareholders, since the enabling legislation hit the Senate last Thursday, the TLS price has jumped from $2.66 to $2.84 and is still rising fast, a jump of 6.7% so far in under a week. I predict it to hit $5 soon after shareholders approve the NBN deal.
umbria Mar 31, 2011 3:51 PM	What a cool new word, "lieline". But of course I meant "lifeline".
adavion May 4, 2011 4:29 PM	Is it really true! The former Chairman of Goldman Sachs is saying he can't run a sale process for a monopoly infrastructure asset with an attached AAA credit rating???? Well ahem... That would be consistent with Goldie's performance in the sale of NSW Lotteries and Pillar! :D NBN Co's cashflows can be securitised and the O&M contracts outsourced, without tripping sale prohibition requirements. All the government will be left with is a is a $1.00 shell potentially with reversion rights in 10, 20 or however many years or so. Technically this is not a sale or a privatisation because NBN Co would remain 100% owned by Government only its operations would be outsourced to a third party and the economic value it generates reallocated to another third party. This approach is broadly consistent with State Governments who have recently favoured adopting monetisation strategies for infrastructure assets that are not technically privatisations or sales. Eg Premier Bligh's approach to Queensland Forrests, Premier Rann's proposed "sale" of SA Forests and Premier O'Farrell's approach to the NSW Desalination Plant. Second as far as any complexity in dealing with Telstra goes, the contract there is not actually that complex. It comprises three aspects: 1. Infrastructure lease. 2. Sale of network traffic. 3. Operational support. There are multiple examples of these contracts in the market just in Australia. There is absolutely nothing hard or special with the TLS / NBN transaction- then again I am apparently smarter than typical Goldie investment bankers.
Tom Brown May 5, 2011 9:57 AM	Mr Turnbull rabbits on about nothing. He doesn't know this or that well does he know anything, he knows all the details and actions, he has been there with Ozemail, he is in the midst of the debate. He is caught in his own web of deceit! The opposition and Mr Turnbull are in a no win place. If you watch QANDA you see the broad and growing understanding what the NBN offers and the public realising the oppositions sheer lack of a credible response and in fact their base attempts to discredit. The coalition sought to oppose on all points and are now in the place of being proven politically wrong but cannot back flip.