Coalition bags NBN Study despite telco support

By Ry Crozier on May 6, 2010 6:07 PM
Filed under Telco/ISP

Time to ditch Telstra negotiations?

Shadow Communications Minister Tony Smith has emerged as a lone critical voice in continuing to wage war on the NBN as carriers came out to praise the NBN Implementation Study findings.

Smith steadfastly refused to concede that the study provides a compelling business case for the up to $43 billion investment.

In a statement, he said the build cost and timeframe outlined in the study by McKinsey & Co and KPMG "rely on nothing at all going wrong and everything going right."

"The fact the study makes out a business case on the Government's pre-determined plan with its pre-determined architecture does not mean it is the most cost effective or responsible use of taxpayers' money," Smith said.

He said the study "confirms that taxpayers will wear a huge risk for many years to come".

It was an interpretation that wasn't shared by the Federal Government, who earlier said that - assuming no deal is struck with Telstra - NBN Co could nonetheless be earnings positive within six years and the taxpayer be repaid within 15 years.

The Coalition has made no secret of its intention to scrap the NBN should it get into power at the next election.

Telcos were generally more positive of the study's main finding that the NBN was viable.

"With the release of the NBN Implementation Study we are now on a path to building a world-class broadband network," Optus chief Paul O'Sullivan said.

"Most importantly, the study has found that access to the network will be available to all Australians at a price they can afford, which is essential to the healthy take-up of services on the new network."

O'Sullivan made it clear that Optus wanted the Government to now "get on with [the build]."

"As the Implementation Study now makes clear, the NBN will be financially viable even without the involvement of Telstra," O'Sullivan said.

"So it's time to end this never ending debate over negotiating tactics and focus instead on getting the reform our industry so desperately needs."

Vodafone Hutchison Australia's (VHA) chief Nigel Dews said he looked forward to the NBN "heralding a new era of competition in the Australian telecoms industry."

"It's an exciting time and should mean Australian consumers and businesses will be far better off, with opportunities for more players to deliver the value and innovation that Australian users deserve," Dews said.

He said in particular VHA was looking forward to "engaging with the Government around the details" of its use of wireless to deliver fast broadband to some homes and businesses.

"We encourage the Government to remain open to opportunities for wireless to play a larger part in delivering the benefits of the NBN to more people, more quickly," Dews said.

Coalition bags NBN Study despite telco support

5 comments in this discussion

"Nothing in IT ever happens without a stuffup; its a matter of whether there's mitigation plans in place or not. To raise a red flag and suggest that we ababdon hope because problems may arise or ..."

By Mike_Sadler

Tags

finance, coalition, tony, smith, nbnco, nbn, broadband, policy, opel, fibre, nis, vha, optus, reaction

