Turnbull's NBN could 'cost the same' in the long-run

Does the Coalition's version of the NBN really save money?

Shadow communications minister Malcolm Turnbull said at a doorstop interview today that a fibre-to-the-node (FTTN) policy for the National Broadband Network (NBN) could possibly end up costing around the same as the current fibre to the premises (FTTP) policy in the long run.

When questioned whether the costs in maintaining and replacing parts of the ageing copper infrastructure for premises will end up costing more than the current NBN, where the copper will be replaced with fibre in one go, Turnbull said that “probably the prudent thing to do is say it’ll cost you the same.”

He said the Coalition’s $17 billion in savings compared to Labor’s cost for the NBN could eventually be spent over time once demand for faster broadband speeds is proven if fibre to the premises needs to be put in place.

“Let’s say we are talking about a house and we can today enable it with fibre to the node and we’re assuming [it’ll cost] $900, which is a very conservative estimate. Let’s say to go to fibre to the premises it [costs] $3600,” he said.

“If that extra $2700 is not going to generate any revenue for a decade then we keep that $2700 in our pocket for 10 years and spend it when there is a demand for it.

“It’s never a good idea to invest money years and years ahead before there is demand for it because you have got extra investment getting no return. If you assume you have got that extra $2700 in your pocket for 10 years and that’s earning you interest for 10 years and you invest it when you need to then that’s much better off than investing it now and getting no return on it for 10 years.”

Investing more money into the NBN over time as opposed to investing it all upfront also allows for more flexibility to make incremental changes to the network, Turnbull said.

“[The current NBN plan] is like a great, big, chunky piece of infrastructure that is hard to add to once it is built. Telecom network is something where [there’s] a piece of infrastructure where you can calibrate your investment so that you are ahead of – but not decades ahead of – demand. And thereby you use your capital more wisely.

“All the telco executives I’ve talked to around the world who are actually building these networks have said to me that you would never do fibre to the premises because of a saving in maintenance cost. It does cost more to maintain copper in general than fibre. But the difference is not material compared to the huge capital investment difference.”

Internode founder Simon Hackett told Computerworld Australia that it could cost more to turn the current FTTP broadband policy into a FTTN one. He said that relying on copper for the last mile creates greater maintenance costs compared to pure fibre and there are many places where it could fall apart over the life of the NBN.

Commenting on the Coalition’s promise to deliver NBN speeds of up to 50Mbps for the majority of households in 2019 as opposed to Labor’s faster speeds under FTTP, Turnbull said that there is a “lazy assumption” that the exponential growth in bandwidth is going to “mean a similar rapid ramp up in bandwidth requirements at the edge.”

“That’s simply not right because you might have 10 times as much data being hurdled around the Internet but that doesn’t mean everyone is going to need a pipe 10 times as big to their house…It’s a question of getting your investment to match the demands where the revenue is and then you have got the flexibility to expand it later if you want to.”

Turnbull says a cost benefit analysis of the Coalition's NBN will take place after the election if it wins government.

Follow Rebecca Merrett on Twitter: @Rebecca_Merrett

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

Tags Malcolm Turnbullfibre to the premisesbroadband policyfibre to the nodeNational Broadband Network (NBN)copper networkfibre to the premiseNBN costbroadband networkcopper

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5 Comments

gnome

1

We might expect a politician to airily toss up any set of numbers that just happen to suit his case.

But it's naughty to first brush off the high annual expenditure on maintaining old copper, and then completely ignore the huge increase in cost of having to create new job cards for every single future fibre connection.

Still, he seems to have got away without media scrutiny after claiming that NBN will cost $94billion, so he may feel he can now say anything because some journos will run it as fact.

Rob Fisher

2

Two points: For a party spruiking their competition credentials their NBN policy leaves Australia in a globally uncompetitive position. Factor in the costs of future lost opportunities, productivity improvements and innovation into the coalition numbers please Mr Turnbull.
Point 2: What you may or may not have done in past roles Mr Turnbull, has nothing to do with how the coalition will actually implement NBN. We, the public, wish to have full (i.e. complete) transparency of all aspects of your policy so that we can scrutinise it thoroughly. Arguing that the public should accept your assertion that you are an 'experienced expert' and therefore everything you say should be taken on your assertions face value is ludicrous. Surely, as an ex merchant banker you know "past performance is not indicative of future results?"

OldFart

3

I grew up in the country in an era when few people had a phone at home either in the city or country. (No mobiles then either!). Then came along what was the forerunner of Telstra (Postmaster General - PMG) and completely upgraded the phone systems and exchanges of the time. No talk about a cost-benefit analysis or the cost justification at the time. They just did it, and still government owned too.
As a result, pretty much everyone was able to get a phone, though not everyone did immediately. And yes it did pay for itself over time. It's the copper network that Telstra still operates.
Now communication needs have moved on, and the infrastructure needs to move as well.

Do we need an NBN? You betcha!
Will we use the full capacity immediately? Probably not?
Will everyone want it initially? Probably not?

However, I do know that whatever capacity the NBN starts out at, then it will be used faster than people anticipate.
I see the NBN as fibre to the node as the logical (and only) contender.
If I was looking around for a replacement car I'd rather have one that was new, and was able to be upgraded in the future thank you.
I would not be in the market for building up my 'new' car out of the old car - worn out engine and odd spare tyres and parts from other cars, which is the real proposal of the plan put forward by the Liberals.
So it is with the NBN.
We are looking at a new communications system that is to replace the telephone system put in the ground in my youth.
I'd rather put my money into a system that would last for my grandchildren rather than one that would need replacement in a few short years, and my faith in people who can see the possibilities in the future than those who are short sighted.
FTTN NBN. Bring it on!

aza_2400

4

Why are people like this guy put into power?

He knows nothing... get the job done and do it the right way... this is why people hate governments they put you, businesses and infrastructure behind.

Why do we need to revisit the M4, M5 and M2 motorways in Sydney?

Because they didn't plan for capacity....

I will be sitting here again in 1 year saying... I TOLD YOU SO!!!!

Just roll out FTTP and be done with it... no need to make yourself look stupid...

Matthew

5

Turnball made his fortune from oz email, if you remember the libs have had about 4 goes at trying to come up with a policy.

1st it was to scrap it, 2nd to go all wireless, then only fiber to the exchange and now to the street.

They have under estimated the importance of this project, it wont make any money for year maybe a decade, but the benefit will be 15,20,30 years later.
Imagine anywhere in Australia we could have a Microsoft or Google without them every leaving the country or their home town, that is where the possibilities lies.
Small towns can thrive and Australia where we can keep our brightest minds and keep jobs here in this country. if there was no need to build something like this, why did we build the national highway for example?
They know the labor NBN is the best policy, but since they did not think of it (remember they sold telstra) so they pan it with no forward thinking apart form another band aid approach.

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