Former Prime Minister Malcolm Turnbull’s memoir claims that Australia’s National Broadband Network (NBN) was ill-conceived from the beginning and should never have gone ahead:
“[The government] set up a new government-owned company called NBN Co, designed to build over all that linear infrastructure of Telstra. At the outset it seemed like Kevin wanted to put Telstra out of business,” Mr Turnbull said.
“When we got into government we did the best we could with it and NBN has done a great job in getting it nearly completed, but the problems were all an issue with the government trying to do it itself at the outset.
“It needed to be subsidised, but then it should have had a competitive process to allocate [the work], and then let the private sector get on and do it”…
“[The New Zealand government subsidised it], but it was done by a private sector business in the industry for 100 years. New Zealand got ubiquitous broadband faster and at a much lower cost.”
Malcolm Turnbull is partly correct. But the problems with the NBN date back decades.
First and foremost, the Howard Government’s privatisation of Telstra in the late-1990s gave it control of both the wholesale and retail networks. This made it a vertical integrated monopoly, meaning that competitors were forced to rent the fixed line telephone network for access.
The NBN was initially designed by the Rudd Government, in part, to remedy this structural mess. But it came with a huge taxpayer bill, with the Gillard Government in 2011 agreeing to pay Telstra $9 billion in instalments for its fixed line customers to migrate to the NBN.
By contrast, New Zealand did not face these issues.
Unlike Telstra, Telecom NZ was split into a wholesale operator, Chorus, and a retailer, Spark.
Chorus won the vast majority of the work to build Fibre-to-the-Premises (FTTP) networks, which meant it could use all of its existing legacy assets to build their new FTTP network. This obviously reduced duplication, dramatically lowering the cost of the build.
Moreover, unlike NBN Co, which was created as a start-up Government Business Enterprise, Chorus also had the embedded technical expertise to get the job done.
That said, Malcolm Turnbull added to the problems by abandoning plans to build a FTTP NBN across most of the country. Instead Turnbull replaced it with a multi-technology mix (MTM) that included previously retired copper cabling.
This change to MTM was marketed as a cost-saving move by Turnbull. But, the massive amount of rectification works required quickly saw the price tag for the NBN jump from $30 billion to more than $50 billion.
In the end, Australians have been left with an expensive NBN dud that costs many customers than the old ADSL service it replaced, and often is not much faster.
When it comes to the failings of the NBN, there’s plenty of blame to go around.