Coalition NBN to "optimise" and lease Telstra network

Storm erupts over Coalition's NBN policy preview

Costings: Only $150m on backhaul in Coalition's first term

Coalition hedges fast broadband bet on IT evolution

Breaking Stories

Australia shares $2bn Square Kilometre Array

NSW retains right to veto data centre co-tenants

Optus to launch federated APAC cloud

NBN Co expands wireless trials

Aussie unis flock to international video service

Comments: 5

MerariSchroeder May 7, 2010 9:39 AM	I think that if NBNCo can truly achieve a $30 minimum wholesale as recommended and still return a profit in 15 years, then NBNCo looks a lot better to me. But as the opposition said, can we trust that the NBNCo's implementation is going to be flawless? What happens if it runs overbudget or overtime? And certainly there are other possible solutions, which reduce risk on the tax payer. Here's one: If the government can raise $20bn, they can certainly raise that (although they would need less) and then invest that into private sector communications bonds, to achieve the same thing. Put aside the ridiculous witch hunt of Telstra. Good legislation alone can fix the Telstra wholesale problem. "Logically" (not physically) seperate Telstra, so there are transparent wholesale costs for everyone. Then everyone can have access to good backhaul. The government could then choose (per city/towns) providers to build the FTTP networks. Eg. In geelong we have Neighbourhood Cable (which is owned by TransAct), so they could build in Geelong and sunset their cable infrastructure. In Canberra, TransAct (has actually already started FTTN/FTTP I think). Etc.. All of these companies then have an opportunity to grow their local businesses. The communications department would then set specifications for any installations to ensure they interoperate. I'm no economist, so the above idea could be impossible, but I am illustrating that there are alternatives. Saying that NBNCo is creating jobs is ridiculous, all they're doing is offsetting jobs. (Possibly creating a few temporary ones, during the build). Let's hope the NBNCo isn't a disaster, like the other Labour government projects.
singo79 May 7, 2010 2:52 PM	Of course the Liberals are sceptical, for a start they didn't think of it in the first place, secondly they were the ones that sold the controlling share of Telstra and to back such a project as the NBN would basically be admitting that they were wrong to sell Telstra. So far the Liberal party has failed to provide any decent arguements against he NBN. Of course they have opposed and listed some very basic reasons, however none are good enough to oppose the NBN, IMO. Generally the NBN has been well accepted, but of course you are not going to please everyone. Not to mention the American's are now proposing to copy Australia's lead and build their own NBN at a cost of about US$300 Billion. Let's just stop this bickering and delaying and just get on with passing the necessary legislation and build the bloody network.
BlastedUser May 7, 2010 8:34 PM	If we allow ourselves to not do something because we're afraid of stuffing it up, we'll not ever do anything. Each misstep our government makes, I hope, is a lesson they learn from to make a better job on the next one. As one wise man once said (I'm paraphrasing) "Do nothing, fail at nothing, be nothing". And this seems to be the modus operandi of the Liberals. We should criticise the government when they make a mistake so that they learn, but let's not be too quick to assume that their next project is a failure at this early stage.
Rossyduck May 10, 2010 9:12 AM	Just to note that the Americans are not copying - there are some very crucial differences in the implementation. They are not proposing one NBN Co with blank cheque, they are proposing multiple project competing for capital. My reading is that the report is explicitely stifling this approach. We are stuck with one NBN Co implementing what appears to be their very narrwo view of the world. Will cost us lots of money and little chance for innovation.
Mike_Sadler May 10, 2010 6:07 PM	Nothing in IT ever happens without a stuffup; its a matter of whether there's mitigation plans in place or not. To raise a red flag and suggest that we ababdon hope because problems may arise or because there are unknowns - for an IP network build-out - are a little churlish. If we do anything other than nothing, there are similar risks that things will go wrong. The major one I can see is, what if we do it some other way, then get to 2020 and we don't have world class broadband here? I wish there were more column inches devoted to THAT subject. MerariSchroeder - seperating Telstra 'logically' and some of your other comments make sense in some markets, but not here. If Telstra is still "the only game in town" it can still behave in a monopolistic fashion in the wholesale and backhaul market and can still implement improvements (cheaper, faster, more reliable - select any two) at their own (snail's) pace. Their shareholders will demand 'Telco' sized returns and fair enough I reckon. That's why the L1/L2 plant underpinning the NBN must be government owned and highly reglated when privatised so that the expectations of shareholders are of very modest annual returns, but very dependable ones too,i.e. a utility like water or sewerage. Like a bank deposit, not a bank share, return wise. Rossyduck - yes there are differences, but NBN Co's "narrow view" coincides with that of virtually every IP service model in the world... L2 access is wholesaled to L3 retailers, some of whom also wholesale L3 services to other (usually IP only) ISP's, some of whom admittedly also own L1/L2 infrastructure (e.g. Verizon). This model's been going on since dial-up days. We can't afford massive overbuild in Australia, we can't trust/expect Telstra to discount its wholesale offerings to utilities levels, so we have NBN Co, a Govt owned (benevolent monopoly) utility on which ANYONE may sell services. That also leaves Telstra more cash/focus to invest in the retail space and shows us all what they can really do from L3 up (they may even become a good wholesale L3 reseller). Having to compete on that basis will drive innovation from them. In my 20 years in the Internet biz I've lost count of the products and services that had good backing but would not work without ubiquitous affordable bandwidth. The money that could be saved - or better still re-directed - in health alone is mind boggling. Find out what the various State Workcovers spend on travel and accomodation for folks visiting City based Specialists, especially physciatry, and it'll blow your mind. Meanwhile, the shrink's would tell you that if they could 'get' to the patients quicker, the outcomes would be better. Finally NBN Co folks strike me as an experienced lot. In the ISP industry we should be able to find answers for problems that arise and (excepting Telstra's confrontational and uncompetitive behaviour) so far have managed to do alright. I can't understand why that would suddenly stop, particularly with regard to Rudd, Conroy, etc, who'll have bugger all to do with Quigley's ship at an operational level. Let's go!