Malcolm Turnbull (Wentworth, Liberal Party, Shadow Minister for Communications and Broadband) Share this | Hansard source

Both sides of this House are committed to providing all Australians with fast and affordable broadband, and that is what we understand to be the objective of the National Broadband Network. But with every new detail that the government reveals about its strategy to achieve this shared objective—and it will spend more than $50 billion creating the NBN—Australian taxpayers have more reasons to be deeply concerned. We know that the NBN is the most expensive possible way to deliver fast broadband to all Australians. It uses the most expensive possible network design and makes no use whatsoever of any existing fixed line, last mile communications infrastructure. Instead, it overbuilds the infrastructure and renders it valueless.

The NBN is colossally expensive and has no counterpart anywhere in the world. There is not one other national government in the world spending this sort of money on a broadband network. It is also the most anticompetitive way possible to achieve the objective of providing universal access to fast and affordable broadband. The NBN will be a new government owned monopoly, and all potential direct competitors to it will be prevented from competing by legislative and contractual constraints. The justification for this is that the prohibition on competition needs to be there to protect the economics of the NBN. This is taking economic policy back to the days before Hughes and Vale; it is going back half a century and more to the days when state governments owned railway companies, brickworks and butchers shops and legislated and regulated to make it all but impossible for the private sector to compete. The justification was: 'We have to keep the revenue in the state railway, the state brickworks and the state printing office.' All that has been swept aside through judicial action and through microeconomic reform by reforming governments of both persuasions, Labor and coalition, but right now we are seeing this Gillard government turning the economic reform clock backwards to a bygone era. That is profoundly contrary to the best interests of this nation and poses enormous risk to the taxpayers of Australia.

We know that the contracts that the NBN Co. is planning to sign to get the NBN constructed are the riskiest possible way to approach these public works. By shifting to a cost-plus model, the NBN Co. shifts immense economic risk onto taxpayers—it is the taxpayers who are liable for any cost blow-outs. So much for the government's ridiculous claim that 14 major Australian construction companies which failed to meet the NBN Co.'s price target when they tendered were colluding in an attempt to gouge taxpayers.

We know that the NBN Co. is no longer the wholesale only, last mile only, carefully regulated entity—the level playing field—that the government originally claimed it would be. Instead, in areas ranging from communications infrastructure in new housing estates to the communications needs of our defence agencies, NBN Co. is muscling in and using its access to taxpayers' wallets to expand its mission. It will not be a wholesale-only entity in any meaningful sense of the word; it is going to compete for every dollar of telecommunications revenue from the public sector and from the corporate sector. It has achieved the legislative ability to do that. It will inevitably have to do that because the capital cost of this network is so immense that its managers—indeed, its owners—will be under enormous pressure to generate additional revenue.

To justify this vast expansion of the public sector, and overturn decades of bipartisan agreement on the merits of competition and competitive neutrality, the government points to the economic and social benefits of broadband. You see this in its very shallow and flimsy National Digital Economy Strategy document that was brought out this week. Australians were told of all of the virtues of broadband, but then told almost in passing that only the fibre-to-the-home design of the NBN could enable our bright digital future. Therein lies the fundamental blunder that this government has made: everybody agrees that affordable fast broadband is a good objective. We agree that many, if not most, Australians have access to fast broadband now but many do not, and those areas of inadequate service should be rectified.

Indeed, one of the bitterest ironies in this colossal bungle by the government is that it cancelled the Howard government's OPEL broadband plan for regional and rural Australia. It was a fixed wireless and satellite configuration, and had that been carried out all of those areas would have had fast broadband several years ago. The absurdity is that the technical solution that the government is proposing to deliver to regional and rural Australia through the NBN is precisely the same as was proposed under the OPEL plan. So it is not as though the government is proposing something different or better; it is exactly the same solution, except that it will come many years later and at a much greater cost.

At the very bottom of this terrible blunder by the government is the failure to do a cost-benefit analysis. I apologise for raising this again—we obviously have to raise it every time—but it is so fundamental because the government never asked the right question. The right question to ask was: what is the fastest and most cost-effective way of delivering affordable fast broadband to all Australians? That was the question it never asked. It rushed straight to a solution for fast broadband to all Australians, which was fibre to the home. When the government talks about the benefits of broadband it gives examples of health and education, such as kids in remote parts of Australia being able to participate in classrooms with kids in other parts of Australia. These are all worthwhile and laudable objectives. But it never asked the question, 'Do you need fibre into every home to achieve that?' It never asked the question, 'What bandwidth capacity do you need to deliver that?' The assumption is that the virtues of broadband can only be delivered by the NBN, and that is simply wrong. It is just a massive blind spot and it may be the reason it has entered into such a terrible mistake.

