Fletcher Responds, Still No Reason to Believe

It seems that my post on whether we should believe the opposition on broadband policy has caught the attention of the subject of the post, Member for Bradfield, Paul Fletcher.

Paul has graciously put forward his response to my article, and I greatly appreciate that he has taken time to respond. It would be of great benefit to political debate in this country if more of our politicians bothered to intelligently communicate in this way.

As much as I don’t agree with the broadband policies of the opposition, that Fletcher and shadow communications spokesperson, Malcolm Turnbull, do choose to interact as they do is a credit to them.

Firstly, a little business – Paul states:

“I am puzzled why Michael thinks this automatically means that we have sold out our personal beliefs and have no personal integrity.”

I’ll take this chance to pop my statement – “where has their personal integrity gone?” – into some context.

I probably should have said “where has their integrity gone with regards to broadband policy?” or something similar. You know – the old “stand up for what you believe in” stance, instead of being partisan.

That was the context I intended, and I thought it was implied via the statements around it. I apologise to Paul categorically if the comment was taken as “you have no personal integrity”, as that was absolutely not my intent.

Now, moving back onto the subject at hand – (that being broadband policy in Australia) – while Paul has clarified his position on many of the points I questioned in my earlier article, by putting them into a more complete context of how he was thinking at the time he wrote his book, I still can’t help but wonder where the Coalition broadband policy stands as a whole, even with this new context available.

I note that in his tweet he describes my response to his speech as “typical” – so it would be interesting to see all of the other responses to his speech; since my response was “typical”, there are obviously other people who agreed with my sentiments.

I know from my own discussions over many months on the topic of the National Broadband Network (NBN), that many people do agree, and wholeheartedly so.

By now getting to the crux of the issue, it is still obvious to me – (and many others) – that although the Coalition passionately believe in their hybrid FTTN/FTTH/HFC/Mobile Wireless/Satellite alternative to the Labor Government’s NBN solution – that their thinking is still very narrowly focussed, ignores the long term, and is not as “cheap” as they would have people believe.

Everyone agrees – including the Malcolm Turnbulls of the world – that no matter what happens in the short term, a fibre-to-the-home/premises solution is the ultimate endgame, and will be upon us one day.

The time will come, irrespective of what happens now.

But the suggestion by the Coalition that an intermediate FTTN solution provides an adequate migration path to an eventual FTTH network – (which is a common refrain) – is simply bogus. The jury is in, and it is just not correct.

Quoting respected former Internode network engineerMark Newton:

“FTTN doesn’t bring FTTP any closer, but it does push it several billion dollars further away…there’s no upgrade path from one to the other. This notion that FTTN is a “stepping stone” to something else is pure fantasy. If an FTTN network is built you’d better like it, because it’ll be around for a long, long time to come.”

Further, former ACCC chairman Graeme Samuel expected the real cost of the original FTTN proposal – (in reference I believe to the OPEL proposal Fletcher was heavily involved in) – to be massively more expensive than it appeared on the surface, stating:

“If the [former] government’s fibre-to-the-node proposal had proceeded, Telstra could have been entitled to an estimated A$15 billion to A$20 billion in compensation for the relegation of its copper network to the scrap heap.”

The same would likely apply to any renewed push for a FTTN network, as the existing copper network would still need to be “cut” to drop the new nodes into the network. This would take Telstra out of the loop, and see them entitled to compensation, as described in more detail in the ABC Four Corners report on the NBN shown below.

I genuinely believe this sort of detail is being deliberately left out of the debate by the Coalition. They are hell bent on having a plan that “sounds cheaper” than the NBN, to win over the average Joe on the street who doesn’t understand the broadband debate on any level. It’s called populist politics.

Paul also states in his response that:

“[Telstra] would have faced a sales and marketing challenge to win customers onto the new network.”

Frankly, I declare that statement ridiculous. Telstra would absolutely have had no problems moving people from their old network to their new network.

Who was going to stop them?

They would both have been owned by Telstra, and all they’d need to do is move people from one to the other. I don’t think that is a too difficult a reach to make.

Just as under the NBN, Telstra will simply move customers from their network, onto the NBN – there is very little real difference.

Since there’s an 18-month overlap from when the fibre is completed in any given area, to when the copper in that area would be decommissioned, there’s not a lot of a risk of breaching USO obligations – there’s plenty of time to prove the connection on the fibre, before killing the copper.

Tying it all together at the end, Citigroup recently costed the Coalition’s proposed alternative network at $16.7 billion.

They of course deny the figure, and belittle the report – (Turnbull even directly described it as “fiction”) – but they’ve still not managed to come up with an alternative figure. Their policy remains uncosted.

So, shall it be $16.7 billion to build their solution, plus at least around $15 billion to compensate Telstra for the loss of their network?

We’re at $31.7 billion so far.

Then there is the inevitable upgrade to FTTH down the track. We don’t know what that will cost in five or ten years from now, but the figure we have to build it today is around $35 billion.

$66.7 billion? Versus $35 billion?

Even if you add the $11 billion Telstra gets over the life of the project to compensate it for the loss of its fixed line business under the $35 billion NBN plan, we are still well ahead of the Coalition version.

Then there’s the time taken to actually renegotiate a deal with Telstra – (the Telstra/NBN deal just completed and now in effect took THREE YEARS to negotiate) – so presuming the Coalition came into government at the next election in 2013, and the whole deal has to be renegotiated all over again, does the whole idea of upgrading our broadband infrastructure get delayed until 2016? .

Nothing happens for three years? By 2016, the NBN would be at around the halfway mark of its construction!

Let us also not forget that Telstra would get $500 million in compensation for an early termination of the NBN project. For nothing other than signing the deal with NBN Co two days ago.

That’s a lot of expenditure the Coalition are committing us to, and certainly a lot more than the NBN as it stands right now would cost to implement, and taking longer to complete.

Seriously? That’s a “better” idea?

Paul finished his response with this comment about myself:

“I just disagree with him.”

Equally, I just have to still disagree with Paul. While his welcome clarification of his thoughts may have eliminated some of my concerns in my original post, I still don’t think we can believe the opposition over broadband.

In fact, I’m sure.

They need to start being a lot more honest with respect to what their plans will cost Australia in the long term. All they want is to get back into government. They care about the next 18 months.

Not the next fifty or more years that the NBN will set us up for.

So the choice is between the Coalition’s 18-month plan to get back into office with a hyper-expensive long term plan, or a plan that will ultimately cost significantly less to reach a point that both sides agree is inevitable.

I didn’t answer the “should we believe the opposition on broadband” question in my original post, preferring readers to answer that question for themselves.

I will answer it now though, and the answer is a resounding “no”, because since they agree that FTTH is the endgame, and that their plan is cheaper and faster to build only for the intermediate step, their whole stance is quite clearly one thing, and one thing only.