Opposition communications spokesperson Malcolm Turnbull has long argued that the government’s National Broadband Network (NBN) plan is far too expensive, with $26b to come from the public purse to build it.

Information today that his alternative plan has been priced at approximately $17b fronts up some interesting questions. Although this number is $9b “less” than the government plan, a little reading between the lines is required. At this stage, the Coalition has not commented on this report.

Firstly, presuming the Coalition wins the 2013 election, we would face a two year halt in activity:

“Following the six-month cost-benefit analysis after the 2013 election, Citigroup estimates that it would take two years to the end of 2015 for the coalition to renegotiate the definitive agreement with Telstra, negotiate a new separation deal and renegotiate the HFC deals with both Telstra and Optus.”

That is two years of lost economic benefit in areas which would have had the NBN completed in that time.

Secondly, approximately $6b of the $17b figure is calculated for the FTTN component of the Turnbull plan. At such time in the future that an upgrade to FTTH is done, most of that $6b becomes waste, as almost all of the equipment in the huge FTTN cabinets – (of which it is estimated there will need to be 80,000 examples thereof, and pictured below) – will be completely surplus to requirements.

Otherwise known as wasted investment.

If we are upgrading to FTTH everywhere – (which even Turnbull admits will one day be required) – down the track, what will that cost?

Hard to tell, but let’s add $4b – (two thirds of the $6b it cost to do the now obselete FTTN component of the Turnbull plan) – to the $17b price. We’ve forked out $17b, but wasted $4b, so the “real” cost of the original Turnbull plan when looking to upgrade it to FTTH might have been $21b.

That leaves us with “only” $5b of difference between the two plans. What would be the total cost to upgrade it to FTTH?

Given that an FTTH rollout RIGHT NOW is currently priced at $26b – (the government plan) – does that take the long term cost to $47b? Could they get it done for $5b to even cost the same as the current government plan?

I doubt it.

Over time, the opposition plan will cost more than the current intention of building a full FTTH (better) network, before we even consider the lost benefits to the economy.

Cheaper broadband Malcolm?

Get real!

(UPDATE: Further analysis of the Citi report from Delimiter).
(UPDATE: The ACCC has also formed the view that Turnbull’s plans would likely be an expensive waste of money).

Over the last week, NBN Co have been running the latest round of industry forums across the country, as the build of the National Broadband Network (NBN) prepares to ramp up to full scale over the next two years.

Yesterday, the road show hit Melbourne, and continuing on from the last major forum in February, it seems there will be some massaging of the “rules” surrounding some of the minor aspects of premises installation and service activation.

• BATTERY BACKUP:

  Moves are currently underway to reconsider whether or not the battery backup units will remain compulsory for all fibre-based installations within the full NBN project. Initial feedback from users in the mainland trial sites have indicated that many users consider that in power outage situations, a mobile phone is more than adequate for making emergency phone calls, and that given the size of the battery backup unit – (pictured below) – for most people there is little value in making the unit compulsory.

  Of course, the battery backup units will remain compulsory for special needs customers – (medical, etc) – but making them non-compulsory does have Universal Service Obligation (USO) implications. The department and ACMA are currently considering the issue, with a decision expected before Christmas.

  Until a decision is made, all new installations will include the battery backup unit.

• MULTIPLE VOICE SERVICES:

  There have been rumours in recent weeks that RSPs would not be allowed to provision a second voice service onto the UNI-V2 port of NTUs within premises for an extended period of time – with some suggestion that this was an arbitrary ruling designed to curry favour with Telstra, who are losing control of the “last mile” under the definitive agreement between Telstra and NBN Co.

  That seemed extremely odd to me, given that one of the biggest benefits of the NBN will be the ability to have multiple services – (up to four data, and two voice) – provisioned into each premise over their single fibre run, so I made sure I followed up on that yesterday.

  It turns out that it is in fact correct that only one UNI-V port can be enabled – for now.

  They are “currently unable” to provision a second UNI-V port for “operational reasons”.

  Speaking yesterday with both NBN Co’s head of activation, and head of the OSS/BSS team, it would appear that the still evolving OSS/BSS system currently doesn’t allow for it to be done, rather than it being any particular network or policy constraint.

  An internal update to the OSS/BSS systems – expected around June/July 2012 – will enable this functionality, allowing multiple voice services to be provisioned – basically it’s a work in progress.

• BUILD DROPS:

  There has been a subtle change to how NBN Co expect to run the “build drop” – the fibre run from the pit in the street and into your home.

  Building on lessons learned from the trial sites, the build drop – (presuming you have granted permission for one to be installed to your premises) – will be done as the street fibre is pulled down your street, rather than by a second team moving down the street behind the first team and doing the job afterwards.

  This was trialled at one of the sites, and it was found that the time taken to complete the install was shorter, as all the work in the pit was being completed at once, rather than opening and closing each pit multiple times.

  It also provided less disruption to home owners, because work crews weren’t around for as long a period of time.

  In the end, this will provide time and cost savings as the rollout runs down each street.

• IN-PREMISE INSTALLATION:

  The concept of RSPs being given the option of doing the actual in-premise installation work – (NTU, battery units, etc) – has been raised, and is currently being considered.

  Some RSPs have indicated that it would be preferable to do installations themselves – (much like a Foxtel engineer comes and does all the work when you get their service connected) – for reasons of quality and “known state”.

  NBN Co doesn’t sound particularly keen on this potentiality, but the question has been asked, so it is under consideration. The main concern would be whether or not the engineers doing the install will be able to meet NBN Co installation standards.

NBN Co have clearly used the trial sites for exactly what trial sites are meant to deliver – a chance to make sure all the methods, processes, and documentation that comes out the other end of a network build meet the requirements, and an opportunity to fine tune how it all comes together.

Overall, I was impressed at how well things appear to be on track with the project, with NBN Co reporting on construction progress, and plans for the next three years.

The ship is sailing straight and true.