Oakeshott: Coalition's NBN may only save $5 billion

Oakeshott says any NBN cost benefit analysis carried out by the Coalition needs to consider the cost of maintaining the existing copper network or it risks coming up with “false figures”.

Independent MP Rob Oakeshott believes based on his own “rough figures”, a Coalition version of the National Broadband Network (NBN) would only be $5 billion cheaper than Labor’s $37.4 billion NBN.

Shadow minister Malcolm Turnbull has consistently stated the Coalition’s NBN could be rolled out faster and cost less.

Oakeshott, who backed the Labor-forming government after the last federal election, citing the party's NBN policy as a key reason, told Computerworld Australia any NBN cost benefit analysis carried out by the Coalition needs to consider the cost of maintaining the existing copper network or it risks coming up with “false figures”.

“My costings, including on the obvious assumption that the copper network will be kept and maintained, are based on industry feedback and various sources. They are full of assumptions though, so I would strongly welcome a cost benefit analysis of the Coalition’s fibre-to-the-node policy,” he says.

“Maintenance costs have to be factored into any capital spend, as does the retention of a parallel copper network.”

In August last year, BIS Shrapnel calculated maintenance costs for the copper network could total $700 million per year.

Adrian Hart, senior manager at BIS Shrapnel, said maintenance costs of the copper network could add up to $1 billion per year.

“The maintenance of the copper network, alongside rolling out fibre-to-the-node, really only makes this [a] single figure [saving], in my estimation, [of] about $5-6 billion difference between the two policies,” Oakeshott says.

“[The Coalition is] denying the maintenance of and the retention of the copper network in what I’ve seen quoted by them so far. That would be a cost that would continue to grow over time as the copper network becomes more difficult to maintain.”

Oakeshott has called for the Coalition to switch to a fibre-to-the-home approach for several years and says he will continue to “call them out” on what is an “inferior policy position”. He will also continue to build bipartisanship support around FTTH.

One of his main points of contention with the Coalition's version of the NBN is he believes it will not provide the rate of return that the federal government’s NBN has targeted – a 7.1 per cent return over the 30-year period 1 July, 2010 to 30, June 2040.

“It’s just disappointing that the Liberal party in 2013 is arguing against the market in carbon pricing and arguing against the rate of return for the NBN build. Markets and rates of return should be the traditional domain of the business-friendly Liberal party,” he says.

“I just wish, in many ways, that it was Malcolm Turnbull arguing the case for fibre-to-the-home and not against fibre-to-the-home because personally, in many other policy areas, he and I are peas in a pod.

“It wrecks me in the brain that they’re for some reason choosing politically not to support them.”

With an election date now set for 14 September this year, Oakeshott says the NBN will be a significant election issue. But given the choice, he believes Turnbull would rather not fight on the election battleground over the NBN.

“I think he’s [going with FTTN] to demonstrate that he is part of the team and I just hope if they are successful in government, that in many ways he is the minister for communications so that he can minimise the damage done by any election promises made,” he says.

“How a lower speed with less reliability and a lower rate of return is better for Australia even stretches the imagination of a good and smart man like Malcolm Turnbull, let alone the rest of us.”

Tags Malcolm TurnbullRob OakeshottNational Broadband Network (NBN)fibre-to-the-home (FTTH)fibre-to-the-node (FTTN)

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15 Comments

Ernie

1

"Shadow minister Malcolm Turnbull has consistently stated the Coalition’s NBN could be rolled out faster and cost less."

What in the world does the Coalition know about building infrustructure? Last time they were in power they built nothing and sold assets.

Rod

2

Look at the state of the copper network at this video then make your mind up http://www.youtube.com/watch?v=BjvTn5Do6GQ

Nathan

3

I think Turnbull would be on the right path given his experience with setting up Ozemail and his success in the private sector.

$5b is a massive saving given the total Labor expenditure of $37b. As is typical when the coalition comes back into power they will have to spend considerable time cutting costs to right the budget deficit that Labor has racked up.

gnome

4

Turnbull is a merchant banker, not a network architect, which was completely reflected in his investment in Ozemail, and the private sector has been conspicuous by its almost complete absence from building fibre networks.

