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Friday, 29 October 2010 16:12

Turnbull NBN demolition is DNA hardwired

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Malcolm Turnbull, not unreasonably, wants the most rigorous tests of project oversight and financial transparency applied to the National Broadband Network. Which is quite right, of course. It is, after all, the largest single infrastructure spending project ever undertaken in this country.


But Mr Turnbull is not seeking a simple cost-benefit analysis of the NBN. He is seeking to dismantle the project piece by piece. From its' funding to the regulatory framework in which it functions.

He wants it replaced with the same malformed Coalition mash-up that was taken to the last election. Except that he would throw into this hideous construction a functionally or structurally separate Telstra wholesale company, which would be given price and regulatory guarantees to plough the market with.

Mr Turnbull has genuine concerns about the cost of the National Broadband Network and whether a Government business entity is the best way to deliver it. And he presents his case very well, as you'd expect.

But he is disingenuous - disarmingly disingenuous - when he says he won't stand in the way of the NBN if it is given a "big tick" by the Productivity Council through a cost-benefit analysis. He will stand in the way because he knows this is a rigged game. And because he opposes the NBN roll-out at the most fundamental philosophical level.

Hard-wired into the Turnbull DNA is the rock-solid, unshakeable belief that Government has no business getting directly involved in a broadband roll-out. That the delivery of such infrastructure is best left to the market, to the private sector '¦ presumably because it has done such a good job so far.

From the moment he returned to the Coalition frontbench as communications spokesman, Mr Turnbull has tried to distance himself from Tony Abbott's very clear instruction that he "demolish" the NBN.

No-one wants to stand in the way of better broadband infrastructure in Australia, he says. He put himself forward initially as the lonely voice of reason in a debate about cost.

But over the past parliamentary sitting week, we have learned more of the Turnbull plan.

And that plan does not involve a tinkering with the ambition of the NBN roll-out, or the simple application of more rigorous financial oversight. It involves the scrapping of the NBN entirely, to be replaced by a scheme that will leave regional Australia in particular on a parched and uncertain timetable toward broadband improvements.

He flatly does not buy the argument that competition has failed in the telecommunications sector.

And his plan raises more questions than it answers.

He says broadband in the cities should be delivered entirely by the private sector, that it should be a mixed bag of copper, HFC, fixed-wireless, and fibre - but that the market would decide the best platform.

He wants to see 12 Mbps as the guaranteed minimum for all Australians, although he doesn't offer any rationale for why 12Mbps is the right number (having argued consistently that 100Mbps is unaffordable and therefore too much)

He offers his support for the separation of Telstra - his preference would be for structural separation, but says functional separation would be OK - but does not offer any guide to how this would be achieved (he objects to anything involving 'forced' separation, but is happy to take advantage of the work already done by the Gillard Government.)

He says a separated Telstra Wholesale should be allowed to compete with the 'NBN,' as would the other infrastructure investors, but offers no clues about how such an 'NBN' roll-out would be possible, or how it would be priced.

He says Telstra Wholesale (he is calling it CAN Co) would be given guarantees about pricing and return on assets, but doesn't say how those guarantees would be



He says the private sector would be offered subsidies to roll-out to under-served areas of regional Australia to encourage infrastructure investment without saying how these subisidies would operate or why it would be any more successful that than previous, similar subsidies.

He says "equitable pricing" between cities and the bush should be the policy goal, but won't say whether that it was a likely outcome of his broadband plans.

He says a Productivity Commission study should be able to determine which areas have been under-served by broadband providers in the past and decide whether or not a subsidy should be applied.

He says regulatory mechanisms and wholesale pricing framework would provide the right signals to ensure investment in new infrastructure - in both cities and the bush - but won't put a timetable on how long that price signalling would take to effect an upgrade anywhere outside of a metropolitan area.

He can't say how the Universal Service Obligation would be applied under the Turnbull regime, or how the 12Mbps guarantee would be applied.

He says the upgrade of city networks to a guarantee minimum of 12Mbps can be done for less than $2 billion, and that this would be entirely funded by the private sector. He won't says how much the rest of the network would cost, or what the life expectancy of the network would likely be.

And he certainly hasn't subjected any of this to a cost benefit analysis of even the vaguest description.

Mr Turnbull is a seductive advocate, promising affordable broadband for all. What he won't tell you, though, is that is that unless you live in an eastern seaboard metropolis, you won't qualify as "for all."

The regions and the outer-urban areas will have to wait. And wait. Until the pricing signals of Mr Turnbull's alternate plan start to deliver improved services.

We have already been down this path. It left Australia with frustratingly poor broadband services, trending backwards.

The Gillard Government should to be held to account on its plans for the National Broadband Network. Mr Turnbull is quite right to put the project to the most rigorous scrutiny.

But if he is going to seek only to demolish the NBN, he might do the voters the courtesy of offering a credible alternative, given that broadband as a national issue was so critical in determining the result of the recent federal election.

 

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