The reality is that the goal of fast broadband for all Australians at an affordable price could and should be delivered through a mix of technologies, which will include fibre to the home in many areas, particularly in greenfields developments. It will include fibre to the node, which would bring the fibre further into the field so that it is within the last mile of copper—and it might not even be a mile but 500 or 700 metres. With a fibre-to-the-node configuration like that, if the last segment of copper was 750 metres or less—and we had this confirmed only today by one of the leading telecommunications companies in the world—a download speed of 60 megabits per second would be very achievable, along with an upload speed, depending on whether it was 750 metres or closer, of five to 10 megabits up to an effectively symmetrical speed of around 50 to 60 megabits per second. That type of bandwidth is more than adequate to cater for every conceivable application that a residential user would need. To go from 50 megabits per second to 100 megabits per second in a residential context would be imperceptible; the user experience would be no different. You would not be able to tell the difference because there are simply not the services and the applications to take advantage of that higher speed.

What is the cost differential? Again, we checked these figures today with one of the leading telecommunications companies in the world and they advised us that the cost differential is 50 per cent—that is, the cost of fibre to the home versus fibre to the node, in the way I have described, is twice, if not three times, as much. I can mention this company because it was in one of their public papers. ADTRAN, one of the leading American telecommunications equipment suppliers, effectively have a fibre-to-the-node product where the fibre runs down the street and connects to the various existing copper pairs through one of their fibre termination nodes. They say that the cost differential, where they have deployed this in America, is in the order of 50 per cent—that is to say, you can halve the cost with a different network design.

I can understand that the government may not want to take my advice or the coalition's advice on this. They may say, 'We know somebody who disagrees with you.' They can make all of those points, but it just underlines the point we have been repeatedly making: they should have done their homework first. We all understand. We are all politicians, we all want to get elected and we all want to be in government. To use a reference from that former prime minister mentioned so often in question time, we would all love to say, 'No child shall live in broadband poverty.' The fact is that a government that makes the promise of universal and affordable broadband and is met with a positive response from the public is then expected to do their homework to ensure that the promise is delivered at the lowest cost to the taxpayer, and they have simply failed to do that.

I come now to an equally significant point about affordability. I have talked about the cost to the taxpayer, and it is a massive cost. There are aspects to this design that are truly inexplicable. At the moment 30 per cent of Australian households are passed by the hybrid fibre-coax cable—the pay TV cable. That cable is capable of carrying broadband at 100 megabits per second and in fact is doing so in Melbourne right now. So, it can operate at a very high speed. That cable will be decommissioned, as far as broadband is concerned, in order to protect the economics of the NBN.

Again—and I had this discussion with the Korean communications commission in Seoul not so long ago—communications authorities in other countries right around the world are absolutely staggered that Australia would be eliminating facilities based competition. Most countries do not have a lot of facilities based competition because their telecoms networks were built up by government owned PTTs, like Telstra and its various counterparts. But where there is facilities based competition, where there is the potential for it, why would you eliminate it? It is genuinely seen as being inexplicable, and the only justification is the one that the government has given: to defend the economics.

The issue of affordability is a fundamental one. Five per cent of households with incomes over $150,000 a year do not use the internet. A figure of 34 per cent of households with incomes of $40,000 a year or less do not use the internet. The single biggest barrier to internet usage, to broadband usage, to access to this wonderful digital economy that the government likes to talk about and we like to talk about, too—we are all committed to it—is household income. Affordability is the key issue. We have seen massive reductions in the cost of broadband and the cost of telecommunications in recent years coming from competition. When you look at the NBN business case, the price of broadband is set and stays static, even at the lowest rate, for the next 10 years. There are no falling prices. There is no attempt to give lower-income households more affordable access to broadband. Far from it. An over-capitalised NBN will pick the taxpayers pocket and create a massive barrier of affordability to lower income households. (Time expired)

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