The claim that $5Bn is a massive saving is a massive wank, given the scale of the project. The 'saving' will condemn us to another generation of poor standards until the FTTN has to get ripped up and replaced with FTTP anyway, at huge cost.

Abel Adamski

5

Considering the state of the Telstra copper infrastructure as shown by the size of the pit and duct remediation contracts, I suspect that the rest of the infrastructure, i.e the copper last mile is not much better so expensive to identify and remediate BEFORE any plans can be drawn up for FTTN, the obsession with upgrading and extending the monopolistic cable TV network (HFC) the cost of doing so will due to the upgrades and increased backhaul and infrastructure and repairs will approach the original install cost (I hear approx $10Bill jointly ) .
I truly doubt any cheaper for the end user, with reduced income to cross subsidise so it will cost the taxpayer mega bucks for an inferior Patchwork National Infrastructure that third world nations would look down on

Abel Adamski

6

http://delimiter.com.au/2013/02/01/telstra-remediation-work-delaying-nbn/

Sergio

7

How many roads, hospitals etc would $5 billion build. You guys make it sounds like it's a pittance..

Abel Adamski

8

Sergio
As I pointed out, I think Oakshott has failed to take all the factors into consideration. Including upgrading the monopoly Pay TV/Media product HFC for the benefit of certain interests it will actually cost more for a severely inferior over the long term ESSENTIAL NATIONAL COMMUNICATIONS PLATFORM FOR THE WHOLE NATION, that will pay for itself without costing the taxpayer, in fact unlike the coalition version it will pay a dividend to the taxpayer for just those needs

damien

9

Ernie - you sound as though you trust Conroy & Co. to get it right? Think pink batts, the education revolution, cash for clankers, petrol commissioner, price watch, super clinics, live cattle export, immigration - et al.
Give me break mate!

Richard Ure

10

Nathan, Reducing the cost of the NBN will have no impact on the budget deficit you are so concerned about. If you don't understand that argument, pleaseread more likely on this issue., it has been explained many times.

Mor generally when the $32 billion is spent, who will own what it is spent on? Telstra?

Twinny

11

The state Telstras copper is in (a shambles), lack of maintenance (in favour of shareholder dividends - if any) no wonder it costs what it costs.

The only savings will be to trim the fat in terms of how many people running this show and their huge salaries. Tax payers want efficiency - the worry is that no one really knows what it costs (what will the be the end blowout in billions?) and how much of that is "administration costs".

Abel Adamski

12

Twinny
Actually it is the contractors that are the hands on workforce at the coalface, the "Fat" are the people who plan, organise, design etc etc. Comparing skills and responsibilities and functions with advertised positions in any company - all in the ball park.
It is truly a massive task. It took the PMG/Telecom/Telstra 70 Years to cover 90% of premises, NBN has to do it including planning in 10

John

13

Anyone with half a brain will know that oppostion to FTTP is nothing more than opportunistic politics. Why should Australia settle with a second rate FTTN? Why can't we be global leaders in this field and have some bi-partisan support on this massive national project. This is our opportunity to seize the opportunity and the coalition want to downgrade it. Half the delay affecting the roll out of the NBN was at the planning/contractual stage as access to Telstra infrastructure is important to keep the costs down as much as possible. Lets remember that this issue was complicated by the coalition under John Howard, as if he had seperated Telstra properly when it was sold in the first instance it would not have been so messy. The relality is regardless of who is in Government projects of this size do take a long time to kick off but once they get momentum things get more efficient. There is a learning curve so for once can we all as Australians get behind something that will benefit us all?

Question Everything

14

Given that more people are using mobile phone and tablets on wireless the number of broadband connections to the home are reduced. Another question is is the American government building a national broadband network or are all telecommunications funded by private enterprise. A quick check of the situtation world-wide might be interesting as i wonder why Australia is again being the odd one out

ash casey

15

'only'...."ONLY' $5 BILLION!? !! Oakshot has seriously lost touch with how much $5BILLION is and what a saving $5BILLION could buy in terms of education, health or welfare to Australians.

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