COMMSDAY

Shadow communications minister Malcolm Turnbull has fleshed out more detail on the national broadband plan that the federal coalition will take to the next election. Backed by a cost benefit analysis from the Productivity Commission, the alternate policy would mix fibre, wireless and some of Telstra’s copper and HFC assets, and would jettison any rural-urban cross subsidy in favour of transparent federal backing for less profitable deployment areas.

The alternate policy would also abandon the monopoly approach central to NBN Co’s design, necessitating completely new deals with Telstra and Optus – but Turnbull was adamant that any cost of changing plans would be dwarfed by the resulting savings.

“Our approach – and we will be able to promise this at the election – [will be] to say to people, particularly in the outer suburbs of our big cities and indeed in regional Australia, ‘we will get you very fast broadband... more quickly than the NBN’,” said Turnbull, speaking at a Committee for Economic Development of Australia lunch in Sydney. “The NBN is a vast national project that in some areas will significantly improve people’s broadband experience... [but] in other areas, frankly, it won’t. If you’re accessing broadband at 100Mbps on Telstra’s HFC network in Melbourne... [and] you get switched... onto the NBN, frankly, you won’t notice the difference.”

“Our approach will be more targeted, more cost-effective and in addition, it will not stamp out competition... there is nowhere [else] in the world, [that] I’m aware of, where a government is actually seeking to stamp out facilities-based competition.”

Turnbull said the first point in the process would be a full cost-benefit analysis by the Productivity Commission, something he estimated should take less than six months. “But I think it’s pretty obvious what the conclusions would be... I’m not trying to pre-judge, but I think most people in the industry would tell you that the likely approach would be a mix of technologies,” he said. “You’d almost certainly continue with FTTH in greenfields sites.”

“And this has all got to be renegotiated with Telstra and Optus... [but] disallowing the HFC networks to be used for broadband is completely nuts, that is economic vandalism; these are networks that have got many years of life in them that are delivering fast broadband.”

Turnbull’s plan would incorporate a certain amount of fibre in brownfields as well. “In the cities, there are some areas where you would run fibre out to the home or certainly very, very close to the home, maybe to the kerb. And they might be areas where the copper network is very old or where... maintenance

[costs are] very high,” he said. “There are others where you would simply bring the fibre further into the field, so that the length of the copper between the end of the fibre and the premises was sufficiently short to enable you to run very high speeds over that shortened copper loop... I’m talking 50, 60Mbps download, 5-10Mbps upload.”

“In apartment buildings – and I think the NBN [Co] have to come to grips with this anyway - they’re not going to be able to run fibre into every home unit in Sydney... they will end up... having the fibre connected to a multiplex in the basement.”

NEW TELSTRA AGREEMENT: Of course, to make active use of Telstra’s copper and other assets would require fresh negotiations with the telco – and raise the spectre of copper maintenance costs.

“You've got to reach agreement with Telstra in terms of access to the copper, just like NBN Co had to reach agreement with Telstra for access to their conduits... so Telstra’s part of this solution,” said Turnbull. “[There is] more maintenance associated with copper... but the question is the quantum. If the Capex cost is a quarter of what FTTH is, then you can carry a little bit more maintenance! But in areas where the maintenance of the copper network is very, very high, then it would make sense to take fibre, if not right into the home, at least very, very close to it.”

“Part of the difficulty with this debate has been that there’s been a failure to recognise there are a whole range of ways to deliver fast broadband; FTTH... FTTN, using an HFC, of course there’s wireless... I guess all I’m saying is we should be technologically agnostic.”

Tearing up the current agreements between Telstra and NBN Co would also incur additional expense, but Turnbull was confident these would be well outweighed by the eventual benefits. “I haven't read the Telstra contracts; nobody has outside the deal... there will be costs associated with a change of plan, but they will be tiny compared to the savings that can be achieved,” he said. “I think the approach we have to this industry structure is one that would actually benefit Telstra... the industry structure we’d like to see is

the CAN of Telstra structurally separated from Telstra's business. And that CAN would become a regulated utility, like a gas, power or water company, which would be able to charge prices by permission of the regulator that enabled it to get a reasonable return on its capital.”

However, under the coalition model, ‘CAN Co’ would not be able to cross-subsidise costly regional connectivity as NBN Co has been set up to do. Rather, Turnbull’s plan would involve a direct federal subsidy.

“Insofar as it could not deliver the broadband services required on commercial terms because of distance, or a lack of dense population, then there should be a transparent subsidy from the budget,” he said.

“We do not support the approach of eliminating competition in the cities so that the NBN can charge more in the cities and, in effect, cross-subsidise the bush. I’m in favour of the bush being subsidised, it has to be – but it should not be at the expense of more expensive broadband in the cities.”

Petroc Wilton