Turnbull Suggests Eighteen Billion Dollars Is Not Material

In an interview on the ABC program Inside Business this morning, National Broadband Network (NBN) CEO Mike Quigley reiterated what many observers of the NBN have been saying for years.

That the alternative Coalition policy would be far more expensive for Australia in the long run.

Said Quigley of the costs of FTTP compared to FTTN:

“Well you’ve got to do the calculations. The calculations are really a question of, how much do you pay for the copper for a start, then how much is it going to cost to put these nodes in place. Then you have the question of what’s the ongoing maintenance cost and it really depends on what period of time you look at.”

“Obviously there’s a higher up-front capital cost for fibre to the premise but there’s lower ongoing maintenance cost – so you’ve got to look at the period over time.”

Opposition Communications spokesperson Malcolm Turnbull has been asked repeatedly how much his FTTN solution, plus a later upgrade to FTTP – (which even he admits will be necessary) – will end up costing the taxpayer.

He steadfastly refuses to answer.

Midst a similar discussion on Twitter tonight, Turnbull made the following extraordinary statement with respect the difference in maintenance costs between maintaining the existing copper network, and maintaining a new fibre network:

Note the statement that the difference is “not large enough to be material”.


“Based on our estimates and our surveys with contractors and organisations in the telecoms industry, we believe that we could save in the vicinity of $600 to $700 million a year in telecoms maintenance that is currently undertaken on the copper network but could probably be saved under a more technological solution such as the fibre optic NBN.”

Given a reputable firm like BIS Shrapnel has made the projection of between a $600 and $700 million saving each year in network maintenance costs, simply by having the fibre network instead of the copper network, is Turnbull saying this kind of money is “immaterial”?

Sure sounds like it.

So $600m one year, $600m another year.

Geez, that’s not much – it might even add up to “real money” one day.

Given the financial terms of the NBN project run for 30 years, is he really saying that the difference of $18 billion is “insignificant” over that period?

Sure sounds like it.

Given Telstra has signaled that that they will not renegotiate the value of their current NBN deal – (valued at $11 billion), that the FTTN plan has been independently costed by Citigroup at $17 billion, that there will be close to $5 billion dollars of contracts – (including those with Optus, and the various construction companies currently building the NBN) – to break if the current NBN is halted, and Malcolm is committing us to $18 billion dollars of extra maintenance, will his plan cost $51 billion?

$51 billion is more than the current NBN is slated to cost.

Who is being frivolous with the costs now Malcolm?

You are.

Eighteen billion dollars is NOT immaterial.

UPDATE (11:39 25/03/2013): Data indicates that the operating expenditure on both the existing Telstra and Optus networks, just to keep them running over the last decade, is well in excess of what it would cost to build the NBN:

“As you can see, the NBN’s budget to install fibre, wireless and satellite is comparable to the last ten years’ PPE spend by Telstra alone. Never in the last decade have Telstra and Optus spent less than a combined $3 billion on property, plant and equipment.”

Given we already know that having the NBN will reduce maintenance costs, and the carriers have spent more than the cost of the NBN over the last ten years maintaining the current networks, any suggestion that a FTTN solution – (which will carry over much of those existing networks) – would be “cheaper” is just plain wrong.